Amazon has a sprawling marketplace for third party sellers but there’s one major problem that’s causing all kinds of headaches: Chinese counterfeit products.
According to a report by CNBC’s Ari Levy, third party sellers on Amazon are increasingly getting frustrated by Chinese counterfeit sellers who undercut prices and create fake reviews to improve seller rankings.
The report also sheds light on Amazon’s weak policing measures that allow counterfeit sellers to game the system and re-open under different names even after getting caught for illicit activities.
In fact, the problem is getting so bad that 300 of the top marketplace sellers took the issue straight to Amazon’s SVP of seller services Sebastian Gunningham at a recent private event, according to the report. They grilled him with questions about how the company’s going to fix the problem, as many US sellers are losing shares and revenue to the Chinese counterfeit sellers.
The report says it became a deeper problem this year after Amazon started to “openly court Chinese manufacturers,” and urges there needs to be better regulations in place to protect authentic sellers, as Amazon is turning into “the world’s largest flea market – a chaotic, somewhat lawless, bazaar with unlimited inventory.”
This may not have an immediate impact on Amazon’s growing business, which just surpassed $100 billion in revenue for the first time last year. But it could have long term ramifications as its third party marketplace continues to play a bigger role, accounting for nearly 40% of the products sold on its online store.
Amazon’s representative wasn’t immediately available for comment.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.