John UM
On the last day of January, US e-commerce giant Amazon shares closed up nearly 3%, returning to the top of the US stock market value. After the close of the day, Amazon announced its fourth-quarter results last year – revenue for the third consecutive quarter broke records, revenue and earnings exceeded market expectations
However, the “US stock market” was only one day. On the second trading day after the earnings’ announcement (February 1st), Amazon’s share price plummeted nearly 5%
Many analysts blame the market for concerns about slowing growth: for example, self-operated e-commerce business revenue growth slows, such as Prime membership-based subscription service revenue growth slows, and then Amazon The layout in India is frustrated and so on
However, in the 2018 annual report disclosed on February 1, Amazon mentioned another big risk: fakes. This is the first time Amazon has mentioned a fake issue in a routine report
The first mention of fakes in the earnings report.
In the “risk factors” column of the 2018 financial report, Amazon mentioned a lot of risks, including market competition, business pressure, investment, inventory, etc., but the last one wrote: the company may be fraudulent for merchants. Responsible for violations
Amazon mentioned in the following text description:
We are unable to prevent merchants on the platform from selling illegal, counterfeit, pirated, or stolen goods. These acts violate both the law and the ethical standards, infringe on the rights of others, and violate Amazon’s rules
On the Amazon platform, there are often consumer complaints about buying fakes, but before that, counterfeit, pirated and other words never appeared in Amazon’s earnings. Why is Amazon’s monopoly now included in the risk category?
Amazon said in the annual report that according to the company’s dispute resolution mechanism, when consumers buy fake goods, the platform will compensate. But now, more and more counterfeit complaints have caused the company to increase the cost of compensation, which in turn has a negative impact on the company’s performance. In addition, the proliferation of counterfeit goods has also damaged the image of the company, causing Amazon to face some civil and even criminal proceedings
Third-party sellers have increased, and fakes are rampant.
Amazon is blaming more and more third-party sellers on the platform for the proliferation of fakes. In the fourth quarter of 2018, third-party sellers accounted for more than half of the total platform sales, reaching 52%
According to Stastata statistics, from the second quarter of 2013 to the third quarter of 2018, Amazon’s third-party seller sales increased from 40% to 53%
Data Source: Stastata.
However, Amazon is not benefiting from it. By providing services to merchants, Amazon’s third-party seller service revenues such as commissions, packaging and transportation have risen year after year, from $22.9 billion in 2016 to $42.7 billion in 2018
Of course, this is part of Amazon’s proactive transformation. Because the sales growth rate of third-party sellers in online shopping malls is faster than that of self-operated retail sales, and the gross profit margin is higher, Amazon does not need to purchase goods, inventory, and sales in person, and only need to provide services to businesses to make money
As a result, not only the brand stores that landed on Amazon, but also countless “small vendors”, fakes have flooded
In January of this year, an author of the American Atlantic Monthly wrote an article about how he bought a fake “Canada Goose” for $925 on Amazon:
“When I clicked to confirm the order, I received an email: My Canadian Goose is being shipped from Singapore and will pass through Hong Kong, China. Isn’t the Canadian Goose produced in Canada? Later I discovered that this business The name is not a Canadian goose, but a store named Greg Adamserft. At the time, the online store had only three comments, all of which were five stars. After a few weeks, it was all a star rating.”
The Atlantic Canada website author Deborah Copaken bought the fake “Canada Goose”.
Canada Goose Genuine Logo (Source: Canada Goose’s official website).
I found that a number of consumers have complained that the Canadian goose sold in this online store is a fake
Amazon counterfeiting
The first mention of counterfeit goods in the annual report does not mean that Amazon had no knowledge of these situations before. “Anti-counterfeit” has always been an important part of the Amazon platform
Amazon anti-counterfeiting regulations write: If a merchant sells or provides a counterfeit product, Amazon will immediately suspend or terminate the seller’s account and destroy the merchant’s fake goods in the Amazon Logistics Center, the loss is borne by the merchant. In addition, Amazon also encourages genuine property owners to report
In December last year, Amazon punished more than 20 second-hand booksellers and suspended their accounts on the grounds of selling pirated textbooks. More critically, this punishment is not due to consumer complaints, but to Amazon’s active investigation. This shows Amazon’s attitude towards fake and shoddy goods
The issue of Amazon fakes has also caught the attention of some large retail brands. There is a “Clothing and Footwear Association” in the United States, which represents the interests of more than 1,000 brands and aims to protect the reputation of each brand, intellectual property, and the interests of workers and consumers. Last October, the American Apparel and Footwear Association recommended that the US government should include some third-party websites on the Amazon platform in the “Notorious Markets” list. In the notorious market, there is a market for massive violations of intellectual property rights
In the past few years, the Apparel and Footwear Association has been in regular dialogue with Amazon. In May last year, some members of the association met with Amazon’s relevant teams to discuss Amazon’s lack of intellectual property protection
Although the “Clothing and Footwear Association” stated in the proposal that “Amazon has the ability and should be a leader in combating counterfeit and shoddy products”, what annoys Amazon is that this may allow Trump to seize it. “Handle”. For a long time, Trump believes that Amazon has a monopoly problem, and from time to time on the social media, “angry” Amazon and founder Bezos, but until now, Trump’s threat to Amazon is still in the verbal stage
Since last year, Amazon has also thought of some new ways to protect intellectual property rights. Transparency is one of them. The project uses a specially designed barcode to verify the authenticity of the product. After six months of use, each barcode will then cost between 1 cent and 5 cents. Anti-counterfeiting is also a business for Amazon