Amazon, eBay and Alibaba Face Problem as Counterfeit Goods Reach $1.7 Trillion

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There seems to be a problem with how Amazon.com Inc. (NASDAQ: AMZN), eBay Inc. (NASDAQ: EBAY) and Alibaba Group Holding Ltd. (NYSE: BABA) police the merchants who sell fake goods and services at their sites. According to The Counterfeit Report, the sum total of the entire counterfeit goods market is $1.7 trillion worldwide, about the same as the gross domestic product of a medium-sized country. And many of the sales of these go through these three e-commerce companies.

The authors of The Counterfeit Report say they have asked the companies to drop these items from the sites so they are not available to the public, at least through the three huge e-commerce companies. Specifically, they have asked them:

… to remove listings for 3,820,408 counterfeit or fake items offered or sold on their websites – products destined for, or purchased by, unsuspecting consumers. eBay listings, which reflect actual sales figures, indicate consumers purchased 10,640 of the counterfeit or fake items. Alibaba subsidiary AliExpress, whose listings occasionally list sales figures, indicate 2,804 counterfeit items were purchased by consumers. Amazon does not report sales.

The organization claims that the reactions to its research are extremely small:

Particularly shocking, is that the 3.8 million products removed by The Counterfeit Report are just a tiny sample of the infringing products offered on the e-commerce websites, and most likely products that consumer would neither suspect or be able to identify.

There is no way to verify the results of the research. However, the trend identified is a major problem. CNBC reported in June that:

Always a problem, the counterfeiting issue has exploded this year, sellers say, following Amazon’s effort to openly court Chinese manufacturers, weaving them intimately into the company’s expansive logistics operation. Merchants are perpetually unsure of who or what may kill their sales on any given day and how much time they’ll have to spend hunting down fakers.

There also dozens, if not hundreds, of forums online to deal with items sold on eBay. The company actually has a set of policies to deal with the matter:

  • Proactively removing suspicious items
  • Removing items reported as counterfeit by brand owners
  • Working closely with law enforcement to prosecute offenders
  • Enforcing selling limits on some items
  • Restricting seller activity in certain categories
  • Providing free tools for rights owners to efficiently identify and report items  to us for immediate removal
  • Partnering with brand owners and industry initiatives to bring attention to    and combat the issue worldwide

However, if The Counterfeit Report is accurate, this will barely address the matter.