Amazon has long been a lifeline for businesses wanting to reach millions of customers. But for some, that lifeline turns into an anchor dragging them down. Mark Cuban, billionaire investor and entrepreneur, recently shared strong views on Amazon's AMZN impact on businesses, particularly those relying heavily on the platform.
Cuban described Amazon’s seller fees as “insane and unsustainable” and cautioned that businesses that rely too much on Amazon run serious risks. “When I look at investing in companies,” Cuban tweeted, “if you have any level of dependency on Amazon, it's a negative.” He's not alone in his concerns – criticism about Amazon's practices is mounting.
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The Counterfeit Crisis
Amazon's marketplace, which allows third-party sellers to sell their goods, accounts for over half of its retail sales. While this has brought in record revenues, it's also opened the floodgates to counterfeits.
Businesses like Crye Precision, a military gear manufacturer, are hit hard. CNBC recently reported that counterfeit versions of its patented MultiCam camouflage – found on products like tactical vests and backpacks – regularly pop up on Amazon. These fakes don't just cost Crye money; they're also dangerous. For example, some of the fake camouflage doesn't work with night vision.
Crye isn't the only brand experiencing a slump. Apple, Birkenstock, Ikea and Nike have all stopped selling directly on Amazon, citing counterfeit issues and what they describe as a “wild west” environment.
In 2020, Amazon established the Counterfeit Crimes Unit (CCU) to combat the issue. Through raids and the seizure of millions of counterfeit goods, the unit collaborates with law enforcement and brands to disrupt counterfeiting networks. Despite these efforts, the sheer scale of the platform makes it nearly impossible to eliminate the problem.
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Cuban's Proposal to Protect American Businesses
In response to Scott Adams sharing that “100% of the Dilbert calendars on Amazon are fake,” Mark Cuban has proposed a series of major changes to help protect American companies from knockoffs, particularly those coming from China. He proposes asking importers to pay $25,000 bonds to increase financial accountability to cover possible intellectual property infractions.
Cuban also suggests that before products are marketed, they should be registered on a government website for evaluation, allowing brands to confirm their authenticity. To cover these processes, importers must pay fees, which Cuban believes would discourage low-value knockoff goods from entering the market.
He also wants to shift the responsibility for proving compliance onto the importers instead of leaving American businesses to bear that burden. Automating these systems could make them more efficient and Cuban suggests hefty fines for retailers caught selling counterfeit products.
He claimed that these adjustments are “how you get China to pay. And how you at least start to protect American companies, from being knocked off.”
Amazon's “Insane” Fees
On top of the fake product problem, Cuban also pointed out how much Amazon charges its sellers. While Amazon gives sellers access to many customers, businesses feel squeezed by the high fees that eat into their margins. Cuban has called for transparency, urging businesses to share how much of their revenue goes to fees paid to Amazon and Walmart. “The numbers I have seen are INSANE AND UNSUSTAINABLE,” he tweeted.
A Bigger Problem in E-Commerce
The counterfeit issue isn't unique to Amazon. Platforms like Temu, Shein and TikTok Shop have also drawn criticism for selling cheap knockoffs, often shipped directly from China. CNBC cites a 2023 study that found that about one in three adults in the U.S. have knowingly bought a “dupe,” or a cheaper version of a popular product. While some see this as saving money, it's bad news for companies trying to sell real products.
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