Counterfeits Proliferate On Marketplaces As Online Shopping Takes Root

An Organization for Economic Cooperation and Development (OECD) report indicates that the trade in pirated and counterfeit goods has almost doubled between the years 2008 and 2013. In that period the trade in these goods has ballooned from $250 billion to $461 billion. Estimates from the OECD indicate that over 2.5% of the global trade is in counterfeits.

“[The counterfeits includes] cheap smartphone batteries and chargers that could overheat or catch fire; substandard appliances … knockoff brand-name prescription drugs like Cialis and Tamiflu, and substandard auto parts,” said the International Anti-Counterfeiting Coalition president, Bob Barcheisi, in an interview with Consumer Reports.

Source of counterfeits

The rapid growth in the trade counterfeits coincides with the rise of e-commerce with eBay and Amazon being among the beneficiaries. Per OECD, Hong Kong and China are the source countries for about 60% of all the counterfeit products in the world.

Amazon’s recruitment of Chinese merchants on a big scale started two years ago when the online retail giant streamlined a way for Chinese entrepreneurs to sell their products to customers located in Europe, Canada and the United States. In 2015 when Amazon started recruiting Chinese merchants, profits of the online retailer grew by 20%. Within a short time Amazon emerged as the biggest cross-border online retail marketplace for sellers from China.

Per Payoneer, a payments firm, about 62% of the online vendors in China now sell on Amazon. About 91% of these vendors have the United States as their target market. Research conducted by Marketplace Pulse shows that sellers from China constitute roughly a quarter of all the vendors who have a presence on Amazon USA. On Amazon’s global marketplace they are also about 25% of all sellers.

Open marketplaces

While all retailers encounter the problem of counterfeits, Amazon and eBay are especially vulnerable since they both possess open marketplaces. Some of the steps Amazon is taking to weed out fakes includes partnering with Brand Registry. eBay on the other hand also recently unveiled eBay Authenticate which is an authentication service aimed at assisting shoppers when they are buying luxury handbags.

The service will allow sellers to list luxury wallets and handbags from about 12 luxury brands which include Valentino, Louis Vuitton, Hermes, Gucci, Goyard, Fendi, Christian Dior, Chanel, Celine, Burberry and Balenciaga. Wallets and bags which will be sold via the service will have been verified and in the event that they turn out to be counterfeits eBay is offering a 200% money-back guarantee.

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