Amazon sellers say Chinese manufacturers are copying their designs and selling cheaper, lower quality products. And in recent months, the problem has reportedly only gotten worse.
Companies like BedBand, which sells patented locks and clamps to keep fitted sheets from sliding off a bed, told CNBC that its business went from making $700,000 annually in 2013 to half as much revenue in 2015 due to counterfeiting. And as Amazon continues to try and attract Chinese merchants, such negative trends are expected to continue.
Some 40 percent of Amazon's sales are from third-party vendors, and Chinese sales on Amazon doubled in 2015, the report says. Consumers have difficulty telling the difference between real products and fakes because the "Fulfillment by Amazon" program essentially legitimizes the purchases.
Major brands like Birkenstock, Michael Kors, and Canada Goose all have products on Amazon that sell well below their listed price, the report found. An anonymous Canada Goose source told CNBC the problem is that the items, such as their Expedition parka, look real, even though they sell for under $650 compared to the retailer's own $1,000 list price on its website.
An earlier report from CNBC in May chronicled designers of iPhone cases, t-shirts, and pillow cases who say knockoffs of their products are showing up on Amazon for a fraction of the price — sometimes in a matter of hours. Their only recourse is a takedown process that amounts to "a game of virtual whack-a-mole." Though top sellers have asked Amazon how it plans to deal with the issue, the online retail giant has provided little answers.
Another report last year found that some 40 percent of goods sold from China online last year were counterfeit. And in many cases, the fakes are extremely convincing. Jack Ma, the founder of online retailer Alibaba — itself a target of criticism for being a breeding ground for fake goods — said in June of this year that the issue has gotten harder to tackle than ever.
BedBand, for example, saw its rank go from number one seller in the home goods category to number two when they were surpassed by a Chinese company called Nyche, who sells the same bed straps for $8.99, as compared to BedBand's $13.99. "The problem is that the fake products today, they make better quality, better prices than the real products, the real names," Bloomberg reported. "It's not the fake products that destroy them, it's the new business models. The exact factories, the exact raw materials, but they do not use their names."
Because Amazon is not legally liable for counterfeits sold via third parties, sellers feel the company isn't motivated to combat the issue. Instead, it's up to sellers to provide evidence of counterfeiting, and wait for Amazon to make a decision through a takedown system. But even when the fake merchandise is pulled, the counterfeit companies simply rename themselves and start over.
Consumers are left in the lurch, too, trying to figure out which products are legitimate. Currently the only way to tell if a product's ratings online are truthful is by going to a site called FakeSpot, which analyzes reviews for authenticity. BedBand has an A on the site, while Nyche has an F.
Amazon repeatedly declined to comment on the problem. They only note their policy on counterfeits, which says they are "strictly prohibited," and that sellers caught selling counterfeits may have their accounts suspended or terminated.
This article originally appeared at Vocativ.com: Chinese counterfeits cause major problems for Amazon merchants