Amazon is on top of the retail world. A significant portion of the platform’s success has come from the business that third-party sellers do on the site — using Amazon as a facilitator to sell goods to customers rather than, or in addition to, setting up their own digital storefronts. In 2016, half of all sales on Amazon were third-party goods sold through the Amazon Marketplace.
But third-party vendors bring unique challenges, too. Some of those sellers have been accused of copying patented products and counterfeiting established brands. And Amazon has been accused of doing too little to vet third-party sellers to make sure they’re legitimate.
“We’ve continued to make progress in reducing the amount of counterfeit in our store… but the fact is that today, that number’s not zero. There are still counterfeits,” Dharmesh Mehta, Amazon’s vice president of customer trust and partner support, told CBS News in April. Mehta said Amazon discovered three billion suspicious listings before they went live in 2018. But he could not say how many counterfeit products were publicly listed.
In February, Amazon announced a targeted attempt to control counterfeit listings: Project Zero.
“Powered by Amazon’s machine learning, automated protections continuously scan our stores and proactively remove suspected counterfeits,” Amazon says of the program. Additionally, partner companies in Project Zero can remove listings they believe are counterfeits of their own products. And a new product serialization program encourages brands to apply a unique serial number to each of their products, allowing Amazon to confirm their authenticity — and the lack of authenticity of counterfeit versions — before shipping them to customers.
For now, the program is invite-only. If you’re thinking about signing up for the waitlist, here’s what you need to know.
How does counterfeiting affect online marketplaces?
Amazon and other online marketplaces have been condemning counterfeit activity and developing protective measures for years. But the problem keeps growing. Retail Dive reported in 2018 that trade in counterfeit materials could grow to $1 trillion by 2020.
Customers trust Amazon deeply. A 2018 Georgetown University poll found that Amazon won the second-highest level of trust of all American institutions. Amazon ranked second only to the military. That means Americans are thinking more highly of Amazon than they do of local police, nonprofit groups, and colleges and universities.
Amazon doesn’t inspect every product that appears on its site. To do so would be impossible. But still, customers expect that Amazon knows what it’s selling. And when they get a counterfeit product, trust in Amazon can quickly wane.
What is Project Zero?
Project Zero is an initiative aimed at removing counterfeit products from Amazon before customers can purchase them.
The company divides the program into three primary components.
First: Automated protections. This enhanced system uses machine learning-powered AI continuously scans Amazon stores and removes suspected counterfeits. Project Zero encourages brands to provide “key data points,” such as trademarks and logos, to protect their products. Amazon scans more than five billion listings per day looking for counterfeits, the company says.
Second: Self-service counterfeit removal. According to The Verge, historically, when companies have seen fake versions of their products on Amazon, they’ve had to submit individual requests to Amazon. If the company found the claim legitimate, it would remove the product. It was a slow process, especially when companies were losing business to counterfeiters.
Project Zero removes the middleman from that process. Companies that are part of Project Zero will be able to remove products themselves, without Amazon’s approval.
Third: Product serialization service. This offering allows brands to add a unique code, or serial number, to every unit they manufacture for a product enrolled in the service. Amazon has a list of these codes. That means Amazon can scan and confirm the authenticity of each product purchased from Amazon.com — and, more importantly, notice when products don’t match those that have been serialized. This keeps counterfeits from reaching customers.
The Verge reported that serialization will cost between one and five cents per unit, while automated protections and self-service counterfeit removal will be free for brands enrolled in Project Zero.
For now, Project Zero is invite-only. Amazon says brands know their products best and are best suited to identifying fakes. But at the same time, it will require Project Zero companies to undergo training and “maintain a high bar for accuracy” to remain part of the program.
Who should enroll in Project Zero?
Counterfeit products affect almost every company that sells through third-party online marketplaces.
In 2018, the Government Accountability Office published a report on counterfeit products on online marketplaces, including Amazon, eBay, Sears Marketplace and Newegg. Of the 50 products employees bought, about 43 percent of them were fake. Ultimately, the GAO found that “growth in e-commerce has contributed to a shift in the sale of counterfeit goods in the United States, with consumers increasingly purchasing goods online and counterfeiters producing a wider variety of goods that may be sold on websites alongside authentic products.”
So, if you sell goods through an online marketplace, there’s a good chance counterfeit goods will affect your online business — if they haven’t already.
Project Zero may be part of the solution, however. Though the program is still small, and companies are being added slowly from a waitlist, those involved think these additional verification steps are helping significantly.
According to Supply Chain Dive, Vera Bradley, Thunderworks, and Kenu have already enrolled in Project Zero, “and they appear to be thrilled with it.”
In a statement quoted by Supply Chain, Thunderworks CEO Phil Blizzard said: “Every unit we sell through Amazon has a unique, serialized barcode, and our counterfeit problem has nearly disappeared in the United States.”