Amazon’s Project Zero is the company’s first real attempt to remove all counterfeit listings from the Amazon marketplace. But how does Project Zero work, and how will it affect customers like you?
Wait, There are Counterfeits on Amazon?
It sounds strange, but there’s a massive counterfeit market on Amazon. And whether you realize it or not, there’s a chance that you’ve bought a fake product through the retailer at some point.
Amazon, unlike stores like Target and Best Buy, relies heavily on 3rd party sellers for product listings and fulfillment. These sellers aren’t affiliated with the brands that they sell, but according to Jeff Bezos, their listings make up half of the items sold on Amazon.
Many of your Amazon purchases have probably come from 3rd party sellers, whether you’ve realized it or not. Instead of dividing each seller into their product page (like eBay), Amazon compiles all listings into a single product page. A listing for an Apple Lighting Cable, for example, may be fulfilled by dozens of different sellers, including Apple. You can check whether a product comes from Amazon or a third-party seller on the product page.
This system allows Amazon to keep prices low, and it’s a backbone of Amazon’s super-fast fulfillment system. But, as you can imagine, it allows a lot of fraudsters and counterfeiters to piggyback on genuine product listings.
Amazon has some anti-counterfeit measures in place, but they don’t work that well. The review process at Amazon is surprisingly slow, and it relies almost entirely on user feedback. Not to mention, this review system sometimes works in favor of fraudsters by banning “suspicious” users.
As a result, there are a lot of fake products on Amazon. The Counterfeit Report estimates that 13% of the products sold on Amazon are fakes. To put things in perspective, Amazon sold around 5 billion products in 2014.
This counterfeit problem is harmful to customers, popular brands, and Amazon. Some consumers won’t shop on Amazon because of counterfeits, and some brands outright refuse to list their products on the website. Last year, a deal between Amazon and Swatch Group (a Swedish Watch conglomerate) fell apart because of counterfeiters. Nick Hayek, the Swatch Group CEO, claimed that Chinese company Alibaba has better anti-counterfeit measures than Amazon. Ouch. The Swatch Group has reluctantly turned around, but only sells a select batch of watches on Amazon.
You Can’t Buy Everything on Amazon
You can buy just about anything on Amazon—except for luxury clothes and apparel. Branded clothes, watches, handbags, perfumes, hats, and sunglasses have a notorious counterfeit market. Since Amazon relies heavily on 3rd party sellers, luxury brands are reluctant to list their products on the website.
In the last few years, Amazon has attempted to turn things around. The company’s managed to strike small deals with a lot of exclusive brands, like Disney, Hugo Boss, and Nike. In exchange for some minor listings, like perfumes and overstock shirts, Amazon will police (or prevent) 3rd party sellers from selling items listed by or associated with that brand.
This is why the listings for specific brands, like Nike, are incredibly slim on Amazon. They’re boring, old, or overstock items, with a lot of sold-out sizes and colors. This is also the reason why the Hugo Boss Amazon page is full of cologne, plain polos, and out-of-place guitar pedals instead of the luxury suits associated with the Boss brand.
Here are some brands that are slim or non-existent on Amazon:
- Nike: Plain apparel, shoes, and overstock goods.
- Hugo Boss: Perfumes and plain shirts.
- Fila: A slim selection of apparel and shoes and an odd focus on work shoes.
- Bape: Slim pickings, but you can find plenty of blatant knockoffs on Amazon.
- Disney: A large collection that feels mysteriously dated and underpriced when compared to the Disney website.
- North Face: A thin selection of plain shirts and coats.
- Rolex: Mostly pre-owned and discounted watches.
- Versace: A limited selection of watches and cologne.
- Chanel: A good selection of perfumes, but only pre-owned handbags.
- Swatch Group (Omega, Longines, Blancpain) – Only sells select watches on Amazon after a counterfeit dispute.
- Louis Vitton: One book, authored by Louis Vitton.
- Supreme: Non-existent.
- Spark Electric Bikes: Non-existent.
- Sumo Lounge: Non-existent.
If Amazon can guarantee counterfeiters aren’t a problem, then brands have an incentive to list more of their products on Amazon. But this system is clearly flawed. Most of these brands are just using Amazon like a cheap department store. And while there’s probably a few arguments that favor this system (brands seem less exclusive if they sell on Amazon), most consumers would probably like to buy Nike shoes and luxury watches with the convenience of Amazon.
Amazon’s Project Zero Could Stop Counterfeiters
After a messy lawsuit in February, Amazon finally acknowledged its counterfeit problem in a report to the SEC. But the company claimed in this report that, due to”rapid growth,” it “may be unable” to fully prevent sellers from peddling counterfeit items on the Amazon marketplace.
Obviously, counterfeiters are bad for consumers, and they’re bad for the Amazon brand. But if Amazon decides to step up their in-house anti-counterfeiting measure, the company has to hire thousands of new employees, pay for universal product serialization, and put restrictions on the 3rd party sellers that make up half of all Amazon sales. Even Amazon admits that these aggressive measures could “negatively affect operating results.”
But Amazon has struck a middle-of-the-road solution. Since most counterfeit products are imitating name brands, like Apple, Nike, or Sandisk, why not give these popular brands the ability to fight counterfeiters? This anti-counterfeiting solution is called Project Zero, and it should help to alleviate Amazon’s counterfeit problem.
How Does Project Zero Work?
Project Zero gives trusted brands the power to manually take down counterfeit listings. Additionally, brands that are enrolled in project zero can opt for advanced product serialization, and the opportunity to train Amazon Warehouse employees some counterfeit-spotting techniques.
Enrollment in Project Zero is free, and all businesses that are enrolled in Project Zero have administrative privileges. These privileges essentially allow brands to bypass Amazon’s slow reporting system. Instead of reporting a counterfeit listing to Amazon, brands that are enrolled in Project Zero can instantaneously take down the listing, and arrange refunds for ripped-off buyers. Don’t worry—Amazon claims that these removals are reviewed after the fact to make sure that the system isn’t being abused.
Brands enrolled in Project Zero also have the option to serialize all of their products. Right now, Amazon relies almost entirely on basic, easy-to-fake serial numbers to identify products. The Project Zero serial numbers will be used exclusively in the Amazon warehouse, and they may be different for each individual item.
According to Amazon, “brands that choose to use the product serialization service incur a cost between $0.01 and $0.05 per unit, based on volume.” So, some brands will end up paying an extra $50 for every 1000 units that they sell on Amazon. But hey, you can’t fight fake products for free.
If it sounds like Amazon is putting the responsibility onto brands, that’s exactly what’s happening. It may not be the best anti-counterfeit solution, but it’s promising. Brands like Apple are now better equipped to take fake cables and devices off of the Amazon marketplace, and brands that have historically tip-toed around the Amazon marketplace now have an incentive to go all in.
Some Brands are Skeptical of Project Zero, But They Want It to Succeed
Unsurprisingly, some people are skeptical of Project Zero. It’s an overdue anti-counterfeit measure, and it’s hard to know exactly how well it will work. But it’s important to note that brands are critical of Project Zero because they want it to succeed, not because they want it to fail.
Remember the Swatch Group, the company whose CEO said that Alibaba has better anti-counterfeiting measures than Amazon? We asked that company for a comment on Project Zero, and we ended up with a bluntly skeptical, yet largely optimistic response.
Swatch Group told me that “there is a big difference between announcing the Project Zero Initiative and really making it happen.” Alongside this surprisingly candid response, Swatch Group also told us that it’s “optimistic that Amazon will make progress,” and that the two companies will “continue discussions” in the future.
Kevin Williams, the CEO of RGK Innovations made a similarly optimistic-yet-skeptical claim in an interview with Inc. Williams says that, while he loves the idea of Project Zero, he’s concerned that it will “have a boatload of unforeseen consequences.”
How Can I Check if a Company is Participating in Project Zero?
You probably don’t want to buy any knock-off products. That’s a fair assumption. So, it would be nice to know what brands are participating in Project Zero, right? Oddly enough, it’s difficult to find brands that are enrolled in the program.
Right now, Amazon is sending Project Zero invites to high-profile brands, and smaller brands can sign onto a Project Zero waitlist. Since Amazon is trying to court luxury and exclusive brands, we can assume that companies like Nike and North Face have received invites. Commonly counterfeited electronics brands like Apple and Sandisk have probably received invites as well, but there’s no way to know for sure. We can also assume that Swatch Group is involved in Project Zero, based on our correspondence with the company.
A few brands, like Kenu, have already praised Amazon for their Project Zero initiative. So if you want an authentic Kenu product, now’s your chance. And the Project Zero website features testimonials from companies like Vera Bradley, Thunderworks, and Chom Chom Roller… Yeah, I haven’t heard of them either.
Naturally, we asked Amazon if there are any plans to create a comprehensive Project Zero enrollment list in the future. The company told us that, although Amazon doesn’t “comment or speculate on the future,” our idea will be passed on to “the team.” Hopefully “the team” listens to our suggestion.
In the meantime, you can reference a “restrictions” list that’s curated by The Selling Family. This list details some of the brands that restrict 3rd party listings on Amazon. The brands on this list are concerned about counterfeit products and they may jump onto the Project Zero program in the future.