Is Your Brand at Risk? Learn to Identify and Prevent Counterfeit Goods

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Welcome everybody to another edition of CPG Insiders. I'm your host, Mark Young. Justin is off this week and I'm going to be filling in for him. So I'll be doing the duties on both sides. Folks, I want to talk about.

The.

Problem we have with counterfeiting. And this really came home for us recently with one of our clients, I won't say which one, but client contacted us and there was actually companies on that they found on Amazon that were selling exact replica knockoffs of their supplement. They have a very popular supplement and companies were selling knockoffs of the supplement that were not real and they were attached to fake addresses on YouTube and it happened or the not on YouTube. On Amazon, the address for the business wasn't even a real business. It happened to be in an area where I was. So I actually went over to the building that was listed and there was no such business at this building whatsoever. And as it would get them shut down, they would just pop up someplace else on Amazon under a different name. But selling counterfeit products. Now you would think, I mean you first think of this, this is a thirty dollar bottle of supplements. Think, my God, somebody went through a lot of trouble to replicate a $30 bottle of product. But clearly this is a popular product where these people are selling some grossly inferior product. What's even more frightening is this is a product that helps prevent certain conditions. So people are relying on it for health purposes and they're buying the product, they're paying for it, they are believing they're getting the product and they are not getting the benefit of the product. So we have a guest today who's going to talk to us about this. And we're talking to gentleman named Justin Floyd. Now he is an award winning entrepreneur, 25 year track record of founding and investing and pioneering technology. Sounds like he's a serial entrepreneur like myself, which I always refer to as being the socially acceptable addiction. So we have the only addiction that people encourage.

Not with your immediate family. Exactly.

He founded Red Cloud which is a global supply, consumer goods business, distributor retailer, fast growing economics and trading efficiency. He founded a fintech company. He's been an Ernst and Young Entrepreneur the year finalist. And he has now moved into the use of AI for open commerce. So I want to make a couple comments before we bring him in. One, I want people to understand AI is here. AI isn't frightening. AI is a tool. So a lot of people are frightened of it. It's no different of a tool than a computer was a tool. AI is not going to, you know, the AI overlords aren't going to overtake the planet and, you know, subjugate us all to being slaves to the machines. AI isn't going to take anybody's job away. But AI will replace people. But not because AI took your job. It will because someone else who knows how to use AI will take your job. And it's important for all of us in the CPG world to learn how to embrace AI because, because we think of, a lot of times we think of the fun and playful nonsense you can do with AI. I can make deep fakes. I can make my brother look like he's, you know, saying something. I can make Richard Burton read my birthday address. But there's, there's really work that AI can do for us if we learn how to leverage it. Now I'm going to give you some statistics that Justin gave us. I want to give these 47% of brands experience sale losses due to fake goods. In the US alone, counterfeit products amount to 4.5 trillion annually. That's, that is a staggering number when we think of, we have a $20 trillion economy. So we're basically saying 20% of the economy is being subjected to false products. And these false products are affecting 60 to 80% of American shoppers. So the odds are we've all been hit with some fake product. Despite the measures, up to 60% of items sold on Amazon are estimated to be counterfeit. Now that.

Is that real?

Justin? That just is mind boggling to me. 60% of products on Amazon aren't even real. Is that for real?

60% of products on Amazon? At times there are up to 60% of products on Amazon not real. You I'm sure will be aware that I think 5 years ago Amazon really opened up their marketplace to sellers from all around the world with a particular focus in Asia and, and especially in China. And as you've highlighted, Mark, you know, counterfeiting, that, that $30 vitamin bottle you talked about, I mean this is, this is counterfeit being done on an industrial scale now. So, so counterfeit is no longer the guys in kind of hoodies in a dark room somewhere knocking out a couple of Gucci handbags that they can sell on Times Square. Know counterfeiting is one of the most lucrative criminal enterprises throughout the world nowadays. We've been, we've been, all of us been faced with some kind of counterfeiting experience at some period in our life. Whether it's tickets we bought online and of course the whole online experience has made that process much easier. And I think for the first time, you're seeing now offline products being really affected by that. And, you know, I use the Gucci handbag as a great example. You know, the luxury items.

Yeah.

Forever.

Selling some knockoff bags. But.

Absolutely.

And let me ask you something with. We already have a major problem with Amazon selling stolen goods. So we already have an issue of retail fraud, organized retail fraud, going into retailers and just emptying shelves, because now you can do that in certain parts of the country. And then Amazon is letting these people sell the stolen goods. And of course, the real company is having to compete with their own product that has zero product cost because it was stolen. So any feel for, when we look at Amazon, is there any feel for, between counterfeit and stolen, what the percentage is?

No, that's less clear to me. I mean, certainly my focus has been around the counterfeit space. Stolen. I think it's a whole different paradigm. But Canto Feed is a big problem on Amazon. It has been for, for a while now. I mean, that's why Amazon, I think, is spending, you know, several billion dollars a year and trying to clean that down. They're using, you know, arguably fairly rudimentary AI tools. But it's, it's, it's, it's whack a mole stuff. Right? I mean, the minute they kind of crack one down and another three operate in a space. And of course, part of the problem with this is Amazon's business model, because their business model is completely reliant on the idea that the original premise of Jeff Bezos back in 1991 is that we always want to make sure that we've always got the lowest cost of consumer goods available on our marketplace. And that kind of works to a point, but it's not working in a world where consumer prices are increasing inexorably and certainly where the quality of products are actually diminishing at the same time. And so you've got a situation now where I think almost two thirds of all the sellers on Amazon today are from Asia, not American. These aren't American manufacturers of products you're seeing. So sellers you see on Amazon, these aren't your local friendly kind of store that used to walk past when you were a kid and you'll say, hi, hello to you knew you could trust the product because you trusted the person behind it. You have no idea now. You have no idea where, even though that seller is real, number one, no idea whether their reviews are real, number two. And then, of course, on the back of that is where the products are, what they say they are. It affects so many different kinds of products. I mean whether it's everything from kind of electrical apparatus through to know typical luxury goods, vitamins you've talked about. I think where it becomes much more serious is the fact that trusted brands, as you quite rightly pointed out, are not getting a look in inside those kinds of marketplaces. And so what we've been doing, we've been very focused on building out what we believe is the second generation of E commerce. We call it open commerce. Open commerce doesn't mean a free fall. Open commerce means creating less barriers between trusted parties so they can trade with each others much more efficiently. Got over half a million distributors here in the US you've got over 5 million mom and pop stores, retailers. I think you got something about 2 million online sellers here in the U.S. it's an incredible entrepreneurial economy. As we all know, over 100,000 FMCG brands I think in all different shapes and sizes here exist inside, inside your borders. Most of those businesses don't trade with each other today. It's bordering on almost insane. And so I think the second generation of E commerce needs to do a much better job than the first one did of connecting that long. Going back to your AI point, however you describe AI but certainly the use of data to be able to connect trusted parties together is now becoming an economic imperative.

So how do, how do we deal with this? Let's go to, to our client. They make a high quality supplement that is health based. The knockoff product has matched the label. They've, I mean it's almost indistinguishable looking at the product. It's not the same product inside the capsules but to a consumer they can't tell the difference, that they're not getting the real product.

It's not a, I mean this is a kind of three, three phase approach I think. I mean number one is, is to actually figure out why it is that, what's there. Trusted parties. When I talk about trusted parties, trusted brands, quality brands, quality US brands, quality international brands, why they are not being connected through either global or local or domestic supply chains into whether it's online retailers or offline retailers like your typical mom and pop stores, while all that inventory that exists and it's being manufactured, why is that not getting into the hands of local sellers, local retailers who are able to take those products to their consumers. Whether it's an online or an offline environment that just hasn't been happening. And the reason why that hasn't been happening is varying. But the cost of technology, the difficulties around AI, the lack of use of data have really prevented that from happening. Until we create a more even and open and democratized trading environment, from a technology perspective at least this world will continue to occur. I mean, the counterfeit, you know, I mean counterfeit products exist because of that vacuum that's been created around that. On the second part, definitely AI and BI tools can be used far more extensively than being done at the moment across supply chains to actually eradicate to a level some of the counterfeit product problems that are existing. Are you going to be able to create imaging style software that's going to be able to figure out, and you're right, the intricacies of a label, whether that actually is a real counterfeit product or not? I doubt some of that, but what I do believe is that AI can play an important part in, in figuring out that clearly there's problems with inventory, there's problem with pricing that inventory. The way in which that availability, that inventory has been made in a local basis probably doesn't quite match up in terms of the pricing in the way that it should be sold locally. It would be able to identify that clearly products that are being sold locally to consumers are being sold a lower cost or inferior cost to the real product. Therefore there must be a problem there. And there's a number of different anomalies, as you well know, number way that CPG supply chains work that can actually identify those kinds of issues. And I think the third problem is, or third issue is of course bringing together technology businesses in particular to partner much more successfully than they're doing together at the moment. Still. So many parts of the technology industry is still completely disconnected from partnering with each other to actually execute on a much more successful supply chain as possible at the moment.

So how big is this problem? How, how does, how does this counterfeit, counterfeit product business, how big of an impact is this having on manufacturers? And is the impact bigger on the big internationals or the small brands? Where, where's the, the most damage being.

Done in a relative space, in a relative basis? Of course it's the small guys and there's some really great quality, quality brands that are never even seeing the opportunity to be able to get their products in front of consumers. And they're not seeing that because of course there's just so many counterfeit style products that are currently made available to those consumers that are just dragging them out. I mean, you'll be familiar. I mean, Amazon's the biggest and arguably the greatest retailer that's ever existed.

I always think of Amazon and ebay as the world's largest fencing organization.

Yes, you describe as that. Definitely. Yeah. And you look at the way their algorithms work, right? I mean Amazon's algorithms are, you could argue, but they're predatory. I mean they work on the basis of delivering the most revenue and value to Amazon, maybe not to everybody else. And so if you don't sign up effectively to certain pricing on the Amazon platform, then they just bury on the search engines until you do. That's great to a point where you've got manufacturers that actually can't even produce products at that price. That's where the vacuum gets created. That's where you see the cat feet guys start to creep in. You heard about last week, I think it was two weeks ago, Amazon announced, I mean I was horrified that the press didn't pick up on this. They announced their global partnership with temu. I mean TEMU like Xi' an have been, have been accused for years on the way in which they are currently producing counterfeit slash massively inferior slash ripoff products. They're projecting American consumers and now Amazon launching a global partnership with them to allow them to sell on their marketplace. It's kind of slightly mind boggling. The, the Amazon lobbyist must be doing an incredible job in Washington at the moment.

Is Amazon, you said Amazon is spending money to try to stop this. Are they really trying to stop this? Does this, or I mean is this, does the counterfeiting really cause Amazon any problems?

I think Amazon's business model is lowest price to consumers. I think, you know, the, the costs that come with that. I, I'm not convinced that they have really taken into account at all in terms of the damage they're creating, not only in terms of consumers but on the retail economy as a whole. I mean there's one thing saying, well, it's a shame that Sears shut down, you know, know it wasn't a great department store anyway. But when you see the destruction that they've created across small businesses and in particular it's less about the kind of small retailers, but it's more about the manufacturers actually have just been literally killed in their thousands over the last, over the last decade. Brands that had quality products that actually American consumers would have loved at a price they could have afforded. I've never seen the light of day. That for me is the biggest problem with Amazon. All marketplaces like that. And I think you're right. What you just described about in terms of Offense. I mean I almost look at Amazon as like a, as a bit of a flea market at the moment. I mean it's almost turning into like the $1 store. But that's a long way I think from Jeff Bezos original vision that he had.

And this is so in our business, we do a lot of business with the big brick and mortar companies. And if you were to go to Walmart and buy a vitamin, it will be the actual vitamin.

Absolutely.

It will be genuine. It will gone through a channel of distribution.

Absolutely.

That would have gone from the factory to the distributor to the retailer. There's a chain of custody, I guess is probably the best way to put it. There's a chain you can rely that the product at Walmart and Walgreens and Target and CVS and Meijer and all these places you can rely on that product is real. Now you're saying if I go to Amazon I have a 60% chance of getting a fake product. Is that genuinely the risk?

Yeah, up to, I mean there's been a number of studies done, a number of, you know, kind of customer surveys and people have looked at that. I mean up to 60% could be as low as 20, but you know, anything above double digits is shocking.

I mean are there certain categories that the counterfeiters focus on more than others?

Electrical items, definitely, but much more heading intowards food, you know, dried food products, for example, like vitamins, you know, I mean things like baby powder, for example, baby milk. I think it was Roche who are currently suing Amazon, you know, over, over actually the counterfeit, the number of counterfeit products of their own products that appeared on their marketplace. Now if Amazon are investing, I don't just want to make this all about Amazon. I think other marketplaces are equally guilty. And the Walmart example you gave is a good idea. Walmart have got really trusted relationships with their suppliers. I've been to Walmart many times. I've sat in those booths that they have inside their main reception area where you talk to buyers. We believe firmly by bringing open commerce from a technology perspective that world is possible not just in Walmart but across the supply chain. Generally the problem with Amazon is a supply chain problem and their supply chain is often contaminated and they're not doing anywhere near enough about them and the world needs to do that.

They really, they have, they have no connection to the supply chain. There's, there's no, there's no control of chain of custody, is it?

Absolutely none at all? No, none whatsoever. I mean when you open up your marketplace to Temu or when you open up your marketplace and almost 2/3 of your sellers in that marketplace are from Asia or from China, you know what's coming your way.

So how do we fix this? And is this, this a global issue? Is this an issue that each manufacturer needs to take on for themselves for their own initiative? Obviously, the American consumer is being hurt dramatically with this, but so are American entrepreneurs. And not only big companies, but small innovative consumer packaged goods companies are being injured by this.

Yes, they are. I mean, I've actually just joined the board of the AI Trust foundation in Washington, which is founded by Pillsbury and Jerry Bonami, who's a very, you know, he's really vocal Congressman on some of the issues with Amazon. I joined their board three weeks ago and this is the number one agenda on their board at the moment. And they've got three kind of key things they're worried about. First of all, they really are worried about US manufacturers and US SMEs. The US manufacturers, not only have they got problem on their own doorstep, but actually around the world, people love US products. They want to be able to buy those US Products. They want to buy those US products in confidence. They want to know when they buy online or they want to buy from their local favorite store. When they, when that US product is got Hershey on really is coming from Hershey. That's important to them. Secondly, the initiative is to clean up this problem with the supply chains. You know, how do we create uncontaminated, they described it as vaccinated supply chain. How do we create a vaccinated supply chain where at the end of it, as consumers we can be sure that the product we're getting is the product it says it is and it's real and it's come from the company. We need that assurance. And we shouldn't just have to go to Walmart to get that. We should be able to go to our local store or we should be able to buy off a trusted online seller in the US who can deliver us the same thing. And the third thing is how can we collaborate as an industry to make that problem a lot less worse? And there's a lot of technology, there's a lot of investment gone into this space and AI. And I agree with your point. I mean, there's a lot of fluffing towards AI at the moment. But the fundamental point around AI and what is happening now is this ability for data warehouses, data lakes, data lake houses now to be connected to machine learning, which has been around a Long time. This isn't a new fad, but the fact that that data now can be collated in a much more easy, cheaper, much more effective way is now becoming a reality for the first time. Connect machine learning and AI to that. Now you've got a real chance of really combating these kinds of problems in the supply chain and to stop that kind of contamination from Amazon overflowing to everything else, which it will do.

So when I look at Walmart, let's say Walmart is carrying my vitamin.

Yeah.

Walmart is only sourcing that vitamin from one supplier.

Yeah.

And that supplier being me. I hold the patents, I, I do the manufacturing. Walmart has verified that I am indeed the vendor of record, that I am indeed the maker of this product. And there's a chain of custody on the product leaving my warehouse, going into a truck, and that truck is tracked all the way to Walmart's dock.

Absolutely.

Amazon will let me go sell my vitamin. They'll let 20 other people show up and sell my vitamin without what? Without ever asking them, what's the source of the vitamin? Where did you get the vitamin?

Absolutely. You know, Amazon, if you want to become Shopify. Similar, right. If you want to become a seller on Amazon, you sign up with Amazon and they say to you what products you want to sell. You can either source it through our inventory, our own brands that we've probably. There were somebody else's brands at one point, but that's a different subject, or you can go and get your own inventory. And by the way, here's some of the places you can try. They point you to places like AliExpress in China. It's incredible. They don't care. I mean, they, their job is to provide, as they see the customer, the lowest possible price for their goods. And if the price of that goods comes with a different price tag attached to it, and they put their hands up and they say, well, sorry, that wasn't our problem, but we've killed that seller. Make sure you look more carefully next time before you buy from someone. Check out the reviews. How can you check out the reviews when there's AI bot agents being used to create fake reviews on the site in the first place?

So what we really need, I mean, the ideal solution would be for Amazon to adopt the same process of vetting products as a Walmart or in a Walgreens.

That's correct.

Which means I make Product X. I'm the only seller of Product X because I make Product x and 20 other people can't be resellers. Of product X. So it's the reseller issue that becomes the problem because nobody's validating that the product's real or that the company even had the authorization to even represent the company that's selling the product.

Well, I think reseller relationships can work extremely well as long as it's a bona fide reseller and it's a genuine reseller. And as you well know, I mean, that's used successfully all around the world, whether you're companies like Pepsi Cola, for example, you know, right. The way through to Procter and Gamble, Unilever. I mean, these businesses effectively use resellers in the form of distributors and wholesalers. And the retailers actually act as their, you know, arguably as their resellers. Anyway, what they've got here is really tight control over their supply chain and understanding the source of that product. There's still challenges for that mind, you know, and there's a level of counterfeiting still goes on in that kind of business. You look at Coca Cola, for example, I think outside of the U.S. nigeria, for example, is the second largest market. They're one of the biggest problems they have is that, you know, by the time as a consumer, I buy a bottle of Coca Cola, you know, probably half of it was Coca Cola and the other half of it is water. So there are different kinds of issues going on there. But fundamentally that it's possible, completely possible, and particularly using AI to have this relationship between trusted original suppliers, authorized, trusted distributors and wholesalers and ultimately the trusted retailers. Where you can buy that from. With Amazon, it's not the case at the moment. Amazon is a free for all and it's the amount of kind of scrutiny that's been done around the supply chain and the way in which they're using their IO tools to actually manage that supply chain is nowhere near the level where it should be.

Yeah, so it's literally a D. A digital bizarre or flea market.

Yeah, exactly. That's exactly how it is.

Just walk up and throw your table up and throw your stuff on the table and it's for sale.

Absolutely, yeah. In England we have something called a jumble sale, right. And you turn up, you turn up to the kind of school car park every summer. Everybody's got their kind of tables out with all sorts of junk on it. But you know what, you don't care. You just buy something from somebody. In the world that we live in, we believe there's the second generation of E commerce in particular where you. I think we want to go back to a World in which we are able to buy from trusted people and people we like, from people we respect, but also importantly from sellers that we know have got the authority and authenticity be selling the products they've got. You go on Amazon today and I'm sure you've been through this experience. I did it at Christmas, right. I was trying to find a watch for my wife, one of those kind of Swiss watches. 104. I've typed in a Swiss watch plastic. 146 pages was a search came up then, then, then I have to spend the next half an hour trying to figure out where and I. It looks like I'm buying from Amazon. That's what's scary.

Oh, I've got it. I've got to believe that the, the watch business must just be horrendously overtaken with knockoffs.

Yeah, absolutely. And, and so, and I think that the scary bit is, is you've got this experience, this user experience where you feel like you really are buying from Amazon as a brand but you're not. You're buying from a third party seller that's got a potentially a fake review that you have actually no idea where it's originally come from. And actually when you start to kind of dive through the small print, it's only when you realize that actually hold on a second, you know, maybe this is what it should be. And so it's a, it's a problem as a consumer to have to go through that.

Is there anything that that brands, and there's lots of brands, hundreds of brands listening to you right now. What can these brands do right now to try to stem this?

Adopt. I think there's three things they can do. One is to really start to accelerate the use of technology and AI technology. A lot of these brands have got great kind of data warehousing capability. What they've really failed to do is connect the rest of their supply chain to that as well as someone like a Walmart's done. You know there are as I've mentioned, 5 million mom and pop stores here in the US alone. Take some like Nigeria. There's over 30 million mom and pop pop stores there in those countries. These are local stores where people love to buy their local products from. That's local fresh, you know, vegetables right the way through to package goods. Brands can do so much more to adopt the kind of technology, not only sorts of manufacturing and they're just in time production act but actually connects those retailers directly in a trusted environment through their supply chains directly into them. That's a world that can easily exist today. You know, a brand should almost be able to beam in directly on a, on a retailer's mobile telephone, be able to see almost, you know, visually around the store, you know, what these guys are doing, what they're up to. If you, if you walk into a typical brand and I won't mention any names, I was in a couple in New York last week and I asked, I asked their board last time they went, met one of their retailers. That was a long time ago.

So how do we get rid of, how do we get rid of the criminal organizations on Amazon?

Yeah, that's, that's a whole different problem that Amazon need to deal with. I mean they are, you know, they're using a level of their technology and to be fair to Amazon, I think they are trying to, to do that. I think the criminal organizations will always find some kind of way to get through when you've created the vacuum that you've created. And the only way Amazon can do that is to adopt the same kinds of principles that everybody else is doing, which is sort your supply chain out, start to build usual technology to create a much more end to end vaccinated, I think you describe it, chain of custody across your supply chain. Stop cutting deals with temu, stop trying to bring in.

What's that about?

I have no idea. And how can you, how can you have two thirds of your sellers coming from China? I mean, where did that suddenly come from?

And let me, let me give people an experience. So I've, I've manufactured products in China before and quite honestly, a product I manufactured years ago, we had to manufacture in China because the product cost US less than $2 to make in China. And it was going to cost us over $10.

Yeah.

To make the product in the U.S. yeah. And it was a product that, that sells for ten dollars. So we couldn't make a ten dollar product and sell for ten dollars.

Yeah.

And it wasn't a product that if I paid $10 to make it, people were going to pay me 50.

Yeah.

It was a product that was worth $10. So we had to make it there. So we made our products in a plant in Shenzhen, China.

Yeah.

Now if you've never been to Shenzhen.

I have.

You have. You know what, you probably know what I'm about to say. There is, is it Saturday? Is the day off? There's one day off, yes. And I think it's Saturday.

Yeah.

On Saturday you can walk up and down the alleys in Shenzhen where all these factories are and buy pretty Much anything you want for pennies on the dollar that are American products because they're just selling them out the back door. I mean, I'm not making this up, am I?

No, there's an irony in that.

And I'm, and I'm talking about you can go there and you know, and buy a Henry Bendell purse or, or you know, buy DKNY designer clothes or. So I'm not talking about just some junk or electronics or radar detectors or Bluetooth players and you're paying nothing for them. How much of that product is making its way is. And I think it's not just people buying it on Saturday. I think the actual manufacturers who are making the products for us are also competing with us on Amazon. Is that a fair assessment?

Yeah, I agree with that and I think that's, that's a, and that's a bigger problem that Washington needs to deal with. Right. And generally new government needs to deal with where you've got that problem going on. But yeah, I mean, no question, I mean there's, there's definitely that issue is going on.

And no one in China respects a patent, correct?

Yes, very much so to be fair. Fair. I think that's becoming a bit of a global epidemic at the moment. But yeah, I agree with you. It certainly started there. No, they don't.

But you go to China to make your product, they don't care that you have a patent on it. They don't care that you have a trademark on it. And we found our own products that we were making were being sold out the door with our brand on them in our packaging. So it wasn't even, we're just knocking it off. It was sold as if it was ours.

We're going to make it look like it's yours. Yeah, I mean it's, it's interesting you say that you see that particular. So the markets that I've been particularly operating in across Africa and Latin America. So I'm from, as you can tell from accent from London technology, British entrepreneur originally. My first experience back in Africa I think was about 16 years ago. And what really interested me was to see there how powerful the Chinese influence there is. But of course that's the, that frankly is the go to market strategy in Africa. So they bring us looking products and they sell those at knock down, kind of no price at all to African consumers and it's been a very successful business model for them for the last decade.

Is this an argument to, to, for small consumer brands to not sell their products on Amazon?

Yes, most Definitely. And they don't need to either because you know, the power, you know, still 80% of all purchases, even, even on Amazon's best days, still 80% of small local purchases, you know, still done locally, still done from people that you trust, still done from local stores, local high stores, your local shopping streets, places like Walmart, et cetera. But there's still a massive traffic that's being done offline. And I think yeah, for the small brands in particular, you know, there's a great way in which they can be far more easily, far more efficiently connected to multiple retailers through using kinds of technology like an open commerce is a movement rather than a piece of technology. But using that kind of concept to actually connect with those people is really important. I think it's critical that small brands in particular have a real opportunity to level the playing field because on one hand you've got, you know, the kind of very powerful big kind of 100 CPG brands that have been around forever. But there is really quality brands that come up against those that are offering, you know, sometimes better quality brand, lower price. You know, I'm far more, and, and in many ways, you know, far more sustainable many times as well. They're just not even getting a look in. So there's two levels to the supply chain. There's one where you've got these complete lockdown supply chains you mentioned to me earlier, like Walmart, which really do need opening up and really do need, you know, quality brands to get an input into. And secondly of course for smaller brands to get much more of a looking online as well.

Now the thing that is disturbing is that Walmart.com doesn't follow the Walmart chain of custody. They follow the Amazon model.

Yeah, and you know there's, there's parts of that coming in because the pressure of course that they're on with the chase against Amazon puts a lot of pressure on them to be able to do that. That kind of, you know, to kind of what I described the short shortcut E commerce. It doesn't follow necessarily that chain of custody that you mentioned earlier on the vaccinated supply chain as I refer to it as.

So if we don't put our product on Amazon, do we have a way of stopping Amazon from allowing so called resellers of our product to carry it? Since it's our trademark and our name?

I think retailers can become much more. I mean I think one of the challenges, particularly around retailers, I'm not talking about the large, big box guys, but I'm talking about smaller Retailers in particular, I think, you know, the adoption of technology in there is extreme, extremely important and for them to actually have much more of a one on one relationship with their, with their customers, the way that Amazon used to have in their initial days with their customers I think is a really important factor of that going forwards. And so I think you can create a really trusted relationship then between the resellers, between the brands, between their distributors. I think one thing we're kind of not talking about in here is that big ugly bit that sits in the middle which is called the distributor. You know, the really, the kind of the forgotten enterprise who's responsible for buying this stuff, the bringing it to the retailer and making sure it actually turns up from the factory it's supposed to turn up to the price it's supposed to be coming in at with the actual product they said it was going to do. I think that's probably one of the most, if not the most under developed and under appreciated parts of the, parts of industry at the moment, particularly the retail industry and the critical importance they play. It's shocking to me how, you know, how little technology capability they've got, how their margins are so unbelievably stretched that they're just taking shortcuts all over the place. So to go back to your point, it is a supply chain end to end problem. It's understanding each component piece of that supply chain, which parts of those supply chains can be made more efficient but not more efficient at the cost of bringing in untrusted third parties to sell whatever hell they like and calling it a marketplace.

There's almost an argument here to think about brands putting notifications on their own website warning people that any product, any of our products you see on Amazon did not come from us potentially knockoff and not the real thing.

Yeah, and I mean it's interesting to see just how many brands, I mean I think I heard about Nike are potentially finally going to go back onto Amazon off their boycott from four years ago. I mean one of the major reasons why Nike came up with Amazon, as I think everybody knows, is because of their concern around the quality of merchandise, particularly the knocked off merchandise. And of course Nike is one of the favorite all time brands to knock off. Right. And so yeah, I think you, you, you and I think there is a desperate need for brands but I think brands fundamentally, many of them don't trust Amazon and there's been a period where many of them actually withdrawn their brands from actually appearing on there and that's why they've looked for other alternative ways to get their products into market. There is still such a massive importance of the local retailer, those small local stores, you know, whether it's a sportswear store, furniture store, food store, packaged food store, whatever it is, those stores, to be able to connect them much more evenly with their manufacturers and to be able to create a much more dynamic way in which that supply chain works is a critical importance. And I think going back to where we started this conversation today, I think that's where AI plays a really important part. I think AI has almost passed Amazon completely by and in many ways you could argue that maybe it didn't serve their business model purpose to have something like that. I think in other areas of the industry it will pay a critically part in terms of actually creating this kind of trusted relationship between people. You remember four or five years ago there was always talk about blockchain and what blockchain could do around that. And I think blockchain has its own challenges. I think AI kind of solves a lot of those challenges actually going forward.

How can people get in touch with you? How can people follow more what you're doing?

You see me on LinkedIn, Twitter, we are, you know, all over the Internet. I'm on the AI foundation up here. A lot in the news, I go on NASDAQ interviews, people have watched me. They'll know that I've been a, you know, a pretty vocal of what it's less about Amazon, but it's really what Amazon stand for about how, you know, how fundamentally the first generation of E commerce really needs to be overhauled dramatically. And that this kind of platform degradation is occurring at the moment where you know, consumers are getting, they're paying more for worse products in a relative speaking terms, where retailers and small businesses have been wiped out, where distributors are operating on less than living wage margins, which means it's almost impossible for them to be able to ship and deliver and fundamentally create the absolutely important link between that and the manufacturers. How small manufacturers, up and coming quality manufacturers have been denied the opportunity to put their products in the world in the kind of, you know, the windows of the world's biggest retailer. Those things need to change. And the second generation of E commerce, I think backed with AI is going to make a fundamental difference to that.

Well folks, most everybody listening to this is in the consumer packaged goods business. That's what this program is about. And this is affecting all of us. And if you think it's not affecting you, you're probably wrong. It probably is affecting you or will affect you soon. Essentially, I think all you have to do is get your brand up to any kind of decent sales numbers today and someone is going to see an opportunity to steal your money, whether it's to go to the store and steal your product and put it on Amazon or whether it's to go make knockoffs of your product and put it on Amazon. So, Justin Floyd, I want to thank you for being with us. This has been amazing. You go to the Show Notes, we'll have all the links for to be able to connect with Justin, to be able to follow him. And I suggest you do that because this is a guy who's on the cutting edge and we need to stay in touch with him. Justin, I hope as you progress with this and as you're with this DC Group, we can get you to come back again and give us some updates on what's happening with this part of the industry.

We'd love to.

That would be amazing. I appreciate it. Folks, that's it for CPG Insiders today. If you enjoyed today's show, make sure you go to wherever you get your podcast. Leave us five star review. And if you're not currently subscribed to the podcast, click the little subscribe button. Then you won't miss any episodes and it will allow the AI overlords that monitor all of the podcasts in the world to come to the conclusion that maybe these guys aren't knockoffs and we should raise them up at the level of importance. Thank you, Justin, for being here. That's it for today on CPG Insider. See you next week. If you're looking to greatly increase sales on your CPG product, don't hesitate to contact us at Jekyll and Hyde Advertising and Marketing. By the way, only advertising agency with a guaranteed result. Just go to jekyllheidagency.com or feel free to give us a call at 800-500-4210.