LVMH Deals Serious Blow To Ebay

I’ve long been fascinated by ebay, but the recent French court judgment against it for hosting fake LVMH products – at the same time it’s dealing with a similar legal challenge from Tiffany — gives it one of the biggest challenges in its history.

According to the Washington Post, an LVMH spokesman said that 90% of the products sold on ebay as LVMH-branded goods were fakes. When Tiffany did a test buy of its merchandise on ebay, it found that 73% of the items were fakes. Even if those numbers are somewhat inflated, that is a lot of people getting ripped off. And ebay is making money off of each and every one of them. No legitimate business should be profiting so handsomely from illegal activity.

The problem, though, is there is no easy solution. Ebay notes that there are millions of items appearing on its site every day. In addition, some of the fakes are so clever – involving both authentic and copied materials – that it’s hard for even trained experts to tell the difference, especially when all they are dealing with is a visual image on a screen.

Ebay is stuck here. It plans to appeal the French ruling, and could still win the Tiffany case, but this is a long-term problem for the company that isn’t going away. Policing the site to remove every single counterfeit would be expensive and may not even be possible. The other option is to stop selling certain, widely copied, brands — but that opens the door for other companies to stop their products from being sold there, erasing ebay’s business in “previously owned” products.  Its business model may need some serious readjusting.

Whatever happens, the ”Wild West” days of the Internet, when it operated largely without rules or standards (not to mention sales tax), seem to be ending. 

In related news, ebay has changed its jewelry classifications — to separate “fine” from “fashion” jewelry. I always thought that the “fine vs. fashion” distinction was not something consumers cared about, and to be honest, it would be nice to see more cross-pollination between the two. But apparently, sellers wanted it. (Note that lab-grown stones have been ruled not to be fine jewelry by ebay. That’s a debatable point, especially since lab-grown diamonds are not cheap… )

JCK News Director