They could require all suppliers to put up a surety bond. Make the amount high enough to filter out suppliers unwilling to sell long-term and also attempt to filter out anyone intending to sell counterfeit goods. Any suppliers who hit a certain threshold of failing to meet Amazon's standards of product authenticity would forfeit their bond. This isn't a new idea, it works well in other industries.
This can be solved by requiring higher-risk merchants to put money in escrow for a while (maybe an initial amount plus some fraction of revenue). If they turn out to be selling counterfeits, amazon could use the money to set things right. Otherwise the merchant gets the money.
Any sort of second step verification that a business is more than just a front. Or even just watching out for things like this HN post and aggressively cleaning house when this stuff comes up (and actively banning merchants that try the same trick).
Heck, they could even do something like twitters blue checkmark with their goods. For untrusted sources, keep their supplies in quarantined from the trusted sources and start vetting suppliers (check on where they are at, if they've got a history of selling fake goods, checking into the goods they are selling to ensure they are legitimate). Once a supplier passes that test, then move their goods in with the trusted sources.
Really, just about anything would make amazon more reliable and less scammy.
Unfortunately, I only see a way to solve this for fungible goods where you would still need to get every actor involved in the supply chain to upgrade to the same secure tracking solution. It could be done in theory with crypto and tamper-proof packaging, but overcoming the network effect of today's archaic supply chains would be a huge undertaking.
The article points out how sellers are creating unique, non-fungible goods. So how does a customer even initially know that they're discovering 'the original' and not something that has been re-branded? With a Lamborghini, re-naming the car to another brand isn't a problem since the customer won't find it (and a supply chain integrity solution might work.) But how would you solve the Amazon problem?
I suppose you could have a time-locked escrow account where sale funds had to be locked there for N days. That way there would be time to challenge counterfeit sales and re-distribute the funds to the original authors (and / or make customers whole) when fraud was detected. But I am pretty sure people would hate that. Everyone would have to agree to use it for it to work and it wouldn't stop the potential for brand damage from low-quality counterfeits.
If it were a short enough time-lock though, it might work? High enough that it removes the incentive for fraud, low enough that it doesn't frustrate vendors.
The solution doesn't have to be ditching 3rd parties as these can create great shopping value. Amazon should create a hurdle that keeps scammers away. While obvioudly there are better solutions than my off the cuff comment you could for example require a significant deposit for new sellers which is lost on sale of fake goods. Or payment terms are 120 days until you reach X reputation (supplier or item) allowing for full refunds to customers and zero payment to suppliers should fakes show up.
If Amazon had direct liability for selling counterfeit products, for example, if the Ove Glove company (first in the original article) could sue Amazon and recover all the revenue that went to the counterfeiters plus a penalty - I believe in this case Amazon would find a solution to ensure supplier verification.
The problem is that currently it's profitable for Amazon to host goods from fraudsters; if (when) any get discovered, they kick them off but keep the proceeds. Society and law should ensure that Amazon loses money when hosting goods from fraudsters, so that the motivation is properly aligned.
That's definitely an option, and possibly a business opportunity. Downvotes are unwarranted.
Other options would be to require bonding or otherwise validating sellers, particularly over a certain volume. Amazon (and other retailers) might collectivise or bundle sellers, with an intermediate serving as a vouchsafe for quality and origin, if necessary.
Otherwise, this whole situation is a massive trust breakdown, for both sellers and buyers, and a major problem for Amazon generally.
What people were asking was "make it obvious who I'm buying from (i.e. no commingling), and punish sellers of counterfeits". Just punishing sellers of counterfeits goods might have been enough (reportedly Amazon does have item level tracking despite commingling).
What Amazon is doing sounds more like stopping to be an open marketplace, depending on how hard it is to get approved. That's a solution, but at that point they are just another Target or Wal-Mart.
They could shut out all 3rd party sellers until they are verified. Amazon would still be making truck loads of money from Amazon basics etc. Most customers might not even notice any change when buying.
An instant ban for vendors detected and confirmed to be doing this. Amazon has plenty of ability to deal with this, from a ML detection system to human validation. They just don't want to.
I would think a little bit of piracy is okay with Amazon as vetting the authenticity of every seller would be too expensive and time consuming, and making it harder for a seller to get onto Amazon will only encourage the growth of competing platforms. I wonder if Amazon has a policy by which it makes payments to sellers cheated by counterfeit goods so long provided they sign an NDA about it?
> There is something extremely simple Amazon could do about [counterfeit products]. If you have a registered brand in the Brand Registry and don’t sell the product wholesale – there could be one box to check for that. And anyone else would have to get approval or high vetting to sell the product, especially if they are sending large quantities to FBA. I imagine there are some algorithmic solutions that could catch most of it too… Why Amazon doesn’t do this is mind-blowing
Because producers would immediately check any box that needs to be checked in order to become the single supplier of their brand on Amazon. It's immensely valuable to control all sales on the largest online store in the world, while at the same time maintaining a discriminatory pricing structure on various markets without being undercut online by your own distributors.
Amazon would effectively let brand owners gouge their customers and reduce Amazon overall competitivity and appeal.
Amazon is basically providing a goods laundering service for criminals. There's not much difference between what they're doing and what someone is doing who is fencing stolen goods.
If they're going to comingle goods, then they need to put their own tracking onto the goods so that it is possible to know who provided the goods to which buyers. Either that or require that each item has a unique rfid or other identifier. This would allow tracing of counterfeit goods back to the supplier.
As it is, when you buy something that turns out to not be legit, you have no real recourse, and often the wrong supplier gets dinged.
I don't get why they don't fix it. It's a huge problem and it's eroding confidence in Amazon.
It's not even hard: just require anyone selling on Amazon to wire a large enough deposit before they are allowed to sell (magnitude depending on the price, volume of their items and possibly their assumed trustworthiness); then, if they are found selling counterfeits or otherwise misrepresenting their products or their company, Amazon pockets a third of it, rewards another third to the person reporting it to Amazon and distributes the remaining third to affected shoppers.
It seems to me that the gains would far outweigh any possible reduction in the number of legitimate sellers and products.
I'd mostly agree with that, with the caveat that they will often restrict particular listings or brands that got a high volume of complaints, and require proof of purchase to sell. They also flag sellers that have large sales increases in a short period of time.
>It's my view that Amazon themselves should be taking action on behalf of both consumers and sellers to ensure that: 1) products are authentic, and b) consumers can get the best prices possible even if that's from an "unauthorized reseller"
This is reasonable. They could require proof of purchase for all products, or perhaps for all products where more than 10 units are being sold.
I also think there should be a higher bar for foreign sellers, or perhaps a bond that must be posted.
The problem here is Amazon making it ridiculously easy for people outside of our legislatures reach to commit crimes. So, the logical option is to punish Amazon (and similar companies) for distribution of counterfeits.
Is it legal what Amazon is doing (or rather, not doing)? Well, make it illegal.
That'd be ideal, but that would also end sites like eBay and other points of sale for second hand items for good. You could make an exception for second hand sales, but then every shady foreign reseller will just list their item as refurbished.
I don't think there's a good way to solve this problem without massively impacting businesses that do deserve the benefit of the doubt. The driving force behind this crap is consumers preferring the slightly cheaper Amazon rates despite all the news about scams. Perhaps some public education campaign about the problems with resellers can help, and maybe some legislation forcing platforms to show the branding of the actual seller instead of their own, but I don't think placing the responsibility directly on the platform is a good solution to this problem.
I could imagine maybe a law requiring foreign companies to obtain a bond when selling consumer goods, if they don't have substantial presence in the U.S. This bond would be a surety that consumers could recover damages in the case of negligence, at least up to a certain amount. I don't see the argument for requiring Amazon to perform that service, though.
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