Electronic Retailer - May 2012 - 29

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BY SARAH SAIN

One regulation or law could change your business forever. That’s why the Electronic Retailing Association (ERA) is committed to protecting and promoting the common interests of the direct-to-consumer retail industry on Capitol Hill and beyond through its lobbying and education efforts in Washington, D.C. On May 7-8, ERA will once again host the Government Affairs Fly-In in our nation’s capital. ERA members will have the opportunity to support the direct response industry by meeting one-onone with members of Congress, hear from regulatory officials and witness the legislative process firsthand. In addition to meetings on Capitol Hill, this year’s Fly-In will include educational panel discussions on important topics that the industry is facing, including counterfeit and brand protection. But rest assured, after the membership returns to business, ERA will continue to advocate on its behalf to ensure the voice of the industry is heard loud and clear where it matters most. Electronic Retailer recently spoke with ERA members who are taking the lead when it comes to the issues that the association is monitoring and fighting for on a daily basis. Here’s what they had to say:

Counterfeit
Counterfeit activity has become one of the biggest issues faced by the direct response industry, and it poses a grave threat to advertisers and product marketers on a global stage. “Counterfeiting and fake products are a critical threat to our industry that directly impacts profitability on a business level, but, more than that, the products are usually of lower quality and so they impact consumer perception and consumer safety,” says Jonathan Gelfand, chief legal officer and senior vice president of business development at Beachbody, LLC. Counterfeiting is the deliberate attempt to deceive consumers by copying and marketing goods bearing wellknown trademarks, generally together with packaging and product configuration. They appear to be made by the

true manufacturer-rights holder where they are, in fact, inferior copies. In recent years, there has been an onslaught of true counterfeit and pirated goods coming from a number of countries and sources. The Department of Homeland Security reported that the U.S. Customs and Border Protection seized more than 24,000 counterfeit and pirated goods in 2011, a 24 percent increase over 2010. The domestic value of these seizures was $178.9 million. Yet, those in the industry say that is only a fraction of the counterfeit and pirated goods that make their way into this country. “It’s rampant,” says Gelfand. “The Department of Homeland Security and the White House’s IP czar are studying this and finding that, for groups like organized crime and terrorist organizations, it’s replacing the drug trade. If you get caught with a box of purses, police aren’t going to dig into it in the same way as if you get caught with cocaine. Making fake handbags and DVDs is the new drug trade. It’s extremely profitable and there’s a lot less risk.” China continues to be the No. 1 source country for counterfeit and pirated goods seized, accounting for nearly 70 percent, or $124.7 million, of the total domestic value of seizures by U.S. Customs. Some economists have estimated that 8 percent of China’s GDP, which the World Bank estimated at $5.9 trillion, comes from the sale of counterfeit goods. Scott Reid, operating officer at Oak Lawn Marketing, is chair of ERA’s Asia Committee. He agrees with Gelfand that counterfeiting is a very large threat to the industry’s profitability. “It takes money out of the pockets of everyone along the line of a campaign,” Reid says. “If you’re losing 15 to 20 percent of sales – and some say higher, especially with DVDs – that seriously threatens the ability to market a product.” Following the CEO Summit at the 2011 ERA D2C Convention, Reid and a small group of fellow ERA members agreed to work together

to form an Anti-Counterfeit Task Force. Individually, each of the companies had allocated the resources to monitor sites for their own products being counterfeited, educate U.S. Customs and retailers, and participate in takedowns of offenders. With the support of ERA behind them, the companies are currently creating a plan for how they can work together with anti-counterfeit service providers, particularly those who specialize in China and Asia as a whole, to take this battle to the front lines. “Our goal is to identify the worst companies that target the DR industry in terms of counterfeiting,” Reid says. “Rather than do this individually, we’ll work together to file class suits to cause these companies stress and make it painful for them to do business. We have this single focus and single goal, and through Bill McClellan, ERA’s vice president of government affairs, and ERA, we can address this problem head-on and eventually work with other industries to get our voices heard in Washington.” Earlier this year, Congress made an attempt at legislation aimed at stopping foreign websites that infringe on copyrighted material and counterfeit consumer goods. Better known as SOPA (the Stop Online Piracy Act) in the House and PIPA (the Protect Intellectual Property Act) in the Senate, both bills failed following widespread online and offline protests. Gelfand urges companies to go online and see if they have a problem with their products being counterfeited. “Once you have a popular product, it is going to get pirated almost immediately. If you do see that your product has been pirated, get involved,” he says. “Someone is leeching off your product, stealing your money. If you’re in DR, it’s no different than if you had a brick-andmortar store and people were coming in and shoplifting. Would you allow people to just steal from you, or would you take steps to stop the theft?” But what steps? Reaching out to others in the industry through ERA, for starters, Gelfand says. Companies need 29

May 2012 | electronicRETAILER



Electronic Retailer - May 2012

Table of Contents for the Digital Edition of Electronic Retailer - May 2012

Calendar of Events
Your Association, Your Bottom Line
Industry Reports
FTC Forum
eMarketer Research
IMS Retail Rankings
Jordan Whitney’s Top Categories
From the Executive’s Desk
Cover Story Leading a Fitness Revolution
ERA’s in Your Corner on the Key Issues
10 Secrets to Slashing Production Costs
Guest Viewpoint
Teleservices
Creative
Legal
Fulfillment
Member Spotlight
Advertiser Spotlight
Bulletin Board
Advertiser Index
Classifieds
Rick Petry
Electronic Retailer - May 2012 - cover1
Electronic Retailer - May 2012 - cover2
Electronic Retailer - May 2012 - 3
Electronic Retailer - May 2012 - 4
Electronic Retailer - May 2012 - 5
Electronic Retailer - May 2012 - 6
Electronic Retailer - May 2012 - Calendar of Events
Electronic Retailer - May 2012 - Your Association, Your Bottom Line
Electronic Retailer - May 2012 - Industry Reports
Electronic Retailer - May 2012 - 10
Electronic Retailer - May 2012 - 11
Electronic Retailer - May 2012 - 12
Electronic Retailer - May 2012 - FTC Forum
Electronic Retailer - May 2012 - eMarketer Research
Electronic Retailer - May 2012 - 15
Electronic Retailer - May 2012 - IMS Retail Rankings
Electronic Retailer - May 2012 - 17
Electronic Retailer - May 2012 - Jordan Whitney’s Top Categories
Electronic Retailer - May 2012 - 19
Electronic Retailer - May 2012 - From the Executive’s Desk
Electronic Retailer - May 2012 - 21
Electronic Retailer - May 2012 - Cover Story Leading a Fitness Revolution
Electronic Retailer - May 2012 - 23
Electronic Retailer - May 2012 - 24
Electronic Retailer - May 2012 - 25
Electronic Retailer - May 2012 - 26
Electronic Retailer - May 2012 - 27
Electronic Retailer - May 2012 - ERA’s in Your Corner on the Key Issues
Electronic Retailer - May 2012 - 29
Electronic Retailer - May 2012 - 30
Electronic Retailer - May 2012 - 31
Electronic Retailer - May 2012 - 10 Secrets to Slashing Production Costs
Electronic Retailer - May 2012 - 33
Electronic Retailer - May 2012 - 34
Electronic Retailer - May 2012 - Guest Viewpoint
Electronic Retailer - May 2012 - 36
Electronic Retailer - May 2012 - 37
Electronic Retailer - May 2012 - 38
Electronic Retailer - May 2012 - Teleservices
Electronic Retailer - May 2012 - Creative
Electronic Retailer - May 2012 - Legal
Electronic Retailer - May 2012 - Fulfillment
Electronic Retailer - May 2012 - 43
Electronic Retailer - May 2012 - Member Spotlight
Electronic Retailer - May 2012 - 45
Electronic Retailer - May 2012 - Advertiser Spotlight
Electronic Retailer - May 2012 - Advertiser Index
Electronic Retailer - May 2012 - Classifieds
Electronic Retailer - May 2012 - 49
Electronic Retailer - May 2012 - Rick Petry
Electronic Retailer - May 2012 - cover3
Electronic Retailer - May 2012 - cover4
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