Commingled Inventory May Be the Source of Amazon Counterfeits

Selling goods on the world’s largest e-commerce platform means dealing with a growing quantity of Amazon counterfeits. Small and medium-sized business owners may not realize it, but the site’s commingled inventory service could expose their inventory to counterfeiters. 

Understanding Amazon’s Commingled Inventory System

Amazon’s commingled inventory system — also known as stickerless commingling or virtual tracking — pools inventory with the same manufacturer barcode. By default, products that are “shipped by Amazon” are commingled. 

The Basics of Fulfillment by Amazon (FBA)

The FBA program lets storefronts outsource order fulfillment to Amazon. The e-commerce giant stores, picks, packs and ships their products. It even handles returns and customer service. In exchange, they must cover the fulfillment cost and pay a monthly storage fee. They can enroll by registering for FBA via the Seller Account Information page. 

How Does Commingled Inventory Work?

Those enrolled in FBA can use stickerless commingling. Their products receive a Universal Product Code (UPC) or European Article Number (EAN) barcode. They then become interchangeable with identical goods. 

Instead of labeling each product, Amazon uses the same UPC or EAN for multiple retailers selling the same thing. They may even be physically stored together in the same bin at the fulfillment center. Either way, all orders for that item are fulfilled using the pooled inventory rather than pulling from a specific account’s stock. 

Technically, the product remains tied to a specific account because Amazon uses virtual tracking. However, this is not always the case. 

Amazon Counterfeits Are In Commingled Inventory

Say Brand A sells travel tumblers out of a Kansas fulfillment center. Since it uses Amazon’s commingled inventory, its items are interchangeable with Brand B, which ships from Texas. When a customer in Florida places an order, Amazon ships Brand B’s goods. It then places Brand A’s product on a truck to Texas to replace the sold item. 

Unbeknownst to Brand A, Brand B sells counterfeits on Amazon. When the order arrives, the customer feels disappointed and angry. Situations like this one are not uncommon. People may receive off-brand fakes sold in place of name-brand items. The counterfeits may not be polybagged or shrink-wrapped, resulting in damage in transit and a mess upon arrival. 

At best, the customer feels frustrated but does not place blame. At worst, they threaten legal action when the product fails, breaks or hurts them. Counterfeit goods almost always lack required certifications and safety features. They may even contain hazardous chemicals or harmful materials like lead.

Understanding Amazon’s Counterfeit Problem

Fakes are rampant in the e-commerce industry. More than 90% of the counterfeits seized by United States Customs and Border Protection happen via international or express mail — channels that are mainly used for shipping small e-commerce packages into America. 

Amazon says it designed its systems to virtually track each seller’s inventory throughout the fulfillment process, enabling it to separate identical items. However, say a counterfeiter sells a genuine item via commingling. Amazon credits them with the sale. Then, it replaces the other storefront’s stock with the bad actor’s fake goods by virtually transferring ownership.

The Pros and Cons of Amazon’s Commingled Inventory

Stickerless commingling is not all bad. It can help businesses increase sales since they get access to Amazon Prime shipping times. Moreover, it can be more time and cost-effective because the e-commerce giant handles everything from packing to labeling. Generally, it charges less than comparable carriers for these services. 

Small business owners can benefit from faster delivery and reduced labeling time. However, they may encounter Amazon counterfeits. 

Reputation, customer retention and credibility are affected when customers are dissatisfied. They may leave negative reviews, dissuading others from ordering. At a minimum, their experience may deter them from making repeat purchases. Companies could lose brand momentum as a result. 

Even though Amazon does not penalize sellers for situations like these — meaning it will not deactivate their listing or seller account based on problems with units owned by others — the reputation damage can be significant. 

Don’t Your Patents and Trademarks Protect Your Brand?

Technically, moving counterfeit goods can result in up to prison time and hefty fines. However, third-party sellers with unrecognizable “alphabet soup” names flood Amazon with copycat goods, even in obscure product categories. Their items often have hundreds or even thousands of positive reviews because they sell at very low prices and ship for free with Amazon Prime.

These pseudo brands represent a growing portion of the e-commerce platform’s business. Reporting them may be ineffective. Their listings and brand names often disappear as quickly as they appeared, complicating the infringement claim process. They have overwhelmed the U.S. Patent and Trademark Office. 

Many are based in China, meaning they can get away with assimilating your branding — even for directly competing products — if you have not established trademark rights there. 

The Amazon counterfeit crimes unit may be able to help. It works with sellers, customs agencies and law enforcement to hold counterfeiters accountable. It has helped pursue around 24,000 bad actors through litigation or criminal referrals. Also, it helped identify, seize and dispose of over 15 million fake goods in 2024 alone. 

Steps Companies Can Take to Preserve Brand Reputation

Since more than 300 million consumers in 180 countries actively shop on Amazon, having a seller account is imperative for increasing brand reach. However, the threat of Amazon counterfeits can be worrying. Companies should take these steps to protect themselves. 

Enroll in Amazon’s Brand Registry

The Amazon Brand Registry leverages automated machine learning protections to prevent bad-faith listings. It is faster and less expensive than going through the courts for trademark, design, patent or copyright infringement. Forcing pseudo brands off the platform reduces the stock of counterfeit goods.

Perform a Test Buy on Your Product

A test buy can help business owners identify whether counterfeiting is an issue. Technically, it is against Amazon’s policy to do so because it falls under “manipulation of ranking.” Amazon could suspend the listing as a result. 

Using a personal account is not recommended because the algorithm may detect similarities between names or addresses. Instead, people should place a Multichannel Fulfillment Order. It uses their FBA inventory to fulfill an order from their website. To be safe, they should have a friend, family, contractor or employee to place the order.

Enroll in the Transparency Program

The Amazon Transparency Program is a product serialization service. For a per-unit fee, the e-commerce giant applies product-level authentication with a unique transparency code. This service is available in several countries, including the U.S., Canada and the United Kingdom. 

Show Customers You’ll Make It Right

One negative experience can drive customers away. Around 32% of people agree they would stop buying their preferred brand after a single unsatisfactory encounter. Luckily, exceptional customer service can increase their satisfaction by 20%, which translates to a 10% to 15% increase in conversions. Something as simple as positive review responses can help. 

Turn off Commingled Inventory By Switching Barcodes 

Companies can prevent Amazon counterfeits from entering their inventory by turning commingled inventory off. By default, those participating in FBA get manufacturer barcodes. They can adjust that setting at any time. The change applies to future shipments — not goods in transit or already at the fulfillment center. 

In the fulfillment by Amazon settings, they must scroll down to the FBA product barcode section and select the Amazon barcode instead of the Manufacturer barcode. They can print and apply these labels themselves. 

If they want to save time, they can pay for the FBA Label Service, which charges a small per-unit fee. Amazon will charge an additional fee if their products arrive at the warehouse unlabeled.

If Amazon Brand Registry approves companies, they must link their ASINs to a parent brand using a global category owner identification number.

Preserve Your Brand Reputation With These Tips and Tricks

Since global fulfillment relies on a vast, complex system, Amazon’s counterfeit problem may never disappear entirely. However, the Amazon Counterfeit Crimes Unit is working diligently to stop it. Still, business owners should not wait for someone else to protect them. Instead, they should keep these tips in mind.