Coach clos­ing in on e-com­merce fraud

China Daily (Canada) - - ACROSSAMERICA - By YU WEI in San Fran­cisco yuwei12@chi­nadai­

New York-based de­sign brand Coach Inc has re­newed its Mem­o­ran­dum of Un­der­stand­ing (MOU) with China’s largest e-com­merce com­pany, Alibaba Group Hold­ing Ltd, to take fur­ther steps against coun­ter­feit­ing on Alibaba’s e-com­merce site Taobao.

The new MOU was formed based on the two par­ties’ 2011 MOU to deepen and strengthen their co­op­er­a­tion. Un­der the MOU, Taobao will con­tinue to im­pose penal­ties on coun­ter­feit ven­dors on the plat­form, as well as pro­vide tools and a plat­form for in­tel­lec­tual prop­erty rights (IPR) own­ers — such as Coach — to ed­u­cate the pub­lic on IPR and the po­ten­tial con­se­quences of IPR in­fringe­ment.

Ac­cord­ing to Coach, it is a more com­pre­hen­sive ap­proach that in­volves ed­u­ca­tion of the pub­lic as well as the preven­tion, mon­i­tor­ing, iden­ti­fi­ca­tion and re­moval of coun­ter­feits.

“As a re­spon­si­ble cor­po­rate cit­i­zen, Coach has a long­stand­ing com­mit­ment to fight­ing coun­ter­feit­ing to pro­tect our cus­tomers’ in­ter­ests,” said Jonathan Seliger, pres­i­dent and CEO of Coach China. “We ap­pre­ci­ate Taobao Mar­ket­place’s anti-coun­ter­feit­ing ef­forts which help cre­ate a bet­ter and more trans­par­ent online shop­ping en­vi­ron­ment.”

Since the US fash­ion brand opened its first out­let in China in 2003, Coach has seen strong sales there. Dur­ing the year end­ing June 29, 2013, Coach’s net sales rose 7 per­cent to $5.08 bil­lion from $4.76 bil­lion the prior fis­cal year.

China is now the sin­gle largest op­por­tu­nity for Coach and is cur­rently its third largest mar­ket af­ter the US and Ja­pan.

In 2011, Coach teamed up with Taobao in an ef­fort to stop the sale of coun­ter­feit goods in China. The two have since re­moved nu­mer­ous list­ings and ven­dors from Taobao’s plat­form that have in­fringed on Coach’s IPR.

“As a plat­form that con­nects buy­ers and sell­ers, we are ded­i­cated to pro­tec­tion of in­tel­lec­tual prop­erty rights,” said Florence Shi, a spokes­woman for Alibaba. “We have a long­stand­ing track record of our com­mit­ment to anti-coun­ter­feit­ing with mech­a­nisms and teams in place to fight against this type of be­hav­ior.”

How­ever, the bat­tle against coun­ter­feit­ing and work on IPR pro­tec­tion could be a drawn-out process.

Cur­rently, there are still hun­dreds of thou­sands of online stores on Taobao sell­ing Coach prod­ucts priced from $9 to $8,863. Not all prod­ucts are fakes; some are au­then­tic Coach prod­ucts pur­chased at Coach stores or out­lets and then resold, a ser­vice called daigou, or buy­ing on be­half of.

An­gela Zhang, a na­tive Chi­nese cur­rently liv­ing in the San Fran­cisco Bay area, opened a store on Taobao three months ago that sells prod­ucts from Coach hand­bags to Clin­ique skin care prod­ucts.

“So many rel­a­tives and friends asked me to send them those prod­ucts that I de­cided to open my own store,” Zhang said. “Sales are up, es­pe­cially in the past Thanks­giv­ing month.”

Zhang said high prices at home are the main rea­son Chi­nese con­sumers turn to buy­ing lux­ury prod­ucts through pur­chas­ing agents in the US. “Right now, I’m fo­cused on es­tab­lish­ing my store’s cred­i­bil­ity, so I only ask a small mark-up for a prod­uct,” she said. “Once I get more cus­tomers, I can ask a lit­tle more.”

Zhang said she didn’t know about Coach’s new MOU with Taobao and ad­mit­ted that even if her store could po­ten­tially be pun­ished, she would not stop sell­ing the prod­ucts there.

“There are a num­ber of stores on Taobao just like mine,” she said. “I don’t think the bad luck will come my way.”

Wang Xin, as­sis­tant pro­fes­sor of mar­ket­ing at Bran­deis Univer­sity, be­lieves it is hard to com­pletely get rid of coun­ter­feit prod­ucts online.

“How­ever, sell­ing fake prod­ucts (or other forms of fraud) is not unique to online sell­ing,” said Wang. “What makes this prob­lem par­tic­u­larly frus­trat­ing to con­sumers and to e-com­merce com­pa­nies is per­haps in part our ex­pec­ta­tions of tech­nol­ogy. Af­ter all, it has ef­fec­tively solved many prob­lems and made our lives more con­ve­nient than we could have ever dreamed of be­fore.”

Wang said it is just plain eas­ier to sell coun­ter­feit prod­ucts online. “Set­ting up an online store is just a few clicks or a few lines of code away. With tech­nol­ogy as read­ily avail­able and scal­able as it is, it paved the way for fraud­u­lent be­hav­ior,” she said.

“Many e-com­merce com­pa­nies like eBay and Ama­zon rely on re­views as well as in­ter­nal mon­i­tor­ing sys­tems to en­sure user be­hav­ior is not in vi­o­la­tion of com­pany pol­icy,” Wang said. “Yelp has a pro­pri­etary al­go­rithm to pre­dict if a re­view is fake or not. Though not per­fect, it helps the com­pany keep a close eye on what’s been de­liv­ered online, and in­still a sense of con­fi­dence in users.”

“The bot­tom line is e-com­merce com­pa­nies have to be vig­i­lant and grow with the mar­ket so­phis­ti­ca­tion to win this war against fraud. It is an ever-evolv­ing process,” Wang said.

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