For years eBay has been taking heat from brands for allowing the sale of counterfeit goods via its marketplace. High end brands such as Tiffany and L’Oreal — to name just two — claimed eBay hadn’t done enough to crack down on sales of counterfeit items. Legal tussles ensued. Sometimes eBay won, and other times eBay came up on the losing end in such disputes.
In recent years, eBay has taken a number of steps to address the counterfeit issue, including close cooperation with law enforcement, brands and industry associations to police counterfeits. For instance, it partnered with the fashion industry on the “You Can’t Fake Fashion” campaign. And it has policies against counterfeiting and is said to take strong action against merchants when the brand owner reports counterfeits.
But counterfeiting isn’t a problem just on eBay. These days, you may be hearing about a different marketplace in connection with counterfeit goods. With its 71% jump in quarterly sales, Alibaba, a China-based eCommerce site, has also seen a rise in the problem of counterfeit goods.
The Alibaba.com site is largely a wholesale marketplace. Typical transactions may involve small businesses in the West buying wholesale from suppliers in China, through Alibaba.
The small businesses may then turn around and resell the items via Ebay and other retail eCommerce sites to consumers, for a profitable markup.
The trouble is that some items, particularly brand-name products like iPads or flash media cards, may not be all they are cracked up to be. Items bearing the name of Apple or other trusted brands may be fake. If you buy those counterfeit items wholesale, and then turn around to resell them, at the very least you could end up with customer complaints, chargebacks and lost money when you have to give refunds. Even worse, your eBay or other eCommerce account could be shut down — and you could find yourself hip deep in legal hot water. (Read more about consequences of selling counterfeit goods.)
And then there’s the issue of the nearly 1 million Etsy artisans, who may find their handmade goods copied and sold in bulk on Alibaba. In that case, the small business may be the direct victim of counterfeiting on Alibaba.
Alibaba Intensifies Anti-Counterfeit Campaign
Alibaba has vowed to crack down on fakes. Alibaba’s management is partnering with government officials to tackle the counterfeiting issue, The Wall Street Journal reports. It comes in advance of an anticipated IPO that Alibaba has been planning for either late 2013 or 2014. Running a marketplace credible with consumers is crucial.
Company officials are meeting with brands, industry groups and government officials in the U.S. to discuss ongoing problems including violation of intellectual property rights. Alibaba also has created a section on its site with information about safe buying. And Alibaba appears to be cooperating more with brand owners.
However, fighting counterfeit products is a never-ending effort. It’s a complex problem. And it cannot be stamped out in one step.
Counterfeiting is not just an issue for large brands, either. Small businesses have to be proactive.
If you are an Etsy artisan or a brand owner, be sure to scan marketplaces regularly to spot fakes and infringement of your intellectual property. Even if you sell a small number of items in your spare time, you are not immune to being the victim of counterfeiting. Document it and report it to the marketplace. You may even be able to work with US Customs to seize counterfeit goods that violate your intellectual property rights.
When you are sourcing wholesale goods, go into it with eyes open to potential fakes. The consequences of buying and then reselling counterfeit goods could be severe.
To see just how you could get “taken” as a buyer, view the video below showing a counterfeit iPad purchased through Alibaba.
Counterfeit Photo via Shutterstock
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Good for them! Counterfeiting hurts everyone involved except the one committing the crime! You know Amazon has a zero tolerance policy on bootlegged media and counterfeit products. Ebay should, too.
I think eBay has cracked down quite a bit. If all of these marketplaces take a hard line, it can slowly strangle the counterfeiters.
That’s why it’s good news that Alibaba has vowed to crack down – now let’s see them “put their money where their mouth is.” All it takes is for the marketplaces to turn a blind eye, and everyone gets hurt.
Great article. I purchase from various vendors, companies online and I’m glad this is and has been addressed.
That’s a good move especially since you’re dealing with a company that also sells gadgets. I am not as concerned with counterfeits with brand as long as it is announced before it was even sold. But for gadgets, it’s a big NO-NO for me.
There are a few things you should consider with “brand counterfeits.” Often the creative geniuses behind those brands are the ones who get hurt.
What if you’re a small business artisan who makes handbags from a design that you sweated years to come up with and perfect? And you work hard to build up demand for your bags. Next thing you know, you see your bags being copied exactly and sold on Alibaba. What if that artisan were you? Trust me, you’d care.
It’s just like us here at Small Business Trends. We work hard to come up with interesting articles with unique angles. Two weeks later we see a dozen sites have basically “spun” our article like the plagiarizers they are. I’m the one who has incurred the cost of assembling a team that could create that content in the first place, done the investigative work, perhaps conducted interviews, etc. Others steal the idea and basically create a knock-off for a few bucks.
I don’t think that’s right.
I didn’t realize how big the counterfeit problem was. I think it’s much worse in the electronics industry than it is in the fashion world.
I will never do business with Alibaba or its suppliers again. I found a supplier through Alibaba and ordered a product. I got nothing and I lost over $500.00. Alibaba said I must have been hacked. Alibaba and the supplier both refuse to do anything about it. Deal with Alibaba and suppliers in China at your own risk. If anything goes wrong you’ll be screwed Dennis Allan