Alibaba’s recent entry into the International AntiCounterfeiting Coalition (IACC) was an ironic one. Being the first ecommerce company to enter a non-profit organization dedicated to fighting against product counterfeiting, whilst its website contains a high volume of fake designer bags. Despite Alibaba being committed to being the global leader of ecommerce companies to fight against counterfeiting, it has created quite a stir in the last couple of months amongst luxury brands.
The fallback from Alibaba’s counterfeit problem
In early May, the IACC suspended Alibaba’s membership. This is due to the backlash it received from Gucci and Michael Kors, in which both brands quit the association. The IACC board also received an anonymous email threatening a mass walkout unless Alibaba was suspended. The plot-line thickened after it was revealed that IACC President Robert Barchiesi has stock in Alibaba, previously undisclosed to the IACC members.
The Grey Market: Not just a Chinese Problem
However, as pointed out by this opinion piece on Business of Fashion, luxury brands should realize that counterfeit isn’t as big of a problem as grey market sales, a real issue embedded in Southeast Asia. As grey market continues to expand its platform onto WeChat (for Chinese consumers), Thai shoppers browse through Instagram, Facebook and Line to purchase luxury goods. As marketplaces leverage brand prices, the consumer’s relationship with luxury brands weaken. Granted, counterfeit products are bad for brands, but what they should be concerned about is the threat of the grey market, especially in Southeast Asia.
How ecommerce can help both Alibaba’s counterfeit problem and brands
An ecommerce buildout is essential, either on a brand site or an authentic partnership with the likes of Alibaba. Western luxury brands should not be fighting with Alibaba, but instead should be forming strategic partnerships in order to benefit from the platform’s consumer base and ecommerce know-how. This is a problem that will also occur when Alibaba fully infiltrates Lazada in Thailand, as Thai shoppers also buy goods through social commerce, largely supplied by grey market. This doesn’t just apply to luxury fashion brands, but beauty and apparel as well. A partnership of some kind would potentially go onto solve Alibaba’s counterfeit problem, hereby fixing the bigger problems of brands in Southeast Asian markets as well.