As an investor, founder, CEO and business book author, I write about startups, design, how to build a good business, and I like to muse about culture in any form.

Counterfeits: the underbelly of Amazon and eBay

Credit: Shane Robinson

Credit: Shane Robinson

Grommet’s daily launches currently reach 1 in 25 US households. With that great influence comes serious responsibility.

Some call us a “trust agent” for the Maker Movement—making it safe for consumers to support independent products, and productive for Makers to do business with our community. With seven launches a week, we frequently encounter new marketplace dilemmas that require a degree of savvy and judgment to navigate. We do not make decisions by spreadsheet when acting as a trust agent.

As such, I am sharing a recent case study of one of these decisions in action.

The situation:  Last week we were about to launch a groundbreaking Italian product (a truly innovative watermelon slicer/server) and discovered that Amazon was suddenly rife with lookalike counterfeit and knock-off products. To make matters worse, the shadowy counterfeit manufacturer was using our original Maker’s photos to confuse Amazon customers to get them to buy a faulty inferior product.

Our response: The day before the long-scheduled launch we reworked our video, copy, and other media to alert people to the counterfeit products. You can imagine the disruption and extra work a “do-over” caused our media team. If we were managing exclusively by spreadsheet, we would never have taken on this cost.

The reason:  If we had not been very, very clear about this problem, a great proportion of our community would have gravitated towards buying Amazon’s counterfeit product as it was listed at $7.99, v.s. the original quality product at $19.99. The results for our Grommet Maker would have been catastrophic: to point a great number of purchasers to a bad and ultimately disappointing product could have ruined their US business.

The result: We will never know if some people still bought the bad Amazon product, but we knew we had done our best to warn them. We saw our community respond very strongly with i Genietti watermelon slicer purchases and our launch discussion board was very supportive.  Disaster seemed to be averted.

Blatant counterfeits are a real issue for two other groundbreaking Grommets: GleenerTM and bittersweet by Maria ShireenTM. GleenerTM has fought 37 counterfeiters alone! Maria ShireenTM, the manufacturer of bittersweet, has enlisted our help with a similar situation—the founder was finding her very own portrait used to sell counterfeit imitations. (They and other Makers address this and other intellectual property issues in The Grommet’s ebook, “Makers Who Made It.”)

Counterfeiters are nothing new and credible retailers traditionally shut them down. What has emerged more recently is the dangerous behavior of massive online retailers. Our Makers cite the promotional activities of Amazon and eBay, whose algorithms tell them that a product is moving fast (which an artificially low price on a counterfeit or knock-off will do very quickly). When they see that counterfeit product selling, they start promoting the heck out of it by putting it at the top of search listings. Most consumers do not realize the extent to which these activities have created “buyer beware” products flooding on these sites. It’s not just counterfeiters getting heavy promotion: it’s damaged and returned inventory, knock-offs, and last year’s models masquerading as new.

In the meantime, we and our more than 2,000 Makers and our three million-strong community are doing our best to create a community with mutual trust and responsibility. We can be David against those Goliaths and their criminal suppliers. It is part of what we call Citizen Commerce ™.

What can you do to not support counterfeits and knock-offs? Some additional reading to help us all take action:

Consumer Reports: How to spot counterfeits 

MarketWatch: How to avoid buying fake products online 

Consumer Reports: Counterfeit goods: How to tell the real from the rip-off 

Business Insider: A Mind-Blowing Number Of Counterfeit Goods Come From China Report a Retailer selling fakes to U.S. Government Agencies

BuzzFeed expose: Say No to the Dress

P.S.  Here are important updates to this post:

April  2016. Daimler AG filed a lawsuit against Amazon on Monday April 14 for trademark infringement, design patent infringement, false advertising, unfair competition, and other complaints for allegedly selling replica Mercedes wheels that were not authorized or sold by Daimler.

The case is interesting because it claims not only were the alleged knockoffs available for sale on Amazon, but were actually sold by Amazon itself. GeekWire says the case could serve as a new test of Amazon’s liability for counterfeit goods sold on its site, calling it “an issue with wide-ranging financial and legal implications for the company.”

July 2016.  Birkenstock quit Amazon, citing unacceptable business practices by counterfeiters and Amazon’s unwillingness to correct the problem and associated brand damage.

4 Responses to “Counterfeits: the underbelly of Amazon and eBay”

  1. Pedasi Pundit

    Living in Panama we see many “Look Alikes” not only in the product but in the packaging. Panama is flooded with cheap knock offs and because incomes are low, the fake products at cheap prices are purchased.

  2. Nick Harris (@TheNicholaus)

    I manufacture and sell products on Amazon too, and dealing with counterfeiters has become a major headache in the last six months. Despite conducting “test buys” showing clear differences between my listings what the counterfeiters send, and filing dozens of reports with Amazon Seller Performance, Amazon continues to take no action whatsoever. I get the strong sense that they do not want to crack down on counterfeits because doing so would cause them to lose billions in sales.

  3. julespieri

    Nick, I am sorry to hear you corroborate the experience of so many independent companies. I bet you would like to see that class action suit initiated. It drives me crazy to see such a big and powerful retailer taking a free ride on your hard work.


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