Managing Automation - September 2008 - (Page 18)

joshua greenbaum NOTES I’ve always been amazed at how long it took for eBay to be called to task for the criminal activity that has been all too common on its website. Ever since the company started up 13 years ago, I’ve had trouble understanding why such a successful enterprise would let itself become a marketplace for piracy, counterfeiting, and fraud. The company is now trying to clean up its act, spurred in part by lawsuits in the United States and Europe. But eBay’s indifference to fraud doesn’t only mean that individual buyers have been left holding the bag. Manufacturers in a wide variety of industries — from consumer electronics, to luxury goods, to entertainment — face a loss of revenue and, much more important, a loss of brand equity as a result of eBay’s inaction. Every company with goods for sale on the Web faces huge potential liabilities due to counterfeit activity, and the breadth of the potential fraud is enormous. A pending lawsuit by Tiffany & Co. alleges that 83% of Tiffany products sold on eBay are counterfeit. And a French court recently ordered eBay to pay luxury goods manufacturer LVMH Group $61 million in penalties, based on allegations that 90% of LVMH’s products sold on eBay — which include Louis Vuitton, Dior, Moet, and other brands — were counterfeit. The eBay example highlights a problem that all manufacturers whose products are sold through Web-based marketplaces are facing with increasing trepidation: Not only must the buyer beware, but also it’s up to the manufacturer to police the Web or face the consequences. The manufacturer beware issue extends beyond counterfeiting to sales strategy. Even as eBay acknowledges that the fraud problem must be dealt with, the company is denying that it has a responsi2008 Guarding Your Brand Online josh@eaconsult.com Any manufacturer with goods sold on the Web faces big losses from counterfeiting. It’s up to the makers to monitor the risk. Enterprise software may help. bility to stop gray market activities that involve sellers auctioning products for sale outside their intended region. Such gray market activity, eBay told the New York Times, is actually legal, and LVMH’s suit is an attempt to “protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers.” What’s a manufacturer to do? Welcome to your new mandate: managing sell-side, Web-based risk. This involves monitoring — or trying to monitor — websites, auction sites, and other online outlets for evidence of rogue product sales, synching those suspect sales with real orders to find the anomalies, and then deploying resources across the globe to investigate, shut down, and/or prosecute the miscreants. If this sounds hard, it is. And even global manufacturers with global-sized resources are having trouble meeting the problem with pure brute force. The good news is that the need to automate global brand protection fits neatly into the rubric of enterprise software, and vendors such as New Momentum and GenuNet are working on this problem. And more are on the way, as the scope of the problem grows and the burden of enforcement continues to rest on manufacturers’ shoulders. So, if you make products — or even components — that end up being sold on the Web, you should add brand protection to your software shopping list in the next year or so. As with your personal health, an ounce of brand protection is worth a pound of cure — or in LVMH’s case, $61 million worth of cure if the lawsuit isn’t thrown out on appeal. There must be an easier way. s Joshua Greenbaum is principal of Enterprise Applications Consulting, based in Berkeley, CA. maonline managingautomation.com For more of Joshua Greenbaum’s views, visit: u Supply Chain Risk & Reward www.managingautomation .com/notes53 u The CIO’s Waning Relevance www.managingautomation .com/notes52 u Sound Familiar? www.managingautomation .com/notes51 ma 18 September Photo: David Toerge http://managingautomation.com http://www.managingautomation.com/notes53 http://www.managingautomation.com/notes52 http://www.managingautomation.com/notes51

Table of Contents Feed for the Digital Edition of Managing Automation - September 2008

Managing Automation - September 2008 Contents Take 1 Letters Tech Vendors Defy Economic Slump by Plugging into Developing World Growth New E2open Chief Outlines Plan to Accelerate Growth Is This Marketing as It Used to Be or Something New? The OMAC Group Attempts to Widen Its Influence Automation Federation Names Chief, Plots Growth Notes Cover story: The Innovation Gap Special Report: Meet the Progressive Manufacturing High Achievers Progressive Manufacturer of the Year Business Model Mastery Innovation Mastery Customer Mastery Supply Network Mastery Data & Integration Mastery Education & Training Mastery Leadership Mastery Operational Excellence Mastery Special Report: Catching the Wireless Wave Part 1: No Clear Infrastructure Winner Part 2: Wireless Apps Take Wing Part 3: The Human Side of Wireless Product Scan Advertiser Index Next

Managing Automation - September 2008

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