Zero tolerance: Is Amazon’s new counterfeit protection too little, too late?

Amazon Project Zero promises to dramatically improve the power brands have over counterfeit products on the platform – but experts have their doubts

Written by Rhys Thomas

Posted 06.03.2019 | Retail

Zero tolerance: Is Amazon’s new counterfeit protection too little, too late? thumbnail

There’s more than one way to skin a copycat, a fact that Amazon hopes to prove through the new anti-counterfeit measure it’s dubbed Amazon Project Zero.

The American retail giant has, like Google, Facebook and Xerox before the dot-com era, become a verb, a byword for shopping. From the sofa or the train, consumers can simply Amazon everything from phone chargers to live ladybirds. But with such ubiquity and scale comes an inevitable faction of black-market traders who fly under the radar, willing to sell consumers a simulacrum of the real thing for a fraction of the price.

Amazon’s seemingly laissez-faire attitude towards these knock-off merchants has been persistently maddening for brands, who for years have been forced to expend their own resources to stamp them out. But with the introduction of Project Zero, Amazon has promised this will change.

“Our aim is that customers always receive authentic goods,” the retail giant says, and it’s doing what it does best: employing technology in the place of raw manpower to help root out imitation products and remove them from sale on the platform.

Breaking down Amazon Project Zero

Amazon Project Zero aims to tackle counterfeiters through a three-pronged approach: automated software scanning, self-service removal, and product serialisation. Here’s how each step works:

1 The first step is automation. Amazon’s data-driven business model should, in theory, make this system an effective tool against disreputable sellers and imitation goods. Brands can provide logos, trademarks and other identifying data points to Amazon, which will then use software to scan more than 5 billion product listings each day. Any found in breach will be flagged and subsequently removed.

2 Brands will also be able to employ their own manpower to track down and remove counterfeit goods from sale. Previously they have been able to flag offenders and wait for Amazon’s ruling; now they have the power to identify and take down illegitimate listings themselves. Giving brands greater control over illicit third-party sellers aims to make stamping out copycat products a simpler, speedier process to mitigate further damage.

3 Serialisation will see brands and Amazon work in tandem. Codes for each product are generated by Amazon, and these can then be implemented on the items during the manufacturing process. Amazon will then scan the code when processing an order to verify its authenticity. Think of it as a self-scan airline ticket, with Amazon acting as border control should a copycat try to sneak through under false pretenses.

The first companies to use Amazon Project Zero have praised it as a step in the right direction, with brands such as American bag brand Vera Bradley calling the initiative a “significant development” in the fight against fakes. But is it enough?

Counterfeiters have long been the scourge of the toy trade, a fact only exacerbated by the wild west mentality that has until recent years defined online retail. Mintel’s latest report found that nine in 10 UK shoppers regularly use Amazon, 20 per cent of which buy or have bought toys, but whether those are legitimate products or disreputable look-alikes remains to be seen.

Missed revenues are, of course, a chief concern for toy suppliers. But the issue goes beyond immediate losses. Low-quality products masquerading as the real thing can disappoint consumers and damage the brand immeasurably. This can have far-reaching implications and turn life-long customers off, often with the added effect of drawing negative reviews or leading consumers to publicly admonish brands on social media. In toys, there of course are concerns over safety for children – just recently retailers were left scrambling to withdraw toxic slimes from their shelves and online after they were found to contain dangerous levels of chemicals.

In the US, the Toy Association has been working hard to tackle the issue head on. Just this week, the body’s VP of Federal Government Affairs, Rebecca Mond, spoke in front of government agencies responsible for enforcing the US toy industry’s efforts against knock offs, and praised their support. But one of the key sticking points continues to be the disproportionate burden placed on individual brands to protect their IP on online marketplaces, even though Amazon is “far better placed” to take action.

“The toy industry has been battling the problem of counterfeit products on a range of online marketplaces for quite some time,” Steve Pasierb, President and CEO of the US Toy Association tells TNP.MEDIA.

“Amazon has tried to eliminate the problem before and we do sincerely hope that this new initiative will help. The obvious proof will be in the long-term results as gauged by our member companies and their consumers. If Amazon can eradicate the unscrupulous merchandise The Toy Association, our fellow trade associations, our collective members, and their invaluable brands would definitely see it as a win.

“The bottom line remains that the burden still rests upon brands to enforce against criminals profiting from counterfeits. Amazon is far better placed to be proactive against these counterfeiters than any single brand company could ever be – especially given that most toy companies are considered small businesses.”

Steve Pasierb

John Ryan, retail guru and Stores Editor at Retail Week, agrees that all but the biggest brands will lose out if they attempt to tackle counterfeiters on their own. “First off, counterfeit goods have always been around and they always be. Police it all you like; you are wasting you time,” he says. “They will of course have some sort of implication at the bottom end of your market, but in many ways, the threat is more perceived than real. Brands stand to do just as well not worrying about it and instead focusing on the parts of the business that will make a difference.

The smart companies, whether in toys or luxury or other goods, John says, understand that while a certain percentage of sales will be lost to fakes, resources are better spent on making the shopping experience part of the draw rather than chasing down imitators.

He points to Chanel handbags and Mont Blanc pens – “how many times have you seen a metal ballpoint with white stuff dusted on the cap to imitate the real thing?” – as good examples. Just by picking one of these up you can tell they’re fake from the overall quality, John argues. At that point, the consumer has already weighed the benefits in their mind: either they want the real thing and are going to pay for it, or they want the veneer and the lower price tag.

“The reality is counterfeiters are never going to disappear. Protecting IP is one thing – and an important thing – but chasing them down at bricks-and-mortar or online retail will become an endless task. Always you are better off concentrating on improving the retail environments that sell your product.”

The truth is, some consumers want a fake.

Steve Pasierb and the US Toy Association remain unconvinced that Project Zero is the silver bullet Amazon hopes it will be; in fact they are worried the initiative could raise fresh issues for toymakers.

“We remain concerned this program continues to leave the ‘transparency’ initiative in place, which gives Amazon unprecedented access to businesses’ confidential information,” he adds. “While this new bandage is heartening, we will continue to work with Amazon and other ecommerce sites to go deeper and address the underlying wound.”

Top image: Jordan Stead
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