Online marketplaces on the rise
By: Globaleyez, The Brand Protection Experts
Tags: Marketplaces, Brand Protection, Ecommerce, Counterfeit

The coronavirus pandemic hit many economic sectors pretty hard. For example, restaurants and other industries where direct human contact is more or less necessary have struggled to find new ways to operate.

Online marketplaces, on the other hand, are experiencing a boost as we speak. It takes just a little common sense to understand why: if people can’t or won’t go to physical stores, ordering the products they need online will solve their immediate problem — and help online marketplaces achieve the growth of a lifetime.

This time, common sense is backed by hard evidence. The United Nations Conference on Trade and Development (UNCTAD) has recently unveiled a study examining the impact of COVID-19 on e-Commerce.

The study researched the turnover and revenue of the 13 biggest online marketplaces in the world. Seven of them are from the US (Amazon, eBay, Walmart, Uber, Expedia, Booking Holdings, and Airbnb), four from China (Alibaba, JD.com, Pinduoduo, and Meituan), one from Canada (Shopify) and one from Japan (Rakuten).

According to the data, 2020 was a good year for e-Commerce. The marketplaces examined experienced a 20.5% rise in turnover, and the share of e-Commerce in global trade grew from 16 to 19%.

However, we can’t say it’s only because of COVID: in 2019 the turnover of these same marketplaces grew by 17.9%. This means that physical retail was shrinking even before the coronavirus pandemic dealt a further blow to the sector.

Big winners and even bigger winners

According to data published in the UNCTAD study, the largest online marketplace in the world is Alibaba with a Gross Merchandise Value (GMV) of $1,145 billion in 2020.

(Illustration: Gross Merchandise Value (GMV) of Alibaba, Amazon and JD.com)

Amazon is second with $575 billion, while JD.com is third with its $379 billion.

However, the marketplace that grew the most over the course of 2020 is none other than Shopify from Canada. Shopify managed to double its business and is now worth around $120 billion.

What is JD.com

While the majority of marketplaces featured in the study is well-known in Europe and the US, JD.com is probably the odd one out.

Founded in 1998, JD.com is one of China’s largest e-Commerce marketplaces. The platform has over 471 million annual active customers and offers products in a vast array of categories, including electronics, groceries, fashion, beauty, home appliances, and much more.

(Screenshot of JD.com)

e-Commerce: both opportunity and danger for brands

The growing global online commerce has given brands opportunities they’ve never experienced before. Entering a foreign market is now easier than ever, which helps brands widen their reach and grow their audience.

Unfortunately, brands are not the only ones with stellar new opportunities. Copyright infringers, counterfeiters, grey marketers, and other fraudsters also find it easier than ever to widen their reach — at the cost of brands.

Contrary to what many may think, counterfeiting is not limited to trashy marketplaces and dark corners of the internet. In fact, products found on reputable marketplaces like Amazon or eBay can also be counterfeits.

According to the recent report Counterfeiters in Online Marketplaces: Stealing Your Sales or Sharing Your Costs published in the Journal of Retailing, 20 out of 47 products offered by third-party sellers on five large online marketplaces, including Amazon and eBay were counterfeit.

For example, an Amazon vendor offering electronic goods discovered that over 70% of the items sold by third-party sellers and advertised as original were, in fact, counterfeits. No wonder the US Trade Representative (USTR) has included Amazon on the list of notorious marketplaces.

Most major platforms have an anti-counterfeit policy. However, the effectiveness of any such policy depends on how strongly it is enforced. And in that regard, there are big differences between platforms. Some marketplaces, like Amazon, take bigger steps than others to remove detected counterfeit listings and ensure their sellers can’t return to the platform.

Others may not have the human resources or the inclination to do more than simply publish their anti-counterfeit policy on their site. Shopee, for example, is often named as a marketplace that doesn’t act efficiently enough against counterfeit listings appearing and reappearing on its platform.

Different goals, different outcomes

Nobody likes low quality, cheap counterfeits. In theory. But in practice, many make (or save) money on the global trade of knockoffs.

Obviously, the counterfeiters are the biggest winners in this equation. But let’s not forget about the marketplace. A sale is a sale, whether an authentic or fake product was sold, which means that the trade of counterfeits affects the bottom line of online marketplaces quite positively. No wonder some marketplaces are rather sluggish when it comes to the fight against counterfeits.

Of course, if a marketplace is swarmed with cheap knockoffs, its reputation may suffer to the point that customers could become wary to purchase anything on the platform. But let’s get real. Some customers wouldn’t mind owning 5 € AirPods, or a 16 € Yves Saint Laurent handbag.

(A screenshot of a Wish listing offering AirPods for 5 euros)

Bad news for brands

There are two losers in this scenario. The first one is obvious: customers. Many counterfeit goods, like fake Audi radiator grilles are dangerous, maybe even lethal for customers. However, the real losers here are definitely brands that stand to lose revenue as well as their reputation.

Which means that brands need to take steps on their own if they want to stop the sale of their counterfeited products. You can count on marketplaces only to a certain extent, and some customers may not be overly outraged with an offer to purchase your “branded” products for a fraction of the regular price. (Others, on the other hand, could mind it very much, causing your reputation to take a dive and further damage to your brand.)

Unfortunately, it’s not always easy for customers to distinguish between a fake and an original product, especially if they only see a picture and description of it on an online marketplace. According to the Journal of Retailing study, there is usually one measure brands can resort to in order to signal a product’s authenticity to customers: by raising its price. Which is not something customers would like very much.

But what else can brands do on their own?

Brand protection to the rescue

Luckily, brands are not alone in this fight. Online brand protection experts like globaleyez are ready to detect and stop counterfeiters, grey marketers, or any other IP infringers whose actions harm your brand.

As the Journal of Retailing study points out, “a higher effort level in combating counterfeiters will reduce the survival probability of counterfeiters and increase the possibility that a consumer would purchase an authentic product in the platform. Hence, a counterfeiter’s incentive to invest in selling effort would be reduced while consumers’ willingness-to-pay for the product on the platform would increase.”

globaleyez is ready to put in a “higher effort level in combating counterfeiters” on your brand’s behalf. As we’ve seen above, marketplaces may not be inclined to go the extra mile because the sale of fakes brings just as much as the sale of original branded products.

Online brand protection experts at globaleyez, on the other hand, are dedicated to the fight against fraudsters who hurt our clients’ IP rights. Our services like marketplace, image, social media, app, and domain monitoring, as well as test purchases and enforcement are geared towards detecting and removing fake and unauthorized product listings anywhere in the world.

Don’t let counterfeiters steal your revenue and distort your brand’s image. Raise your efforts to a higher level and contact us for a comprehensive online brand protection program.

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We at globaleyez are market-leading online brand protection experts. We find and take action against counterfeiters, grey marketers, and copyright infringers that harm our clients’ brands. We’re based in Germany, but our services cover the entire world. We conduct test purchases, monitor marketplaces, provide enforcement services, and much more. Reach out to us and let us know how we can help your brand.