Amazon Seller Counterfeit War

PODCAST SHOW NOTES - Counterfeit Crackdown on Amazon, eBay, and More...

If you sell on Amazon with any degree of success you have experienced other sellers "hijacking" your listing. There are legitimate times where multiple sellers sell the same product, but if you are the inventor, brand owner, and single source for your own product line the legitimate reasons goes down by a factor of 100.

Yes, for the less experienced sellers it is important to understand that people can purchase from you and resell your product. The so called "FIRST SALE DOCTRINE" allows anyone who buys your product to resell it without threat of copyright or other IP infringement.

This applies to products you purchase too. So the retail arbitrage business is something that can not be stopped as long as there is an economic incentive AND as long as the goods being sold are authentic.

But more importantly brand owners who do tons of giveaways and then are mad that those people who got the product for FREE are reselling it on their listing are experiencing an unintended consequence. Less reputable platforms that help drive brand awareness through discounts or rebates are driving good sellers crazy when they promote their brand only to have the lucky recipients of deeply discounted goods and even FREE products show up on Amazon and sell against then with, at times, ZERO cost of goods. 

That's hard to compete with, but it is manageable to avoid those types of platforms or tactics that lead to the problem. And more importantly these are problems the seller created for themselves.

A customer who purchased the product can also make a legitimate sale as long as they list the item properly. For example if they have opened it, they should not list it as NEW. Amazon warehouse deals can also list items that were lost and reimbursed to sellers, but later they were found, that is a legitimate type of listing that a seller may not like, but there is no recourse.

The more disturbing issue is when you have a listing and sellers jump on your listing and offer to sell your brand and your product, despite the fact that it is NOT the same product.

Those sellers are actively selling counterfeit products and engaging in fraud and deception. The problem is that the online platforms, up until now, have had little incentive to crackdown on those behaviors. Unlike Louis Vuitton or Cartier small brands don't have a budget to threaten Amazon or the sellers, instead we try to rely on brand registry which is purported to help resolve hijacking, but in reality it does very little to stop hijackers.
 
Part of the problem is that platforms like Amazon make it too easy for bad actors to spin up new seller accounts. They knowingly engage in black hat tactics using these disposable accounts without regard for the law or for consequences because they are largely based in China.

This allows competitors to have an unfair advantage over sellers who are compliant with the law and those sellers who actually pay taxes in the country they are selling in.

Not only do foreign sellers game the online platforms to their own advantage, often using stolen customer identities, credit cards, and other information, they do so with impunity. There is little chance that the long arm of the US law (or other western marketplaces) will reach across the ocean to try and find the illicit seller who has hundreds of Amazon seller accounts at a minimum.

It does add insult to injury that the large volume of sales these sellers make also operate essentially tax free. Most do not comply with any local sales tax, and with the marketplace tax laws now in effect, that issue is going to be mostly resolve for all sellers so that is a moot point at this stage. But they don't pay federal taxes either. Try competing with companies that instantly have a 40%+ edge on your company because they pay no income taxes.

Project ZERO from Amazon.com has also promised a better result, but in practice there are still too many gaps. Many sellers believe Amazon is complicit with the black hat sellers because they make money on the sale regardless of what kind of seller makes the sale.
Amazon does not agree with that opinion and shares many data points that are meant to illustrate they are fighting the problem and to some extent that is true.

The core problem is the fact that Amazon allows much lower information from a foreign seller to register a seller account on the platform than a seller with a proper US legal entity. The compliance for one group of sellers should be consistent with other groups. It's only fair to have a level playing field. Without Amazon taking a firm stand on this issue, they will continue to appear to be part of the problem instead of being part of the solution.

For more details including the TOP 10 highlights from the DHS report goto

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