2. Amazon's problem with fakes
Tens of thousands of sham products have appeared on Amazon over the last two years — a rash of counterfeiting amid a growing, trillion-dollar global business of retail fakery.
Axios' Erica Pandey reports: Amazon, Alibaba and other retailers have failed to keep up with the soaring business in counterfeit brand makeup, skin care and other goods. Losses are expected to soar to $1.8 trillion by 2020, a 52% jump from $1.2 trillion last year, per the 2018 Global Brand Counterfeiting Report.
Why it matters: Losses from e-commerce fakery alone were $323 billion last year, according to the Global Brand Counterfeiting Report. The growth of e-commerce counterfeiting potentially adds to the crisis of trust facing Big Tech, already under fire for the proliferation of fake news and disinformation on their platforms.
By the numbers:
- The Counterfeit Report, an advocacy group that looks for fake products on platforms, counted 59,749 fake goods on Amazon between May 2016 and this morning.
- Over the last two years, Amazon customers reported 5,101 counterfeit products, according to a new report by market research firm Gartner L2, provided first to Axios.
- In context: The actual scale of the problem isn't known — none of the reports is a representative sample, and Amazon sold 560 million products last year. But Craig Crosby, founder of The Counterfeit Report, says the problem "can only grow."
In its report, Gartner looked at 350,000 one- and two-star Amazon customer reviews from 2016 to 2018 for 321 brands, ranging from hair care to headphones to fashion. Among its findings:
- One in three products sold by third-party merchants — sellers other than Amazon itself — received at least one customer review claiming it was "fake" or "counterfeit."
- The problem was especially significant for makeup and skincare brands, with 75% of L'Oreal, Olay and e.l.f. products receiving at least one "counterfeit" review, Gartner said.
- Axios reached out to all three brands: L'Oreal declined to comment, and e.l.f. and Olay, run by P&G, did not respond.
Researchers knew there were counterfeit goods on Amazon, Gartner's Cooper Smith tells Axios, but "we didn’t know the scale of the problem, and neither did brands, so we conducted this study to help bring some data-backed evidence to the conversation."
On the other side: In a statement to Axios, Amazon says it disputes the methodology used by Gartner, adding that the company takes strong measures to keep counterfeit products off the platform. Among the measures are swiftly flagging counterfeit reviews and punishing the vendors by removing them from browsing options.
Go deeper: Read Erica's whole post.