Shenzhen Jiayz Photo Industrial Ltd., the parent company of BOYA wireless microphones and accessories, has filed a petition in the Delhi High Court against e-commerce sites Flipkart, Amazon India, Paytm Mall, Tata Cliq, and Snapdeal for allegedly selling fake versions of its products.
Such cases are just the tip of the iceberg.
There are various instances on social media where people have expressed their anger and resentment towards receiving fake products. Repeated incidents of receiving such fake products tend to erode the brand reputation and consumer trust. This results in loss of revenues which is detrimental to the e-commerce businesses especially in the pandemic where people are most likely to shop from online platforms.
The size of fake and counterfeit products, according to Acviss- a technology company that uses algorithms to protect consumers and brands from experiencing counterfeit products- is a massive Rs 20,000 crore industry, which is roughly less than 0.37 percent of the total retail pie in India. The size is quite alarming for e-commerce businesses. According to ASPA (Authentication Solutions Providers Association), fake and counterfeit products cause revenue losses worth Rs 1 lakh crore annually in India.
The size of fake and counterfeit products, according to Acviss- is a massive Rs 20,000 crore industry in India.
Reasons Behind the Growth of Fake Products on E-Commerce Platforms
Lack of visibility, traceability, and transparency in the existing supply chain network from manufacturing to point of sale is making room for fake products.
In e-commerce marketplaces, the detection of counterfeit and fake products is cumbersome since orders are accepted by the e-tailers and are shipped directly by suppliers. There is no such body that inspects the goods that are being supplied by the suppliers.
This holds the e-retailers responsible for the quality and authenticity of products and ends up with negative reviews of customers receiving the counterfeit or fake product.
Amazon’s Project Zero to fight fake products
E-commerce giant Amazon was troubled with the menace of fake products largely due to the size and scale of its third-party marketplace that went unregulated. The e-commerce major decided to tackle the fake product menace with its Project Zero initiative which ensured that the customers received authentic goods while shopping on its platform.
More than 7000 global brands are associated with Amazon’s Project Zero initiative across the US, Europe, and Japan, with pilot tests being launched in India to test Project Zero.
How Amazon’s Project Zero Works
Amazon’s Project Zero, as the name suggests, aims to have zero tolerance towards fake products on its platform through its Machine Learning (ML) capabilities consisting of three powerful tools:
- Automated protections
- Self-service counterfeit removal tool
- Product serialisation.
Brands to counter their fake versions will associate with Project Zero to submit trademarks, logos, and intellectual property data with Amazon, which in turn will be used by Project Zero to automatically detect fake or counterfeit products.
Amazon’s machine learning-backed automated protections will continuously scan its site that displays a myriad of 5 billion product listing updates per day, for detection of any suspected counterfeits.
The self-service counterfeit tool gives brands the autonomy to directly remove products impersonating as original from Amazon’s store that otherwise required to file a counterfeit report first with Amazon to take action. This information is shared with the company’s automated protections enabling Amazon to catch potential fake product listings proactively in the future.
Project zero’s product serialisation will allow Amazon to scan and receive confirmation about the authenticity of a brand’s products being purchased on the site. It assigns a unique code for each manufactured unit, that is put on products during the manufacturing process. When the product is ordered, Amazon scans this unique code to verify if the product being bought is authentic. If not, Amazon can detect and stop a counterfeit item before it reaches the customer.
Is Project Zero Free for Brands?
Project Zero enrollment is free for brands however, brands that will use the product serialisation service will incur costs.
Other technologies to Counter Fake Products Being Sold
Blockchain technology is another solution. Its characteristic of distributed ledger technology is widely being used in the fashion industry to establish transparency, security and authenticity in products thus saving the livelihoods of designers and restoring the trust of end consumers. Many global fashion and luxury brands such as Louis Vuitton, Gucci, Prada, Zara are implementing blockchain technology in the process.
During the development of a product, the RFID (Radio Frequency Identification) tags are attached to the raw materials and are scanned at various stages right from its production to packaging to confirm the genuineness and authenticity of the product. The RFID tags, when scanned, execute a smart contract where multiple trusted nodes verify the information to be correct before the update goes on record in the blockchain ledger. Each entry in the blockchain ledger is protected and encrypted that deters fraud.
How should small businesses go about it?
For Small Businesses who Sell on E-commerce Platforms
Fake or counterfeit products will create irate and unhappy customers whose trust regarding your brand will erode resulting in refunds and exchanges eventually causing a drop in revenues. Hence, small businesses who are sellers on e-commerce giants Amazon should enroll themselves with Project Zero.
For E-commerce Businesses
Independent D2C e-commerce can invest in blockchain or ML technologies to make the entire supply and operations under its radar, therefore, protecting the business from selling fake products.
This will make your e-commerce platform secure and increase user’s trust. Sellers and Buyers using your platform will choose you over other options in the market. Hence, you will be ahead of the competition and increase the number of loyal customers. You might also be able to expand your user base with new sellers and buyers when they are influenced by the existing happy users.