Monday, August 15, 2005

Alibaba... a name you can trust ;)

Forbes (which widely reported Yahoo!'s Alibaba investment as a great move) just published an article on Alibaba's problem with fakes. Alibaba's Thieves Threaten Yahoo! This a problem faced by online marketplaces generally, but Alibaba's B2B focus is a vast multiplier on this issue (consumer buys 1 fake handbag, business buys 100 pallets of 100 fake handbags and then sells them to 1000 consumers).

According to the article "A spokeswoman for the House subcommittee on commerce, trade and consumer protection, which heard testimony in June that berated Alibaba for trafficking counterfeit goods, said the company and its partnership with Yahoo! was on the committee's 'radar screen.'...

"Alibaba has emerged as a chief target of advocacy groups, which say the company has been less willing than its competitors to weed out phony products from its sites. 'Counterfeiters from all over the world converge on the site,' concluded a February report by the anticounterfeiting coalition. Timothy Trainer, former president of the coalition, said Alibaba had been singled out in the report because of the sheer volume of knock-offs traded on the site. "

For those who are wondering, eBay has a Verified Rights Owner (VeRO) program in place that pulls listings at request of rights owners and a huge team of folks patrolling the site for prohibited products (helps to have one of the biggest community of users on the Internet).

No doubt Yahoo! will work with Alibaba to reduce the severity of this issue. Let's hope that Alibaba's sales volume wasn't based on thousands of pallets of $100 Roll-X watches and $10 Hermays ties...


Anonymous Anonymous said...

Are you seriously asserting that eBay is going to do a better job at policing its marketplace? If eBay really goes toe-to-toe with anybody else over fraud and fake items, it's going to be pretty messy. You should really look for a better basis for comparison.

6:42 PM  
Blogger Ro said...

I did state that fakes are an issue on ANY online marketplace... that being said:

1) Alibaba is a b2b site and 2) many of the suppliers of fake merchandise happen to be sourced from China.

Combine the two and you have a toxic combination leading to greater concentration of fake merchandise sales.

11:36 PM  

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