How Amazon’s Problem With Cheap Knockoffs Got So Bad.
Between counterfeit items and subverted customer reviews, that Amazon Prime membership could be a bit less worthwhile in coming years. It’s all about trust, and it’s getting to the point you can’t trust Amazon anymore.
But the problem has become a lot worse. According to the Organization of Economic Cooperation and Development, counterfeits were an almost $500 billion business in 2013. It’s an issue for eBay, and such a problem at Alibaba, that the U.S. Office of the Trade Representative just put the Chinese retail giant on its “Notorious Markets List,” citing the “challenges” trademark and copyright–holders face in enforcing their rights.
But here in the United States, Amazon, the nation’s largest online retailer, gets the most attention for the problem. The company’s current woes seem to have originated in a 2014 decision by management to allow Chinese manufacturers to directly list their wares on Amazon Marketplace, where third-party sellers are responsible for about 40 percent of the company’s sales. What happened next isn’t shocking: According to the U.S. Chamber of Commerce, 72 percent of counterfeits confiscated by law enforcement authorities in the United States, European Union, and Japan between 2010 and 2014 originated in China.
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And indeed, the number of counterfeits and knockoffs available for sale on Amazon surged. No product appeared immune. World-famous brands complained. So did craftsmen. Christopher Beikmann, a New Mexico–based designer who markets iPhone covers decorated with his art, told me that at about that time he began to see products that looked just like his $39.95 phone cases going for as low as $7.95. His sales plunged. “I literally went from doing six figures a year in sales to doing a third of that,” he said.