Recently, global business broadcast network CNBC reported that noted specialty footwear provider Birkenstock has quietly walking away from its online retail distribution agreement with Amazon because of counterfeit goods concerns. That information came from a confidential letter acquired by the network.
According to the report:
“Plagued by counterfeits and unauthorized selling on the online shopping site, the sandals company will no longer supply products to Amazon in the U.S. starting Jan. 1. Additionally, Birkenstock won’t authorize third-party merchants to sell on the site, according to a letter the company sent to several thousand retail partners on July 5.”
A Birkenstock company spokesperson confirmed the letter’s authenticity to the network but declined further comment. A spokesperson for Seattle-based Amazon also declined to comment.
CNBC had earlier reported that scores of legitimate sellers that are hurting because fraudsters are knocking off their products and utilizing tactics such as paying for reviews and taking advantage of loopholes in Amazon’s logistics system. Further noted was that Amazon commingling of inventory from distributors at its fulfillment centers can expose authentic products and fakes to get mixed together without more rigorous controls.
Birkenstock obviously needs to control its brand but after legions of Chinese sellers promoted the Birkenstock Arizona sandal for $20 below standard retail price. While some consumer goods producers have elected to control fraudulent goods by turning over their full retail line-up to Amazon, this footwear provider elected to pull the plug and maintain its own control. Birkenstock will inform consumers to purchase its branded products only from authorized retailers which will not reportedly include Amazon.
While many fraudulent goods concerns have been consistently reported regarding China’s dominant online retail sites associated with Alibaba, these latest report reflects perhaps a different concern related to both Amazon and the Fulfilled by Amazon online platforms. From our lens, it once again indicates the increased sophistication of fraudsters, not only in the copying of product designs but in identifying fulfillment vulnerabilities of online retailers.
This should be concerning for B2C producers and all online retailers.