The last thing you want to do as an online entrepreneur is to sell counterfeit items. You will get into legal trouble, and the government is going to shut you down.
Most online retailers, like dropshippers, and even those who have brick-and-mortar stores, buy their items from AliExpress. It is one of the largest online marketplaces where you can find millions upon millions of products to sell.
But how can you avoid selling counterfeit items from AliExpress? This is what we are going to learn today. If you know how to spot counterfeit, you will be able to protect yourself.
What is counterfeit?
A counterfeit is described as the imitation of something. This includes the imitation of the design, the logo, and the name of a particular brand. For something to be counterfeit, it has to be an exact replica of a brand or a product.
Counterfeit items are illegal. Why? You see, people who produce goods took years to study how to make that product. They spend money on research, and then they spend money on branding, including a budget for advertising and paying for models.
Then, a manufacturer just decides to create fake but exact replicas of counterfeit items. They did not spend on advertising, and they certainly did not spend money on research. All they did was to reverse engineer the product, and now they sell the product like as if it is the original.
Since the product is fake, the original designer—let us use Nike as an example—does not earn money from the sale of fake items. Just imagine this happening to you if you designed and built a product from scratch and then somebody creates a replica of your product, how would you feel?
There are so many types of counterfeit items out there, and here are a few examples:
- Bags
- Shoes
- Cosmetics
- Clothing
- Power tools
- Watches
- Toys
Generally speaking, the counterfeit item is of lower quality. After all, the manufacturer of the fake item wants to sell it at a significantly lower price. The fake product may look good on photos, but they certainly are far from the original once you have them on your hands.
Having said that, you must know that counterfeit items are bad and can cause health problems, especially for items in the health niche. Counterfeit power tools are dangerous—they can explode and cause serious accidents and even death.
A few stats on the counterfeit business
There is big money made in the counterfeit business. The legitimate owners of brands are losing big on this battle. Let us take a look at some statistics to help us understand what is going on, and what the impact of counterfeit is in the legitimate industry of various brands.
Back in 2017, the accumulated losses of brands because of counterfeiting was pegged at $320 billion. The total value of counterfeit items for the same period is at $1.2 trillion. By the end of 2020, the estimated cost of all counterfeited good is $1.82 trillion.
This is a lot of money—money that never goes to the pockets of the original brand manufacturers. A lot of these counterfeits are from China because it is the world’s leading hub of manufacturers.
According to authorities, 87% of all counterfeit products seized in 2018 in US ports are from Hong Kong or China. Here is the problem: you cannot sue a Chinese manufacturer for counterfeiting if you are from the US. They live in China, and no justice will be served.
The Chinese government is doing what it can to stop this, but it certainly is not enough—counterfeiting only works because there is a market, and there are people who are willing to sell these products. There are millions of sellers on AliExpress, and for every counterfeiter you capture, another ten of them will pop up.
You see, where there is money, there is evil. There will always be people who will not invest in their own research. They will not take the risks of doing research, and all they want to do is to ride along with the success of others.
Do not support these manufacturers. If you sell or buy counterfeit items, you are just giving thieves a reason to keep on doing what they are doing.
Tips to avoid counterfeit goods from AliExpress
Now, let us move on to the tips on how you can avoid counterfeit goods on AliExpress. If you know how to keep yourself safe, you will not run the risk of paying a hefty penalty or going to jail.
Check the logo and trademarks
If there is one thing that you can be guaranteed off, no supplier and manufacturer are allowed to distribute any brand’s goods. Brands sell their items in their own online store, or on approved distributors like Walmart, not in AliExpress.
If you ever see a product in AliExpress that says Nike or any big brand name, stay away from it. AliExpress is not even approving the sale of any counterfeit item, but some sellers are getting away with it. If the product is an imitation, even if the brand name is not there, then it is still a counterfeit.
One example of this is figurines and toys. If you ever see a Marvel character toy, that is a guaranteed counterfeit item, even if the name of the character is misspelled. For example, you may see a Hulk toy but the name on the label is “Halk” with a letter A and not U. This is still a counterfeit.
Read the reviews
Even if reviews lie sometimes, all it takes is one dissatisfied customer to rate a seller and expose whether the item is fake or not. Take your time browsing through reviews as it is going to be worth your while.
The good thing about big websites like AliExpress is that you can filter to see reviews based on the star rating.
Take a look at the screenshot below. You will see that you can filter the review for 1-star rating only. If the product you are looking at has hundreds of reviews, this is a good way to find out if there is anything bad about this product, or whether it is a counterfeit.
Use a dropship supplier tool
Dropship supplier tools have a way to check if the supplier is a good performer, and if it is completely legit. For example, you can use Spocket to look for suppliers, and you can rest assured that all the suppliers found in this tool are legit.
Other tools that you can use are SaleHoo and Oberlo. Not all dropship supplier tools are free. Some of them cost about $9 per month. This money is going to pay off because you will only be dealing with suppliers who have good performance, not suppliers who will delay your shipment, much less suppliers selling counterfeit goods.
Order the product
The only way to guarantee that the product you want to dropship is legit is to order it yourself. This can take time, but at least you are sure that the items you are selling are not counterfeit.
Depending on where you are, it can take several weeks before you get your product. However, you will experience first-hand how your supplier performs. You will see the packaging, the item’s quality, whether you can track the order or not, and many more.
If you order the items yourself, you will understand what kind of experience your customers will go through. Do this for each supplier that you want to partner with, and use it as a deciding factor to choose who your suppliers are going to be.
Penalties for selling counterfeits
If you sell counterfeit, you will get penalized and even banned from a platform if you were exposed or caught. In this section, we will discuss a few scenarios that should make you think twice before you even consider selling counterfeit goods.
Payment Gateways
Financial institutions, including payment gateways like PayPal, do not like to be involved in selling counterfeit goods.
A lot of payment gateways will investigate your website before you get approved to accept money with their system. If they spot your site as a potential counterfeit, they will ask you to supply them with documents proving that you are a legitimate re-seller or retailer of a branded item.
If you fail to provide this, all payments made to you through this payment gateway will be put on hold. If there is proof that the item you sold is fake, you will never get that money.
Social Media
Social media channels like Facebook and Instagram are all cracking down on fake items. They do not support online stores that advertise fake goods.
This is why it takes a day for an ad to get approved. There are filtering systems in place that will forward suspicious stores and ads to the legal department. If the Facebook employee can prove that what you are selling is fake, your account will be banned.
This is bad for you, especially if you have already built a huge following. All these people will be gone, and you have to start from scratch. And since you are banned, it is not likely that you can use the same email address or name to create a new Facebook or Instagram account. You will have to create a fake one.
Legal Issues
If your web hosting provider or your store platform gets notified that you are selling counterfeits, they will shut down your store. If you do not get reported, the platform may find it one day on their own.
If you read the terms and conditions of these store platforms and web host providers, all of them do not allow their services to be used in anything that is illegal. In some cases, they may just ask you to remove the counterfeit items from your store.
What if everything you are selling is illegal? You have to shut down your store. As you know, your store is your asset. You cannot sell it, and you certainly cannot re-open it.
The worst thing that can happen is that you get banned from the platform. You cannot apply again, and you will have to build a new business from another service provider.
You can go to jail or pay a penalty
If the owner of the brand finds out about you, like Nike or Disney, then you may face legal consequences, especially if you are a big reseller. In court, they will have access to the sales you made over the years, and they can make you pay a huge price for the sales they lost.
In the US, the maximum fine you will pay is $2 million. You can also go to jail for ten years. Different countries have different rules. Just don’t risk it. It just isn’t worth it. While you can make a few thousand dollars here and there, this amount of money is just not worth going to jail for.
People will hate you
For one, your customers are likely expecting that they will receive original items from you, only to find out that the item they received is fake.
What kind of rating will you get? Also, can you just imagine the number of refunds and returns that you have to process? Do you really want this kind of headache?
On the other hand, your competitors can bash you. It is so easy to launch a press release to destroy you. If your items are counterfeit, your competitors will just state this fact to ruin you. They can also work with their influencer partners to ensure that your brand name or your store name, will be avoided by their followers like as if it is a plague.
Summary
While selling counterfeit items sounds promising, it does not really do justice to you or the manufacturer. In the end, you will lose this battle. Also, you should have conscience not to make this industry grow. You really cannot call yourself an entrepreneur if you are violating the law.