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January 27, 2020

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Homeland Security Is Cracking Down On E-Commerce Counterfeits

On the latest episode of Today In Five:

With the rise of e-commerce has come the rise of counterfeit goods. The U.S. is now vowing to crack down on those counterfeit goods.

  • David’s Bridal introduced a series of digital wedding planning tools, including a vision board, an interactive wedding checklist, and a customizable website, according to a company press release. The launch of the new digital tools comes after David’s Bridal named its first chief digital experience officer and introduced its virtual assistant chatbot, Zoey. The CEO of David’s Bridal said in a statement, “We are relentless in our pursuit of becoming the most relevant, digitally modern, and innovative company to serve today’s modern bride."


  • Grubhub announced Thursday it was launching Ultimate, which uses software and hardware to allow restaurants to offer customers the ability to order their food online or through an app for pickup. Founder and CEO, Matt Maloney, said the food delivery company is focusing on marketing the technology to small and medium-sized restaurants. Ultimate is being tested at Chik-fil-A locations, Ohio State University, and more than 100 restaurants in the New York City and Chicago areas, according to the company. Industry-wide orders for pickup account for more than 50% of takeout sales, and 58% of all digital orders, according to the NPD Group. According to Morgan Stanley, $350 billion is spent every year on food purchased from restaurants. For Grubhub, providing a new tool for pickup orders could help it grab more market share, especially as it faces competition from players like DoorDash and Postmates.


  • Spotify and Apple are typically considered the giants in the music streaming world, but Amazon seems to be trying to push its way to the top. The e-commerce giant announced that its streaming service – Prime Music and Music Unlimited – had reached 55 million customers globally, across both its free and paid services. The company also said that Amazon Music Unlimited, its paid tier option, grew by more than 50% last year alone. Amazon and Apple have both kept subscriber numbers close to the vest. Apple’s last confirmed subscriber number was said to have surpassed 60 million in June of 2019. Spotify, however, has regularly updated its numbers, which makes sense considering music is its only business, unlike Amazon and Apple. Spotify said it ended the quarter with 113 million paid subscribers, up 31% year-over-year. Streaming music presents a big opportunity, with music revenue in the U.S. alone growing to $5.4 billion during the first half of 2019. Amazon wants its share of the market, and the e-commerce giant has both the power and resources to make it happen. Apple and Spotify will not only have to contend with each other but will also have to worry about Amazon’s rise in the music streaming space.

 

E-Commerce and the Unplanned Rise of Counterfeits

With the rise of e-commerce has come the rise of counterfeit goods. The U.S. is now vowing to crack down on those counterfeits. The U.S. Department of Homeland Security’s Office of Strategy, Policy, and Plans released a 54-page report promising to strengthen scrutiny, enforcement, and punishment to tackle what it calls a growing problem in e-commerce. In a foreword, the acting department secretary, Chad Wolf, wrote that, “illicit goods trafficked to American consumers by e-commerce platforms and online third-party marketplaces threaten public health and safety, as well as national security." 

The announcement of a federal crackdown on counterfeits comes as Amazon, in particular, has struggled to control fakes and unauthorized sales on its platform. The e-commerce giant has tried to push back on its apparent counterfeit problem, saying that the company has blocked more than 3 billion suspicious listings and prevented more than a million suspected counterfeit goods sellers from listing products. But, as the government’s report notes, the problem is only getting worse, and Amazon is feeling the pressure as big-name brands, including Ikea and Nike, increasingly leave the platform after establishing storefronts on its Marketplace. That will only continue to happen as brands continue to feel a loss of control as Amazon struggles to keep counterfeits at bay.

The issue with counterfeits goes beyond tarnishing brand names. The American Apparel & Footwear Association’s CEO Steve Lamar pointed out in an emailed statement that, “This is about more than just lost sales and damaged reputation...Counterfeit products that are unknowingly purchased...can put Americans in direct contact with materials that do not meet federal safety regulations, support unsafe working conditions, or enable illegitimate factories to ignore sustainable best practices. It is past time that we attacked this pervasive problem head-on."

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