Amazon Counterfeiting Explained

by Trademark Garden | April 23, 2018

Probably the largest threat facing any Amazon seller is the looming specter of the counterfeiter. Just imagine, your brand is finally taking off, positive reviews begin flowing in, and your sales are up month after month. Then, as if out of nowhere, you notice a 1-star review, and then another, and then another, and as the negative reviews roll in, your sales drop off. What’s more, the disappointed buyers are complaining of faults that you know that you products do not have, it’s like they are unhappy with completely different products from yours, and yet here are the negative reviews, on your product listing. The reason, of course, is that they are unhappy with completely different products from yours, they are unhappy with counterfeit, or fake, products that scammers have comingled with yours by abusing Amazon’s fulfillment system.

When selling on Amazon, a seller has two general options:

counterfeit stamp
  • Self-fulfillment:
    The seller ships directly to the buyer. The invoice comes directly from the seller, not from Amazon, and the seller doesn’t get a “Prime” badge.
  • Fulfilled by Amazon (“FBA”):
    The seller ships to an Amazon warehouse, and Amazon fulfills the orders. The order page will say “Fulfilled by Amazon” and the seller gets a “Prime” badge.
amazon fullfilment truck

Most established and higher volume sellers practically have to choose the FBA option, as it has Amazon deal with shipping and storage of merchandise, which is impractical for most Amazon merchants. In addition, many buyers see FBA as the more “professional” and safe option, as buyers often mistakenly believe that Amazon screens products that are fulfilled by their system. Unfortunately, not only is this not the case, but it is the very FBA system that leads to counterfeiting and hijacking of brands. The problem is that Amazon comingles goods of different sellers in their warehouses as long as they all claim a common ASIN (Amazon Standard Identification Number) and allows different sellers to “list against” sellers of a certain product. For example, say that several sellers are all selling the same set of Bose headphones. Amazon will have a single ASIN assigned to that product, as well as a single listing. One seller will have the “Buy Box” and be the “default” seller for the product, while other sellers will be listed as options below the Buy Box:

It’s important to realize, however, that the stocks of all of these sellers stock in a common pool. When a customer orders the headphones, Amazon will not check that they are getting headphones that are from the stock of the Buy Box seller, they will just send them some set of headphones from the common ASIN pool, and record that the Buy Box seller sold a unit, but the actual headphones might come from stock provided by another seller, and that seller might be providing counterfeit goods. The good news is that it is possible for a seller to opt out of comingling, but it must be done before any goods are shipped to Amazon as once comingled, the goods cannot be separated out again. To do so, go to: Fulfillment by Amazon profile settings → FBA Product Barcode Preference → Use the manufacturer barcode to track inventory. That said, comingling alone is not the greatest threat that counterfeiters pose, it gets worse.

Amazon Counterfeit Case Study

Say Honest Abe has his own private label called Abe’s Abacuses. Abe has been selling his Abe’s Abacuses for a while now, and has a series of good reviews. Abe is the only seller of Abe’s Abacuses, and, of course, has the Buy Box. Now say Crooked Carl comes along, and presents himself as another seller of Abe’s Abacuses. In reality, Carl is selling counterfeit products, but he is listing them at a cheaper price. Carl can now not only have his counterfeit products shipped to Abe’s customers, he can even win the Buy Box, becoming the “default” seller of Abe’s Abacuses! In either case, all of Carl’s negative reviews would show up on Abe’s listing page, and kill Abe’s business. Meanwhile Carl would take the money that he made off of hijacking Abe’s listing, and move on. As for Abe, even if he is eventually able to get Carl’s hijack removed, the damage has been done and the Abe’s Abacuses listing is now hobbled by 1-star reviews claiming that the products are shoddy, poorly constructed, or even dangerous.

This more insidious form of counterfeiting cannot be combated with profile options, and the only realistic approach is to have your brand “Gated” against new listings. Amazon Brand Gating is a method for brands that are on the Amazon Brand Registry to be protected from counterfeit listings. When a brand is Gated, all new sellers attempting to sell items the Gated items on Amazon must receive approval from the owner of the brand. Ultimately, Brand Gating is the only effective and proactive method of preventing hijacking, and is probably the best reason to get your products on the Amazon Brand Registry as quickly as possible.

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