Veddatorial

FAKING IT

By Dan Vedda

I last wrote about the problem of counterfeit goods on Amazon in April of 2019. At that time, Amazon had just introduced “Project Zero,” a program that would allow brands to find and flag knock-off products and take them down themselves (subject to Amazon review). This invitation-only cadre of prominent brands was empowered to do the whack-a-mole grunt labor of counterfeit hunting at their own expense. That’s right, in a Tom Sawyer-esque ploy, Amazon convinced brands to do the work and sold it as a benefit, rather than policing its platform itself. Tellingly, Amazon only launched the platform with prominent, name-recognition brands, many of whom had threatened to remove their products from the Marketplace (or, like Nike, who had already done so.)

So, two years and a pandemic later, how’s that working? As you know, we experienced a massive surge (up 44 percent in 2020) in online buying during the worst of the quarantine period, and while that surge has flattened out a bit, it now qualifies as a trend. More people buying online would make weeding out counterfeits even more important, right?

Here’s how things are developing, according to Elizabeth Segren in a mid-May article for FastCompany: A new report from Amazon reveals it blocked 10 billion attempted counterfeit listings in 2020 — up from 6 billion the year before — and destroyed 2 million fake goods in its warehouses.

While this sounds like real progress — and in many ways, it is — it also offers a dismaying picture of the scope of counterfeiting online. I find it particularly troubling that Amazon has had fake product actually reach its warehouse. Destroying two million fake products is good, but it doesn’t tell us anything about the raw number that may have made it past the merchant application, seller vetting and (one would think) additional scrutiny it would take to allow goods to cross the warehouse threshhold. The brazen aggression that inspired counterfeiters to put goods directly in the Amazon warehouse suggests that Amazon may not have detected every last one. The Amazon report states that “only .01 percent of goods received a consumer counterfeit complaint.” Based on the number of transactions estimated to occur for the over 350 million products on the Amazon Marketplace, that paltry “hundredth of a percent” translates to “millions, perhaps more.” How many counterfeit products does that really represent? And that’s just factoring in those who actually made consumer complaints. It’s possible that consumers (which in 2021 have become an admittedly less savvy group, given the large influx of music newbies forced online during quarantine) didn’t detect some substandard items.

When a customer receives a counterfeit product, there’s also a tendency to misplace the blame. In an earlier column on the problem of counterfeits, I cited an exchange I witnessed on a saxophone forum. A consumer was railing against a reed company, which he claimed was releasing “crappy seconds” to the market. Another poster told him he had likely bought fake product. The buyer shot back, “No one would counterfeit reeds. [Company X]’s just screwing us.” That sort of reaction is likely mirrored with other products, as well. No complaint to the seller: It must be the brand’s fault.

That story highlights a bigger problem: Everything is counterfeited, from reeds and strings in our industry to items whose counterfeits can actually prove dangerous, like baby formula, vitamins and car parts. The FastCompany article states there is an “entire underground economy devoted to creating every possible consumer product imaginable.” As you can see from that forum poster placing the blame on a company that had nothing to do with the substandard product he had purchased, the damage isn’t done just to sales, but to the very reputation of the brands being knocked off. So counterfeiting is more like a “brand cancer” than just a problem of lost revenue.

Even Amazon isn’t immune to reputational damage from customers being burned by imitation products. The Fast Company article further notes that “many consumers and brands have lost trust in the platform.” That might be why Amazon is finally taking the problem seriously. Alongside Project Zero, it has added an artificial detection engine and paved the path to litigation and law enforcement for fraudulent product. Still, while there are signs that Amazon has stopped a lot of fakes from being sold, the company is not ready to declare victory just yet. It claims to have invested “over $700 million” in anti-counterfeit measures, including hiring more than 10,000 people for the task. But Segren wonders in the article if it’s a case of “too little, too late.”

Certainly, the vast scale of product fraud shows the daunting level of effort needed to fight it. And Amazon isn’t the only online place where counterfeits live. But I wonder again: Music brands have a vetted network of both online and brick-and-mortar merchants; I think we’d all be better off educating our customers that the best products, service and advice are available from within our industry, in our online and physical stores. You know what you’re getting from us. Some brands have already pulled goods from Amazon because they can’t make the same guarantee.

Year after year, we lament that consumers aren’t aware of our stores and products, or that they have become disenchanted with the MI experience. But we haven’t — as an industry (although some of us have done so on an individual level) — advertised effectively across the board that we can help, we have legitimate product, and we’re right here in your city and state. I honestly am astonished that our biggest players — companies like Guitar Center, Sweetwater, Reverb, etc. — haven’t done more to promote the benefits of their own platform and to pressure manufacturers to abandon Amazon. (Side note: Some manufacturers seem to be looking toward going direct-to-consumer, prioritizing their own channel over all others. Folks, do you have any idea of the costs of marketing your brand alone? Because that’s where you’ll end up, and then one misstep or ticked-off influencer can cost you a lot of revenue and brand equity.)

Finally, now that people are visiting stores once again, I see people every week who are glad we’re still open and who pledge their support for a local small business. Can’t we try to ride that wave, rather than assuming the counterfeit problem is something we have to live with? Can’t we build our industry infrastructure (there’s a word we hear a lot lately) instead of taking the “quick-and-dirty” path of thirdparty sellers or trying to grab market share from our peers? Asking for a friend.