From The Wall Street Journal:
Amazon.com Inc. has made it easy for small brands to sell their products to large numbers of customers, but that has also enabled some counterfeiters to cut into their business.
Sassa Akervall gets much of the sales for the SISU-brand mouthguards that her family invented from Amazon. The Michigan-based entrepreneur said fake versions of the product on the site have undercut her price and hurt her business. She has reported the problem repeatedly to Amazon, but the fakes keep resurfacing.
“It’s frustrating,” Ms. Akervall said, adding that the fake products and their reviews have hurt the brand’s reputation.
Amazon said it prohibits the sale of counterfeit products. “We invest heavily to protect the integrity of our stores,” a spokeswoman said in a statement, and “will continue to aggressively pursue those who harm our customer and seller experience”
. . . .
Counterfeiters, though, have been able to exploit Amazon’s drive to increase the site’s selection and offer lower prices. The company has made the process to list products on its website simple—sellers can register with little more than a business name, email and address, phone number, credit card, ID and bank account—but that also has allowed impostors to create ersatz versions of hot-selling items, according to small brands and seller consultants.
When sellers are logged into Amazon’s Seller Central, most pages have a “Sell on Amazon” button next to the item that makes it easy for someone to list the same product. That strategy works well for widely distributed items like shampoo and sneakers. When it comes to closely held small brands, typically their owners are the only authentic manufacturers. So, in some cases, counterfeiters are listing their versions of hot-selling items on the same page and at lower prices.
Amazon’s pricing algorithms sees the lower price and then places the counterfeit in the “buy box”, which is where customers click to purchase, elbowing brands out of selling their own goods.
. . . .
Cal Chan said recent counterfeiters on the Amazon listing for the teeth-whitening product his company created have posted prices less than a third of his usual $20 to $25, and he has matched pricing and lost money to ensure customers get the authentic product. He has tried changing the labels for his Active Wow teeth-whitening charcoal powder—which is one of Amazon’s hottest-selling items by unit—to differentiate from impostors who have grown increasingly sophisticated at imitating his packaging.
. . . .
Amazon has said its platform has helped millions of small businesses start new products. More than half of sales on its site, by unit, now are from independent merchants, including those who sell their own brands. Those transactions typically are more profitable to Amazon than selling its own stock, because it takes a roughly 15% cut and avoids inventory costs.
. . .
Still, fakes continue to pop up. After Rob Ridgeway, inventor of a musical board game called Spontuneous, registered his brand with Amazon, a new Ukraine-based seller showed up, undercutting his $29.99 price by about $5.
The Austin, Texas-based entrepreneur tried to order the game to get proof it was a counterfeit, but the item never arrived—its tracking number was fake, too.
Link to the rest at The Wall Street Journal