Amazon announced this morning a new initiative called Project Zero to reduce counterfeiting on its website – a name that refers to Amazon's ambition to bring counterfeit sales to zero. The program will leverage Amazon's technology, including machine learning capabilities, combined with the intellectual property rights of its owners to automatically and continuously scan Amazon's store for, among other things, detecting and proactively eliminating violations.
Brands Wanting To use the new tools, Amazon will receive their logos, trademarks, and other important data about their brand. Amazon will then review the updates of its 5 billion products per day and look for suspicious counterfeits.
The idea is to put more technology behind the search for counterfeits to be more proactive than reactive. In the past, brands would have to file a fake report on Amazon to take action. With the new tools, brands can remove and control entries from the Amazon store directly without first having to contact Amazon.
Another service of the larger Project Zero program is product serialization.
With this service, Amazon can scan to verify the search process authenticity of all branded products purchased on the site. The service provides a unique code for each manufactured unit that is applied to products during the manufacturing process. If the product is ordered later, Amazon will scan this code to confirm that the purchase is authentic. If this is not the case, Amazon can detect and stop a fake item before it reaches the customer.
Counterfeiting has become a serious problem on Amazon, largely due to the size and scale of the Amazon third-party market, which it barely regulates. Some of these items are never touched by Amazon but sold and shipped by the third party. Others are only met by Amazon, but this does not include a review process.
However, these are labeled with the "Fulfilled by Amazon" label, which some consumers misunderstand because they are trusted because Amazon is somehow involved. 1
Amazon has been repeatedly called by brands because they have actually "complicity" with the counterfeiting business and always push the issues aside – they are third-party vendors, not Amazon's own store.
This has allowed Amazon to avoid many legal issues related to counterfeiting in court, although it continues to struggle with litigation. For example, Daimler AG sued Amazon in 2016 for benefiting from the sale of wheels that violated its patents. In the same year, a family sued Amazon when a fake hoverboard burned down their home. Apple also sued Mobile Star LLC for making fake Apple Chargers, which it tried to authenticate on Amazon, bringing the retailer's name to the merchants News.
More recently, Amazon has joined the legal battles. Last year, three lawsuits were filed in collaboration with fashion designer Vera Bradley and manufacturer of accessories for mobile devices Otterbox.
Counterfeiting not only affects consumers and brands that are being tapped, it also affects Amazon's business – especially an increasingly important fashion category.
Many fashion brands do not work with Amazon. For example, Birkenstock decided to discontinue its business with Amazon. LVMH (Celine, Dior, Givenchy, Louis Vuitton and others) said last year that Amazon's business did not "passe" with its brands, and Swatch withdrew from a deal to sell on Amazon 2017 as the retailer did refused proactive protection against counterfeiters.
Despite all these issues, US government pressure may have recently helped bring about a turnaround – Amazon and others in the industry have been forced to take counterfeits more seriously.
Last year, state investigators bought counterfeit products on the largest and most well-known ecommerce sites, including Amazon, Walmart, eBay, Newegg, and Sears Marketplace. Out of 47 products, 20 were counterfeited – including Urban Decay cosmetics, Yeti mugs, Nike Air Jordan shoes, phone chargers and more.
The e-commerce companies of course expressed the righteous condemnation of counterfeiting and assured to cooperate with policymakers resolutions.
Amazon says its new Project Zero tools have been tested with several brands before today's launch, including the aforementioned Vera Bradley; Animal Anxiety Product Manufacturer Thunderworks; mobile accessory manufacturer Kenu; and lint remover manufacturer Chom Chom Roller. Amazon claims to have been able to proactively stop 100x more suspicious products during the trial period, compared to what it removes responsively based on brand reporting.
"Project Zero with its automated protection features and the removal of counterfeit products through the service is a significant development that will ensure that our customers receive authentic Vera Bradley products from Amazon," said Mark Dely, Chief Legal & Administrator Officer at Vera Bradley.
"Amazon's product serialization service was a game changer for us. We are very pleased with this tool to remove counterfeit self-service services to the US market and consider this an insurance policy, "said Ken Minn, CEO of Kenu.
Project Zero initially launches as an invited product that can offer branded self-service products Sign up for membership before it becomes broader.