In its annual review, Amazon marked this as the first time the company has mentioned the words ‘counterfeit’ and ‘pirated’ as major risk factors, despite continually reassuring customers of its “zero tolerance” policy.

Amazon recently warned investors of one of the biggest problems facing its online marketplace – counterfeit products.

According to Simon Baggs, CEO at Incopro, it’s a problem that could get much worse as Amazon shifts more of its sales to third-party sellers. Third-party products currently account for 52% of all products sold on the site with this number expected to rise.

This year, for the first time, Amazon has added a warning about counterfeit products to their earnings report. Counterfeits being sold on their platform is a problem that has been growing exponentially year-on-year, with minimal tangible action taken to address the issue thus far.

Under the ‘risk factors’ section of their report, Amazon stated: “We may also be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies.”

Amazon isn’t alone, all online marketplaces have an issue, and many have been paying lip service for some time. A quick search online reveals articles about Amazon going back years discussing the latest initiatives that they are putting in place to fight counterfeits. Yet the issue continues to grow, and this is largely down to not putting action behind their words and not putting comprehensive enough programmes in place to adequately protect their consumers.
While it may be true of Amazon that they are unable to prevent illegitimate sellers, that does not mean that businesses must expose themselves to risk through lack of action.
Every single one of these companies knows only too well that Amazon is used by many to sell knock off items that are often dangerous and always of inferior quality. The consumer is confused and out of pocket. Businesses experience lost sales from fakes. Now the fake issue is becoming a major threat to Amazon itself.

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To read the full article featuring Incopro, please view the original in the Total Business Magazine.