Amazon is facing a most significant survival challenge to date when the Trump administration released a report on new measures against counterfeiting and counterfeiting on Friday. As announced by the Department of Homeland Security DHS, the new measures will hold Amazon and e-commerce platforms responsible for the counterfeit goods sold on it.
The U.S. Department of Customs and Border Protection’s report (CBP), a DHS agency, makes many new regulations binding more responsibility for counterfeiting to Amazon.
Now, warehouses and fulfillment centers in the United States, which largely belong to Amazon, will have legal and financial responsibility for the goods in them. That means billionaire Jeff Bezos’ company will incur additional costs due to new anti-counterfeiting policies on e-commerce platforms.
Accordingly, law enforcement officials will begin instituting cases against counterfeit goods sold online and will “pursue civil and other penalties against these entities“The new rule also allows”.The government seeks compensation from third-party exchanges and other intermediaries involved in counterfeiting.. ”
Moreover, the new measures give greater authority to inspect shipments in warehouses and distribution centers in the United States. Officials will notify counterfeit facilities and encourage platforms like Amazon to voluntarily carry out “removal and destruction of large quantities of contraband” that has not been seized by US Customs.
Not only to protect US intellectual property, the new rules also ensure public safety as well as national security. That’s why the Trump administration also requires e-commerce platforms like Amazon to send them a huge amount of data from third-party vendors for a closer look.
A CBP employee checked one of the 14,800 Nike knockoff shoes seized on a shipment from China to Chicago last year.
Jeff Bezos has already faced huge trouble regarding fake goods on his platform. Previously, a series of brands have sued Amazon for their counterfeit and counterfeit goods are sold on this platform. But so far, the giant has prevailed in the court when succeeding with the argument that Amazon is a platform, not a seller.
But with these new measures, that argument will no longer work. That would compromise the company’s ability to keep prices low and grow product options quickly. The new costs associated with controlling counterfeit goods (as well as penalties) will also hurt the company’s profits.
This would be a deadly blow to the company’s fragile profits, even if Amazon employees were paid the lowest possible pay.
According to a Bloomberg report in April 2018, Amazon’s operating profit was only 3.8% compared to more than $ 51 billion in sales revenue, too fragile compared to Facebook’s profit of up to 45%.
Amazon stock plunged 1.22% on the trading day last Friday as DHS prepared to issue its report.
Refer to CNN