How the Blockchain Can Solve Amazon’s 400 Million Dollar Problem
Counterfeits in the Online Marketplace

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Counterfeiting, defined as [making an] imitation of something else with [the] intent to deceive, has become prevalent in today’s online marketplace. This is because there are so many fake products added every minute that large e-commerce retailers, such as Amazon, are unable to keep up and verify their authenticity.

From 2018 to 2019, there has been a 40% increase in counterfeits online.

For small companies, this is a large problem. When S’well, one of the most recognized brands in the world for their reusable water bottles, was just a start-up running out of an apartment, they too faced counterfeit issues.

Here is an excerpt from a Medium article written by Stephanie Clifford that discusses how Sarah Kauss, the founder of S’well, found her first copycat:

Kauss and her [partner] were heading to S’well’s factory in China when they stopped for a couple days’ vacation in Hong Kong. Kauss saw there was a trade show and insisted on stopping by. When she arrived, it appeared that S’well had a significant presence at the show, with bottles displayed in a case and a ribbon flaunting an award it had apparently won. “A man came over to me and gave me his business card, very properly, and said he was from S’well,” she says. His card had S’well’s logo on it, with the little TM for ”trademark.” The problem: Kauss at that point was running S’well from her apartment. It had no presence in Asia. Nor did it have a sales rep there. And it had no employees besides Kauss. She had barely gotten the company off the ground, and her bottles were being knocked off.

In a globalized marketplace, it proves difficult to enforce intellectual property rights when someone can sell imitations overseas with a low risk of being punished. Kauss’s experience is a clear example of how widespread the knockoff epidemic has become.

Why This Is a Problem for Amazon

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“When a fellow says it ain’t the money but the principle of the thing, it’s the money.” — Artemus Ward

Amazon desperately wants to combat its counterfeiting crisis for one major reason: vendors are leaving them and Amazon is losing money as a result. In the past month, Nike, one of Amazon’s most popular vendors, decided to leave the platform because fake listings were superseding their content on search results.

On e-commerce platforms, SEO is key for vendors who want to grab eyeballs and drive sales. With fake listings on Amazon, the platform breeds a sense of distrust and an aversion to building brand loyalty. In the words of Jeffries analyst Randy Konik, “Amazon is just a traffic aggregator that reduces friction in consumption… it doesn’t build communities.”

On top of all this, Amazon itself has been accused of knocking off popular products. Last year, home and kitchen brand Williams-Sonoma sued Amazon by claiming the tech giant’s private-label furniture division copied one of their chair designs.
['Pronoy Chaudhuri']
['Money', 'Business', 'Ecommerce', 'Blockchain', 'Technology']