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Why Amazon Has So Many Counterfeit Goods

Amazon is making the same mistakes in beauty that it has with fashion: it doesn’t innovate and it doesn’t take advantage of its strengths. Haus Laboratories is a half-hearted attempt at capturing the superstar status of Rihanna’s Fenty line, Amazon’s professional beauty supply store is a bit amateur, and Belei is a more ordinary The Ordinary.

Amazon squandered what was once its greatest strength in beauty: being one of the few sources where people outside of Korea could buy K-beauty. Instead of partnering for American exclusives or playing up its products, it ceded the market to specialty shops like Peach and Lily and Soko Glam.

The online beauty market is littered with failures. Birchbox is struggling to get beyond the subscription box, Gloss.com was long ago bought by Estée Lauder, Beauty.com was bought and subsumed into Walgreens, Eve.com is long gone and its founder has moved on, and Beautyjungle.com is grown over. Amazon is still unbeatable in retail, but when it comes to beauty, its future looks untamed and uncertain.

Editor’s Note: This story was updated on 9/18 with comment from Amazon.

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Spot The Fake Reviews

Sometimes, the telltale sign of a fake a product is a fake review. Just because an item has five-star ratings doesn’t mean it’s authentic. On the contrary, a high number of positive reviews can be a red flag.

Don’t be fooled by a “verified purchased” tag on Amazon while it helps establish credibility, sellerscheat the system by hiring businesses to create dummy accounts, purchase products, and write a stellar review.

You can use online tools to help determine the legitimacy of a review, such asFakespot, which provides a score regarding the likelihood of fake reviews for a product.

But, you don’t always need the help of an online service there are a few warning signs you can spot with your own eye.

Wirecutter points out that a lot of positive reviews within a few days can indicate people pushed for reviews to happen on a timeline. Poor spelling and grammar, similarly staged user photos, and similar wording can also be warning signs, as can certain words and phrases think high usage of first-person singular, verbs, and adverbs as well as specifics, like references to people or exact details.

But Simply Removing A Counterfeiter Won’t Prevent Bad Actors From Taking Over The Anchors Listing Again Or Other Listings In The Future

Hopkins said Amazon could easily implement a safeguard to prevent this kind of fraud. The company already prevents third-party sellers from listing products under its own Amazon Basics brand. He suggested that if Amazon gave sellers an option to indicate when their branded content is not sold wholesale, then it would be straightforward to block anyone trying to sell counterfeits of these products.

Through the Fulfillment by Amazon program, or FBA, sellers can send all of their inventory to Amazons warehouses, where Amazon takes care of the storing, packing, and shipping of each order. Its incredibly easy for anyone to sign up for an Amazon seller account and begin selling products, and especially counterfeit products, through FBA.

Amazons marketplace, which gives sellers access to its millions of customers with credit cards in hand, is a double-edged sword for many sellers: We do a ton of business on Amazon. Its a gift and a curse. Its a massive platform, and you have to be there its where youre going to get a ton of volume in sales, Hopkins said.

He continued, I have Amazon Prime, and Im a big Amazon fan, but theres this messed up side of Amazon, on the seller side, thats, like, insane.

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How To Protect Yourself From Amazon Counterfeits

According to The Counterfeit Report, Apple reported that 90% of Apple products it purchased from Amazon Direct were counterfeit. Also, according to the Recording Industry Association of America, close to 25% of music CDs they purchased from Amazon were counterfeit.

Bottom-line: Amazon has a problem. And while theyre doing a lot to get rid of counterfeits, theres still stuff us shoppers can do to protect ourselves.

First, its important to understand the three ways Amazon currently sells stuff:

  • Amazon Direct: This is the stuff that is sold and shipped directly by Amazon. Much less likely to run into counterfeit items when youre buying directly from Amazon.
  • Amazon Marketplace: This is the stuff thats sold via the Amazon website, yet its shipped by via a 3rd party seller. These products never enter an Amazon warehouse and are never inspected for authenticity. Buyer beware as a big percentage of Amazon counterfeits are sold this way.
  • Amazon Fulfillment: Lastly, this is the stuff that is stored and shipped in an Amazon warehouse but is owned by a 3rd party seller. Because Amazon has more control, they can weed out counterfeits when they enter their warehouse. Still, be sure to read product reviews and check out counterfeit sites if your gut tells you something fishy might be up.
  • The single best way to protect yourself from counterfeits is to only buy items that are sold and shipped directly by Amazon.

    How Do You Know If Something Is Real On Amazon

    Does Amazon Sell Fake Products? You better believe it!

    In order to analyze whether a counterfeit product is real, look at what the seller says about it in a review posted alongside the images of the product. An overly garbled or badly photographed item can cause you to lose track of a certain product. Look for misspelled or off-color language in the description or photos.

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    Why Is It So Easy To Sell Fake Goods

    When you scan through products on Amazon, the majority are not sold by Amazon, but by third-party sellers. Historically, Amazon has not carefully policed the authenticity of the products sold by these merchants. Amazon does not do audits of distributors that claim to be selling original products, Handfield says. It has relied on companies and consumers to report counterfeit products to shut down the seller. But then itll just pop up somewhere else.

    Some brands have pushed back against Amazon for not tackling the counterfeiting problem more aggressively. In 2016, Birkenstocks CEO took the dramatic step of pulling products off Amazon, saying that Amazon was unwilling to help the brand identify and fight those making fake versions of its shoes. In 2019, Nike said it would also stop selling products directly on Amazon, partly because of the proliferation of counterfeits on the site. Both Birkenstock and Nike declined to comment on whether they might reconsider partnering with Amazon now that it is beefing up its anti-counterfeiting measures.

    In June of last year, Amazon established a Counterfeit Crimes Unit made up of former federal prosecutors and data analysts to tackle the problem. In last weeks report, Amazon said it has spent a total of more than $700 million and hired more than 10,000 people to protect the site from fraud.

    Selling On Amazon: Common Challenges

    So now you know anyone can get started selling on Amazon, which can lead to some issues with product quality.

    On the other hand, if you follow the rules, you can easily make a full-time e-commerce business.

    But before you dive in, below are some challenges youll run into:

    • Expensive importation costs
    • Length of time to establish a good relationship with suppliers,
    • Getting products through customs and into the Amazon market place.

    It can happen, but it takes patience and time.

    This is also assuming you have a hot product that will sell fast.

    Personally, for me, I wanted to work online, but didnt want the stress of

    • Dealing with customs
    • Buying in large quantities of inventory
    • Paying storage fees
    • And constant quality control checks.

    But I wanted to be able to work online.

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    Look Into Shipping Logistics

    Another red flag waves in the form ofextra-long ship times, especially on Amazon where third-party sellers don’t see their sales in their bank accounts for fourteen days.

    A new vendor with fake merchandise has to maintain their account for at least two weeks, so they’ll schedule shipping time for longer than the Amazon processing time to prevent consumer complaints.

    Also look from where the product is shipping. “I don’t want to pick on China, but that’s where most of the counterfeits are coming from,” James Thomson, a former Amazon executive, told .

    Why The Chinese Have An Advantage

    Accused of Selling FAKE Items on Amazon? What To Do if You Receive a Counterfeit Product Complaint

    Now having a little extra competition on Amazon is to be expected but whats frustrating is that the Chinese simply dont play by the rules.

    After all, when you are thousands of miles of away, its near impossible to force Chinese sellers to obey the law.

    For example, the Chinese repeatedly sell counterfeit merchandise on Amazon and get away with it. Amazon doesnt really care as long as they are making a profit and you really have to hound Amazon repeatedly before they take any action.

    In addition, there are many companies in China that sell both positive and negative reviews.

    If youve sold on Amazon for any length of time, youve probably been the target of a malicious negative review attack.

    Youve also probably witnessed brand new listings accumulate hundreds of 5 star reviews within a week of launch. Well now you know how:)

    Often times, these Chinese sellers have hundreds of accounts. They dont care if they get banned because they always have a backup. And as a result, they can violate Amazons terms of service with impunity.

    If ignoring all of the rules wasnt bad enough, both the Chinese and US governments are facilitating these advantages.

    First off, the Chinese are exempt from taxes. Now I shouldnt say that they are exempt but many Chinese simply dont pay. After all when you live in China, whats the worst thing that can happen to you?

    The Chinese also get heavily discounted shipping.

    This is huge!

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    If A Price Seems Too Good To Be True It Probably Is

    Just like pretty much any exchange market for the last few thousand years, hucksters on Amazon know that the best way to catch the eye of buyers is with a good price. Amazon often offers items for sale at a significant discount over other vendors thanks to bulk purchasing and efficient distributing, but if you see something for sale from a non-Amazon vendor thats marked at half off the regular price or more, be extra careful. If its combined with one or more of the red flags elsewhere on this list, its not worth the risk.

    What Can I Do If My Amazon Purchase Is A Fake

    If customers find that the product they purchased from Amazon is fake, they can contact Amazon customer service and request a full refund for the product.

    Amazon guarantees a refund for any product that arrives differently than its advertised.

    Therefore, customers who have received a counterfeit item that was advertised as being legitimate will automatically be offered a refund.

    Customers can obtain a refund by filing an A to Z Guarantee, which is a recommended course of action if they are unable to obtain a refund from the seller directly.

    In addition to being refunded, customers can take further action by contacting the brand the Amazon seller is posing as, which will enable the brand to track down the seller and shut down their operations.

    Finally, customers are recommended to contact their credit card company and request a chargeback if they are not approved for a refund.

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    The Game Has Changed And You Must Adapt

    The reason most people fail at ecommerce is because they are using old tactics in a new era. In this day age, you simply can not throw something up on Amazon and expect it to sell well.

    You need to either have a strong value proposition or the best price and preferably both.

    Heres a quick example to illustrate my point.

    Recently I did a search for black bags on Amazon. Now assuming you know nothing about handbags, which one of these would you buy?

    When the brand names are unknown, most shoppers will gravitate to the listing with the lowest price or the most reviews. If your product is not one or the other, then you wont make many sales.

    Now lets say that competing on price is not an option for you. How can you possibly compete with a Chinese manufacturer who can undercut you at will?

    Establishing A Recognizable Brand Is Now A Must

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    First off, I want to clarify the definition of having a brand.

    A lot of Amazon sellers out there consider themselves a brand if they design some clever packaging and slap their logo onto the box. Well guess what?

    Just because you have a logo does NOT mean you have a brand.

    After all, a brand means absolutely nothing unless its recognizable. Referring to the earlier handbag example, technically all of those products have a brand. But the brand is worthless unless it carries any weight.

    If you want to measure how strong your brand is, you can conduct this quick 2 minute exercise.

    Go into Google Analytics and find out how much direct traffic you are getting for your website.

    Here are some statistics for my online store at BumblebeeLinens.com

    • Direct traffic went up 17.25% in 2017
    • Direct traffic is up over 67% in the past 3 years

    Now youll notice that you cant perform this exercise at all unless you have your own website because Amazon hides every statistic from your view.

    And this is important because you can not establish a strong !

    When people shop on Amazon, they think that Amazon is the brand owner and not you. As a result, if you are only selling your items on Amazon, you will forever be a victim to price wars and Chinese competition knocking off your products.

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    Complaints About Fakes Are On The Rise

    The sale of counterfeit items now represents 3.3 percent of world trade, according to the Organisation for Economic Co-operation and Development, an international group with 36 member countries that provides analysis and policy recommendations. The value of seized goods in the US was almost $1.4 billion in 2018, according to US Customs and Border Protection. Worldwide, there have been instances of fake chargers causing electrocution deaths , phony cosmetics making a buyers face swell up, and pet supplements sickening dogs. Immigration and Customs Enforcement and other law enforcement agencies have reported finding carcinogens, bacteria, and waste from both humans and rodents in counterfeit cosmetics. Fake chargers and cheaply-made lithium ion batteries can damage your electronics and even catch fire.

    A 2018 GAO report on counterfeits recounts that of 47 products agency employees purchased from third-party sellers with good ratings, 20 were fake, as confirmed by the intellectual property rights holders. One hundred percent of Nike Air Jordans were real. One hundred percent of Urban Decay eye primer makeup tubes were fake.

    Its impossible for me to accurately determine which products are counterfeit on Amazon and which arent, Noonan emphasizes. And his analysis doesnt take into account the contextual use of the words . But his finding does provide a heuristic for whether or not discussions using these keywords have increased over the years.1

    No Place To Hide Anymore

    It’s a matter Amazon has been able to sidestep, until early this year. In its full-year report for 2018, filed with the SEC in February, the e-commerce giant finally conceded: “We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies. … To the extent any of this occurs, it could harm our business or damage our reputation and we could face civil or criminal liability for unlawful activities by our sellers.”

    It’s relatively boilerplate language. But it’s language Amazon had no interest in adding to its filing before now, even though counterfeits have been a problem for years.

    It’s also a concern that has garnered interest, or at least lip service, from the leader of the free world. In April of this year President Donald Trump signed a memo directing a more concerted effort to quell the sale of counterfeit goods in the U.S. While his chief concern was protecting the intellectual property of the nation’s technology players, the move was a victory for all counterfeiting victims. It’s an effort that will also, at least indirectly, put more pressure on Amazon.

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    Increase Sales Protect Brand

    As Amazon continues to make some upgrades to their system and services, their fight against Amazon counterfeiting continues. The eCommerce platform even allocated over $500 million to fight fraud and abuse. This is geared towards the protection of their customers worldwide.

    Participating with Amazons anti-counterfeiting services will help secure your brand and its potential sales. Apart from that, taking advantage of Amazon selling tools such as and feedback tools will also help engage customers and increase profitability.

    Shop By Amazons Specialized Tags

    Distributors Selling Counterfeit Products to Amazon Sellers & Suspected IP Complaints

    Another way to eliminate the chance of counterfeit products is looking for Amazons Luxury Beauty department, where you can find products by brands like Sunday Riley, Boscia, and Elemis. This is a way to find skin-care brands that name Amazon as an authorized retailer and are given added protection for their customers. Because we are listed on Amazon Luxury, Amazon is able to assist with eliminating third-party sellers, a rep from Boscia said. Another category that can help you locate authentic products is under Amazons Professional Beauty tag.

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