Big Brands and Counterfeit Goods

I once had a conversation with someone about doing business on eBay.  They told me that at one point in the past they were shipping 1,000+ orders every month. I was curious how they were so successful, and why they decided to stop.

They were selling Monster Brand AV cables.  These cables sell for big bucks, and have a respected name in the industry.  He said they were doing such a tidy business because their prices were half of the retail price.

“But how did you get them so cheap? Doesn’t Monster regulate their dealers and pricing pretty closely?” I asked.

“Yes, but these were fake Monster Cables from China”.

Without even asking, my second question of why he stopped was immediately answered. He confirmed my suspicions.  Customers complained, eBay investigated and shut them down. Frankly they were lucky to avoid criminal charges. Overnight the money left in their PayPal account was seized, and their entire sales channel and business were gone.

The lesson is simple: If you are interested in creating a long-term, sustainable business, you will not do it with counterfeit goods.  It’s only a matter of time before it blows up.

Sometimes even when you tell people they aren’t genuine…

Even genuine goods can be banned, depending on the technology used.  I once purchased a lot of charging cables that were compatible to the Apple Lightning charging cable. The cables were not made by Apple, and were certainly inferior to Apple branded cables.  But I was able to sell them for about $3/each.  I stated on the listing clearly that these were not Apple brand.  Several times.  I had no desire to deceive people.

Well it turns out, I made the mistake of using Apple, iPhone, and Lightning in my listing.  Within a few days (before any actual sales) Apple complained, and eBay pulled the listing and gave me a stern warning.  Because I had used their Trademarked name, I was in violation.

The Brand conundrum

Selling genuine, name brand goods is very appealing. You get much better search presence since people are looking for your specific product (Eddie Bauer Cargo pants) vs a generic term (pants). And it is with good reason.  These companies have spent gobs of money in order to establish their brand, and create brand value and recognition in the user’s mind. Its a valuable thing that brands are wise to protect. Most large brands are not interested in selling wholesale to an online based upstart company. So how do you do business in brand-driven marketplaces?

1. Liquidation – By buying genuine goods (Shelf Pulls, Overstocks, 2nds, Customer Returns, etc) you have every right to market your products using the brand name. That is what they are, afterall. So long as you label them in the correct condition (used, salvage, open box, etc) there will be no problem on the marketplace sites.

2. Find A Willing Brand – In every market, there is a level of cottage industry.  Finding a Mom and Pop shop that has the respect of the market but lacks the marketing and retailing knowledge or ambition may be the way to go. Sure, Jim’s Shoes may not be as popular as Nike, but maybe they are among Lacrosse players.* And they may welcome the extra sales volume they get by supplying you goods at wholesale prices.

3. Your Brand Here – As mentioned, establishing your own brand can be a complicated, time consuming, expensive process. But certain niche markets are devoid of a brand leader.  If you find a market that is underserved by a respectable brand, get some product and YOU be that brand. It’s a slower start, but more valuable and rewarding in the long run.

Get Choosey

When you have the opportunity to buy goods, keep these cautions in mind. Make sure you can sell your product without using a brand or trademark you don’t have access to. If it will blend into a world full of generic products or get you in legal hot water, move on to the next product.

*As far as I know I made up Jim’s Shoes and its affiliation with Lacrosse.


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