For eCommerce sellers, Amazon is more than a shopping platform- it is a tool that they cannot afford to disregard. The platform has grown to become one of the top-most platforms, offering a pool of opportunities for authentic business owners- big or small alike. However, the rise of fake merchandise is now posing a threat for brands present on the channel.
As per Global Brand Counterfeiting Report, counterfeiting losses coming through digital channels is about 25% of $1.8B, and it is rampant on Amazon (aka The Amazon Counterfeit Products Problem). Becoming a trillion-dollar economy in itself, the business of counterfeit products devastatingly impacts the authentic brands. Another report by the Organization for Economic Cooperation and Development states that fake products now estimates 3.3% of the global trade. Numbers for the future are more alarming. International Trademark Association has estimated the growth in fakery to $4.2 trillion by 2022.
Apart from dipping revenue, over-production costs, fraudulent product warranty claims, product liability claims are the other factors that impact the brand’s economic stability. Besides, it is the brand’s reputation that is worst-hit and may prove fatal in some cases.
What Amazon Is Doing About Counterfeit Products
The counterfeit problem is significant- mainly for brands and shareholders, consumers, and even for eCommerce platforms like Amazon. On February 1, 2019, Amazon, while reporting its year-end earnings for financial 2018 and SEC filing, acknowledged for the first time that the company might be unable to prevent sellers from trafficking fake and pirated merchandise.
Nike recently stopped selling products through Amazon, stating unlicensed and fraud sellers as a contributing factor.
However, the giant retailer did not let the problem to dominate. It has now taken some crucial steps to combat the issue of counterfeit products. This includes the new Counterfeit Crimes Unit launched in 2020. The unit is focused on identifying the sellers who list fake products on the channel, take legal action against such sellers, and prevent future fake-listings from happening on the channel.
Undeniably, Amazon has switched on aggressive mode to fight counterfeit products since 2019. The following numbers from 2019 warrant its stand on the grave issue:
- Over $500 million invested in fighting counterfeits and frauds
- A team of 8000 employees dedicated to combating the counterfeiting issue.
- Banned and blocked above 6 million suspected fake or harmful listings
- Over 2.5 million suspected bad players blocked even before they could post a single product for sale.
Amazon’s stand on counterfeit products is clear, and so is its goal. Thanks to the steps being taken by the organization, 99.9% of the products on Amazon did not have a single counterfeit issue reported. The new Counterfeit Crimes Unit is all set to bring down the number of counterfeit goods to zero. While some may argue that the goal is nearly impossible to achieve, the company is willing to leap by investing its resources and capital.
What percentage of Amazon Products are Counterfeit
If we are to determine the exact percentage of counterfeit products on Amazon, we may not get accurate numbers. However, based on an analysis by ReviewMeta, a site that evaluates the quality of reviews on Amazon products, about 4.275 percent of the reviews in 2019 had the keywords “counterfeit” or “fake.” This certainly shows an increase in the percentage from 2015, which was about 1.725 percent. Another survey conducted in 2018 stated that 20% of the products on Amazon are fake.
Solving The Amazon Counterfeit Products Problem
We now know that problem of fake merchandise on Amazon and other such platforms is big. However, there are ways brands can solve the counterfeit problem and save their business from drowning.
For instance, a world-leading personal care brand was able to regain its sales by $1,500,00 a month ($18,000,000 annually) with the help of Revuze Explorer, an Ecommerce review insight platform.
How AI Is Solving Amazon’s Counterfeit Products Problem
After noticing a steep decline in sales and customer satisfaction over digital channels, the brand required almost an immediate solution to save its business. By eliminating all solutions that relied on human-expertise and hence were costly and time-consuming, Revuze Explorer’s AI researched, monitored, extracted complete data from all the eCommerce marketplaces and retail, along with internal data provided by the customers. By sorting the customers’ opinions into 50 most discussed topics, it further organized the data into insights.
One of the reasons for the decline in sales was an SKU sold on one of the biggest eCommerce platforms, not from the authorized seller/distributor. Also, the product was of low quality. It was not difficult to understand that product is fake.
The brand, without delay, took legal action forcing the fraud seller to shut down. Further, the brand utilized the insights collected by Revuze Explorer to improve customer satisfaction, product functionality, marketing, and even the supply-chain aspects.
Here, AI-driven technology played a crucial role in identifying and addressing the issue. It took only 2-3 weeks, and nominal cost for the brand teamed up with Revuze to collect, identify, and resolve the counterfeit problem.
To summarize, retailers can combat the problem of counterfeit products by:
- Researching and Monitoring the data to extract valuable insights to protect the brand.
- Educating the customers about products and let them know about policies regarding counterfeit products.
- Using technology-driven marketing strategies and look-out for false advertising, black-hat practices, and spam, turning the traffic to illegitimate offerings.
The covid-19 phase has accelerated the dominance of eCommerce. The risks involved will also increase. The combined efforts of the brands, retailers, governments, and consumers can resolve the counterfeiting problem in the long run.
Simone Somekh is a New York-based writer and editor who specializes in marketing and communications for B2B SaaS companies. He teaches Communications at Touro College and he is the author of an award-winning novel published in four languages.