Amazon Transparency Program 2022 – How Amazon Tackles Product Piracy￼
Transparency by Amazon – Why Does the Transparency Program Exist?
In 2019, over € 400 billion worth of counterfeit goods were traded worldwide. This is 2.5 % of the total world trade. In 2019, €119 billion of counterfeit goods were imported into the EU, representing 5.8 %.
In 2020, Amazon sorted out and destroyed 2 million counterfeit products from its warehouse. Another 10 billion products were blocked or not included in the product range at all. According to Amazon, around $ 700 million and 10,000 employees are being deployed to prevent fraud. Primarily, Amazon relies on artificial intelligence and other technical tools. This is intended to detect the counterfeit titles and remove them from the trade. In order to continue to efficiently prevent counterfeit products, Amazon launched the Transparency Program. In 2021, approximately 15,000 brand manufacturers participated in the program and took advantage of its benefits. (Source)
The question is whether counterfeiting is a big problem. Let’s take a look at Germany for example. The answer is given by the German customs report of 2021. 18 million articles were seized by German customs in 2021. This corresponds to a value of € 315 million. Three times as many items were seized in 2021 as in 2019, and the seized value of goods increased by 40 % from 2019 to 2021. The customs report states that over half of the counterfeit items come from the People’s Republic of China. (Source)
The previous section showed that product piracy and counterfeit goods are a cost factor that should not be underestimated. The following section describes how Amazon’s solution attempts to get a grip on this problem. What the Transparency Program is and how it is used will be explained in more detail below.
Amazon’s Answer to Product Piracy and Counterfeit Goods
For whom is the Transparency Program suitable? Since the program is about trademark protection, the program is mainly intended to support companies that have registered trademarks with Amazon (Amazon Brand Registry). Any manufacturer or owner of a brand can be affected by product piracy. To what extent a company is affected by counterfeit products is difficult to assess. And even more so, most companies are not aware of the extent to which product piracy exists. Large companies have their own departments that deal only with product piracy. For smaller companies, however, such a large effort is uneconomical and therefore not possible. For companies that do not have their own legal department but have registered their own trademarks with Amazon, the Transparency Program is a great help in taking action against counterfeit goods.
Apart from the financial damage, false ratings and reviews are given to the product in question. As a result, the products receive a negative rating, although fake products have been rated. However, this is not apparent to the customer.
The Amazon Transparency Program is currently (2022) available in the following countries:
- United States of America
- United Kingdom
Only customers from the countries where the program is available can use it.
Transparency QR Code From Amazon – What Does the Seal of Approval Look Like?
The solution that Amazon offers its FBA sellers is a cachet. This cachet is provided to the manufacturer or brand owner. The cachet is assigned to an ASIN. The special feature of this cachet is that each has its own individual QR code. I.e. each product has its own ID. Copying a cachet is therefore not possible, as the system would recognize that it is duplicated.
Each product approved for Transparency must have its own sticker with a QR code. The QR code must be prominently displayed on the outer packaging of each product unit. The QR code is also called Transparency 2D barcode. The QR code label can be recognized by a special Transparency (T symbol) and the seller can choose from three label designs. The labels are slightly different. However, there is a repeating pattern on all labels. The QR code is displayed behind the T symbol. The Transparency symbol is usually in a blue tone. By default, the square QR code is printed in black and white. The QR code stickers are referred to as labels in the following. This is also the current name of Amazon for the stickers.
The QR codes (labels) are available in different sizes:
– Label 1 – size: 2,8 x 2,8 cm
– Label 2 – size: 4,5 x 2 cm
– Label 3 – size: 3.5 x 3.5 cm
The Transparency Code is an alphanumeric value that is either 26 digits, starting with AZ or ZA (making a total of 29 digits, since the AZ/ ZA prefix is separated from the honorific by a colon), or a 38-digit SGTIN. (Source)
Transparency Labels – How Does Amazon Brand Protection Work?
The labels can be ordered from Fineline Tech. In the future, the Transparency symbol will also be displayed in the Amazon online store if it is a Transparency product. At this point (mid-2022), the system is being rolled out in the US. By the end of 2022, the system is also planned for Europe. It will then be possible to see directly on the Amazon platform whether the product is an original one. The T symbol with the text “Verified by Transparency” will be displayed. More information about the product is offered via “Learn more”.
The labels can be acquired in various ways. On the one hand, a corresponding number of labels can be ordered from a service provider, which are then sent as stickers. Another option is to print out the labels yourself. For this purpose, self-adhesive label sheets can be ordered from Amazon or the service provider, which have the corresponding T symbol on the sticker. The QR code is then printed on the sheets themselves as required. Since each QR code is individual, security is further guaranteed here as well.
Amazon FBA Shipping – How Each Item Is Checked for Authenticity
Every item, whether it is sold on Amazon or its own online store, needs this sticker. In this way, it can be ensured throughout the sales process that it is an original product. For deliveries, Amazon scans the item and checks whether it is a Transparency item. At the latest when Amazon ships the item, each Transparency Code is scanned and checked for authenticity. Both Amazon articles and articles from sales partners are scanned and checked. Since Amazon automatically checks all items in its shipping process, a high level of security is ensured. In addition to Amazon, there is also a check for sellers who carry out the shipping themselves. In this case, Amazon provides for a random check. In this way, additional items can be checked by Amazon and this can be done at all sellers. A complete check at all merchants is not possible, however, because there are too many products and sellers.
If non-authentic products are found on Amazon, they are sorted out and processed separately. There is a renewed examination of the found article. If the item is a counterfeit item, the item will be confiscated by Amazon and later destroyed. After a counterfeit item has been found, the listing of the item on the Amazon seller will be blocked to prevent future circulation of counterfeit products. If this happens more than once, the Amazon seller will be warned and penalized by Amazon. This can lead to a blocking of the entire Amazon Seller account.
Brand Marketing – Amazon Customers Can Check Your Items Themselves and Get Information
In addition to Amazon and sellers who ship themselves, customers can also find out if it is an original product. This gives buyers the opportunity to check the seal of approval themselves and ensure that it is a genuine product. Is it necessary for customers to download the Transparency App for Apple’s iOS from the App Store or for Android from the Google Playstore. With the app, the QR code can be scanned and a check of the scanned label takes place. After the check, the customer gets a green check mark for an original product. This lets the customer know that it is not a counterfeit item. In the case of a counterfeit item, a red cross is displayed. Then the customer can assume that it is not an original item. He then has the option to inform Amazon and return the item.
In addition to the aspect of avoiding counterfeit items, there is also the possibility of communicating information about one’s own brand to customers. This so-called “brand marketing” helps the brand to become better known. After the QR code has been scanned, further information about the product or brand can be displayed. Various details about the product are conceivable here. For example, general information about the product can be provided. This could be ingredients, materials or allergens. Take general information about the product, information about the individual article can be stored. The place of manufacture or the date of manufacture would be conceivable.
Amazon Transparency Costs – Is the Effort Worth While?
In addition to the pure financial costs, the time required for the Amazon Transparency Program is an important factor. Since the financial costs can be calculated on a label, the effort is relatively easy to estimate. The situation is different with the necessary steps that have to be carried out and the restrictions that arise as a result.
In order for the system to work, several steps are necessary and must be taken into account. If a cachet has been created for a product, only products with the cachet will be accepted. Thus, from this point on, a cachet is always necessary. The label (cachet) must be placed outside on the product, clearly visible. It must be on the same side as the ASIN barcode. In the automated Amazon process, the item barcode (ASIN) is thus automatically scanned and the item checked for authenticity. If a polybag or packaging is used, the label must be placed on the outside of the packaging.
In case of returns without a polybag and without a transparency code, the item can no longer be sorted into the FBA warehouse. The item will then be returned to the seller. The seller must then repackage the item and apply a new label. Then the item can be sent back to the Amazon FBA warehouse. As mentioned above, all items regardless of the sales channel, must have a Transparency Label. “All sales channels” in this case means the ones besides Amazon FBA, the own shipping on Amazon sales, an own online store or another platform. The pure financial costs are about 1-5 cents per label.
Amazon Transparency offers significant protection against counterfeit goods. Counterfeit products are automatically detected by Amazon and removed from the sales process. Amazon sellers who bring counterfeit products in circulation get their listing blocked and – in case of recurrence – an account block on Amazon. Negative product reviews, which are based on a fake product, will be avoided in the future. In addition, brand marketing is an important point. A product with the Transparency Label appears to be of higher quality and creates more trust with the customer. In addition, there is product information about the Transparency Label.
On the other hand, more effort is required here. In addition to the financial costs, labels must also be affixed to all articles. Returns whose packaging has been opened must be repackaged by the manufacturer. New labels are always necessary for the corresponding products. Once this step has been taken, there is no provision for Amazon to go back.
It is necessary to weigh the effort and benefit against each other. It is important to assess whether counterfeit products are in circulation and whether they have a relevant impact on your business. Furthermore, it is necessary to check whether brand marketing is a relevant factor. If the Transparency logo is displayed on items in the future, this may have a sales increasing impact. These advantages have to be balanced with increased effort.
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