Is Alibaba Winning the Battle Against Counterfeit Luxury Goods?

On his recent trip to Detroit, Alibaba CEO Jack Ma called counterfeits the “cancer" of Alibaba, in yet another prominent announcement in his campaign to remove fake goods from online shopping platforms Tmall and Taobao. A new report by digital intelligence agency L2 shows how much the e-commerce giant’s efforts to fight the fakes plaguing international luxury brands may be helping. Ma told the audience in a live interview at Gateway '17 in Detroit, “I assure all the SME’s here, we are the company online here today, the leader in counterfeit and IP protection. We know there are three things that will make our site die, three things that will be the cancer of our business—counterfeit, IP, and cheating.” His assurance comes several months after forming a counterfeit-fighting alliance with several major brand partners, including Louis Vuitton, and gaining the support of Chinese authorities. Alibaba pledged to use shared data and analytics to determine which listings on its site were fake. This all came after a tumultuous 2016 for the company as it faced issues convincing luxury brands it was doing everything it could to fight counterfeits, which reached a peak in May when Alibaba was ejected from the International AntiCounterfeiting Coalition. L2's study of product page results of luxury brand terms on Taobao shows how much Alibaba may have accomplished in its battle since as far back as February 2016. According to the report, the average number of search results for Taobao product listings for 10 fashion brands, Armani, Ports 1961, Gucci, Versace, Prada, Givenchy, Coach, Chanel, Calvin Klein, and Valentino, show a “marked decrease” of 64 percent from February 2016 to April 2017. However, this dip doesn’t necessarily mean that luxury brands are in the clear just yet—when a search is conducted for a luxury brand term, the results still yield tens of thousands of listings. The luxury brand that started out with the most product listings on Taobao was Armani, with the search term “Armani men” producing 486,000 results in February 2016. The listings saw the most dramatic drop in the period between May 2016 and September 2016, from 395,000 to 111,000. By April 2017, there were 68,000 results—an 86 percent decrease in product listings. Ports 1961, when searched for by its Chinese name 宝姿, also saw an 86 percent drop in listings. Versace experienced the largest drop in product listings at 88 percent. Unlike Armani, it witnessed its biggest decrease from February to May 2016. Coach, meanwhile, experienced the smallest change in search term results at a 47 percent decrease, but it’s worth noting that Coach started out with much fewer listings (140,000) compared to many of the other luxury brands studied. In most cases, there wasn't a major change in the number of listings for a search term from September 2016 to April of this year, but there was still an overall downward trend. L2’s report authors warned big luxury brands that these results signal that whether they have an official presence on Alibaba or not, they're likely to be on the platform anyway. They noted in the report that “it is clear that online third-party sellers will not disappear as long as demand remains robust.”

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Is Alibaba Winning the Battle Against Counterfeit Luxury Goods?