In those heady days of the dot.com boom, we were falling over ourselves to extol the virtues of the worldwide web’s power to connect us and to strip out the ugly, corporate greed of the middle-man. The possibilities were endless and everything it seemed had a three letter acronym – it was all about UGC and P2P you know (pedant alert, I know 2 isn’t a letter…).
Yet 25 years on from eBay’s humble beginnings as AuctionWeb, the internet feels a very different place and marketplaces are now big, big businesses. What started as a vision to bypass greedy institutions has become another way for internet giants to leverage their scale. Marketplace Pulse estimate that Amazon sold $200 billion worth of product through its marketplaces in 2019 with the UK alone hosting over 280,000 active sellers (up 18% yoy).
The attraction for the platforms is clear; the third party sellers carry the cash flow burden of the inventory and you are able to satisfy the long tail of niche ranges which may not be profitable to carry yourself. More scalable and less risk; what’s not to like? No wonder it seems there is a marketplace for pretty much anything online these days.
The challenge of course is that, as a marketplace, you run the risk of associating your brand with a whole raft of issues, ranging from legality (e.g. counterfeit, stolen), quality (e.g. poor goods boosted through bought reviews) to morality (e.g. poor taste). Having had my own recent close shave with an illegal puppy farm it’s easy to see how the unsuspecting buyer can be lured in by the supposed stamp of approval of an online portal. Some of these scams are so elaborate that, to quote Lilly Allen ‘I don’t know what’s right and what’s real anymore’.
Recent news events have brought these challenges into sharp focus. Firstly, with third party resellers keen to cash in on the rumoured 400%+ surge in demand for safety masks in the wake of the Coronavirus outbreak, Amazon has been forced to remove some one million items from its site which made false/ misleading medical claims. Secondly, in the wake of the tragic death of Caroline Flack, US retailer, Teespring have found themselves in hot water after counterfeiters used their site to sell versions of Keith Lemons #bekind charity t-shirt. The response of course was predictable :- ‘Teespring is a user-generated platform and all designs are created by independent individuals. We have ensured the sellers account has been disabled. Rest assured, we do not support this behaviour (sic) on our platform!’
However, as we head into the 2020’s, is this stance acceptable anymore? Surely consumers have a right to expect both big businesses like Amazon or rising stars like Teespring to take more responsibility for the products listed on their site? The argument, of course, is that these brands provide the platform for retailers rather than being the retailer themselves. To use a bricks and mortar analogy, they would claim to be the mall rather than the stores within it.
Which? Announced last week that 66% goods they bought and tested from marketplaces such as Amazon, EBay, Wish and AliExpress failed the relevant safety tests, with examples as extreme as smoke alarms which couldn’t detect smoke. The Wall Street Journal found similar results in 2019, claiming that 4,000 products which had failed safety tests were offered for sale on Amazon’s platform.
A recent CBC investigation echoed these findings Over half the products they bought from marketplaces were either confirmed as counterfeit or suspected counterfeit goods, including fake cosmetics with dangerous levels of heavy metals contained within. According to Markmonitor, make up is now the leading category in which customers unwittingly purchase fake goods and across all categories and 37% of all unwitting counterfeit buys come from…. You guessed it - online marketplaces.
One could argue that consumers have a responsibility to check out the validity of who they’re buying the product from. However, the lines are becoming increasingly blurred here. To the untrained eye it is often unclear from the initial search, who the retailer is. Add in mixed customer journeys e.g. "Sold by X, Fulfilled by Amazon" and it’s no wonder consumers are often confused. For many of us, this is exacerbated by the trust we place in these online retail giants. Incopro have found that only 42% of Amazon marketplace buyers would run background checks on the seller (I’m actually surprised it’s that high!) ; the majority of consumers are placing their trust in a reputable brand to find them a genuine product at a great price.
Amazon of course will point to the billions of dollars it invests in trying to tackle counterfeiters and initiatives such as Project Zero but does there need to be a more fundamental overhaul of the marketplace model? Surely brands of this scale have a responsibility to do more and do it more quickly? One suspects that it is only when a marketplace is found to be liable in the courts that the winds of change might start blowing more vigorously. Birkenstock and, more recently, Daimler have both found cause to file lawsuits against Amazon with the Daimler case particularly interesting in that unauthorised parts were both ‘sold and fulfilled by Amazon.com’. However, the likelihood appears that this will end in a settlement agreement rather than a precedent-setting legal victory for the German car manufacturer
For all the court cases, confusion and counterfeiting, perhaps one of the most surprising things is that traditional retailers and brand owners have not addressed this more directly themselves. It’s almost impossible to read a marketing or retail newsletter without talk of growth in direct to consumer models or severe pressure on the high street but yet these same players have made very little of the fact that, if you buy direct or from a known high street brand, you know you’re at least going to get the genuine article.
Brand owners themselves are inevitably conflicted here; for most, Amazon is one of their biggest channels to market. However, for retailers of branded goods, building and leveraging trust in their brand is surely an opportunity - We hear so much talk of Amazon killing the High Street but perhaps this is one area where the old guard truly have the edge?..