Congratulations. You’ve created a great selling product. It’s a huge success. You’re adding more inventory and starting to think about launching your next product and then you notice your competition doesn’t just look similar, it’s the exact same thing.
To make matters even worse, it’s being sold on your listing. Someone has taken your product, and made a fake. Now they’re selling it to your customers who have no clue which product is the right one.
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Show Notes: Counterfeit Products
Congratulations. You’ve created a great selling product. It’s a huge success. You’re adding more inventory and starting to think about launching your next product and then you notice your competition doesn’t just look similar, it’s the exact same thing. To make matters even worse, it’s being sold on your listing. Someone has taken your product, and made a fake. Now they’re selling it to your customers who have no clue which product is the right one.
Counterfeit products is a big problem and that’s what we’re going to be talking about in this Episode with Peter Kearns.
“I ran a team recruiting new sellers into Consumables Categories which is Health & Personal Care, Beauty, Baby, Grocery, Personal Care Appliances,” Peter says.
Peter primarily focused on finding gaps in the Amazon Catalogue then finding sellers to fill it.
Now he runs a company consulting third-party sellers called eGrowth Partners. They can be found at www.egrowthpartners.com
Counterfeit products were an issue Peter dealt with trying to recruit sellers to Amazon.
“It’s one of the big reasons why a lot of the brands that when I was with Amazon would not work with us because there was no way to prevent those other types of products from surfacing right next to theirs,” Peter says.
Just recently, some big name companies made news because of the counterfeit problems on Amazon. Sandal company Birkenstock publicly withdrew from selling on Amazon last Fall because of counterfeit products. Meanwhile Apple sued a third party seller out of New York for selling fake iPhone power adapters and charging cables. In the lawsuit, Apple says the counterfeits have “the potential to overheat, catch fire and deliver a deadly shock to consumers.”
Yes, counterfeit products are a big problem. In the worst case scenarios the fakes impact customer safety. At the very least it impacts customer satisfaction.
Selling fake products is against the law, if you’re caught doing it in the United States you could face up to $5-million in fines and prison time with a potential for 20 years to life.
But what if the counterfeiter isn’t in the United States? That adds a whole new complicated level to counterfeit products.
According to the Organisation for Economic Co-Operation and Development, 63% of knock offs in the world originate in China. Now that seems like a lot from China, but you should also know China is the largest manufacturer in the world, so it makes sense that they would also have a large percentage of counterfeits made there. 20 percent of the knock offs created in the entire world, not just China, end up being sold in the United States. Keep in mind, not all of those are sold on Amazon but Amazon and other e-commerce marketplaces have big problems when it comes to preventing counterfeit sales.
“Amazon and eBay have problems with these third party sellers coming on and lighting up storefronts, selling counterfeit merchandise, Amazon tries to shut them down,” says Peter, “It’s kind of this amazing game of whack a mole.”
It’s not just a problem for big name brands. If you have a product that’s selling well, someone has noticed and will start copying it. Peter says the way sponsored products is structured right now can easily help the counterfeiters steal your sales and customers even faster.
“Sponsored Products has been a really great way for businesses to launch a new product on Amazon and start to sell it and drive traffic and get that conversion happening quicker,” says Peter, “ But Sponsored Products also allows the overseas or competitives or counterfeits to actually serve their product right next to yours, I hope that there’s something they’re doing in terms of addressing that.”
Alright, so what is Amazon doing about the problems? Well, in November Amazon sued several sellers that were selling fake goods on the marketplace and right now, we know counterfeit products will be a big focus in 2017.
“Amazon’s going to work really hard to remove those bad apples, those bad sellers from the marketplace because it negatively impacts the customer experience,” Peter says.
Let’s say you’ve created your own original product. As an example, let’s say it’s a computer bag.
You’ve spent months doing research and design to find the right type of fabric, strap length and specially created inside pockets to provide your customers a high end product. From the very beginning there’s a couple things you can and should do. First, make sure your product is Brand Registered.
“You need to make sure that you’re going through all the Brand Registry processes on Amazon and doing the due diligence of making sure that you’re taking advantage of what limited tools are available right now,” Peter says.
The next thing you should do is make sure you go to the greatest length possible to protect your product under law.
“Go through the process of getting the patents, the trademarks, the copyright those are really important,” Peter says.
It may seem like a lot of work but you want to have all the paperwork ready to prove that your product is the real product. It will help you in the long run against counterfeiters. Peter tells us Amazon is planning to offer more help for sellers when it comes to getting patents.
“Supposedly there may be tools coming where Amazon’s even going to help facilitate getting patents like that,” says Peter, “Where you could go through some sort of tool through Seller Central.”
Alright let’s go back to our computer bag example. You have your computer bag brand registered and you’ve also done all the work for any copyright, trademark, and patents that might apply to your product. Then a counterfeit does pop up. What do you do? First off, file a complaint with Amazon. You can email them at firstname.lastname@example.org. That email is sent to the Amazon Legal Department. You should note this step is only for notifying Amazon that your copyrighted material has been infringed.
The next step is frustrating and can get expensive depending on how many counterfeiters of your product are out there. Amazon wants you to order the product from the counterfeiters and then submit photos of the counterfeit product. Amazon will remove the listing or suspend the seller depending on the situation. This can get really tricky though, because often the sellers just open a different seller account. Then you have to do the process all over again.
Keep in mind, if you don’t own the intellectual property rights to a product but maybe you’re an exclusive seller of the product then another seller starts selling it, you can not claim that it’s a counterfeit.
Sellers also want to make sure to follow Amazon’s Code of Conduct when it comes to dealing with counterfeit problems. Sellers also can’t put anything on their listings informing customers about the fake products.
“The only thing that can be in a detail page is information that’s specific to the product being sold,” Peter says.
I’ve seen this on several accounts. If this is on your any of your product listings, Peter tells us it can get you shut down for violating Amazon’s Terms of Service.
“You want to be really careful that you’re not trying to circumvent any of these kinds of Terms of Service that you’ve agreed to when you signed up so you don’t get your account in trouble even though you’re just trying to enforce against the counterfeit seller,” Peter says.
Peter is optimistic that announcements in 2017 will help immensely when it comes to counterfeits.
“The good thing is Amazon recognizes what’s going on, they’re going after bad sellers – they’re going after bad buyers,” says Peter, “It is gonna change, just not as quickly as some people would like I think.”