Lately, a lot of “rags-to-riches” stories feature an e-commerce element. In fact, Alibaba posted such a tale on its blog, and we thought we’d cover it, too. Why? Because it’s a testament to the viability of online retail and the new class of successful entrepreneurs.
Health Problems Caused Hardship
Michael Leip leveraged his illness and injuries and turned his life around. After a series of accidents and a bout with Lyme’s disease, the typically busy internet marketing consultant and developer found himself in a position with which he was unfamiliar. Leip was having a hard time getting out of bed most mornings. “I couldn’t think clearly. The combination of Lyme Disease and the head injuries put me in a place of severe anxiety and depression. Some days I didn’t know if I was going to be able to work eight hours or 90 minutes. I was in debt; it was really scary for a good many years.”
Turning Lemons Into Lemonade
But Leip turned lemons into lemonade. Propelling himself of out of depression, he created a personal daily planner with a motivational, self-care bend. When it became obvious his tool was a great aide, Leip thought, if this can help me out, maybe it can help others? So, in 2015 he launched Panda Planner. In 2016, a Kickstarter campaign netted him close to $27,000 to create Panda Planner Pro.
Leip started researching manufacturers in the US, but found labor costs to be too high to produce Panda Planners at a competitive price. Enter Alibaba.com. Alibaba.com is a Chinese e-commerce company that provides wholesale consumer-to-consumer, business-to-consumer, and business-to-business sales services. Leip found dozens of suppliers willing to manufacture his product at prices that offered a workable profit margin.
“I think what’s so amazing about Alibaba is the way it has democratized the market,” Leip enthused. “It has lowered barriers to entry so anyone can get into business very quickly.” He also noted that “locating suppliers also gave me a chance to learn about binding styles, cover materials and other aspects of production.”
Quality Is A Concern
Sometimes, however, manufacturing quality can be an issue when sourcing products from overseas. Leip has had to change suppliers a couple of times in search of a manufacturer that punctually delivers consistent quality. “The product now is exponentially better than when I first started, but I’m still looking for a supplier who can produce even higher quality products for our customers.”
Creating Jobs Through E-Commerce
Leip is now hiring two full-time employees and has opened his first office in response to increased sales projections for this year. He’s begun shipping to Canada and is in the process of developing a companion mobile app that works in conjunction with the physical planner.
“It would be impossible to have a profitable company without Alibaba,” Leip said. “One of the goals of the company is to create research-based tools to increase wellbeing. We want to create tools that leverage academic studies about productivity, creativity and happiness so people can apply those principles to their everyday lives,” he added.
Leip continues to perfect Panda Planner using customer feedback and other sources. “I’ve been taking an iterative approach to product development,” he said. The product has been in a constant state of flux with a bunch of changes being made to the design in the search of perfection. “I’m not quite there yet,” Leip says, “but feel like I am pretty close.”
Connect With An E-Commerce Attorney
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In an ironic twist of events, ecommerce hub Alibaba is suing over alleged counterfeit goods (instead of being sued). But the suit has cynics wondering: Is this a toothless PR maneuver on Alibaba’s part; a tack to distract from its recent reputation setback? Let’s quickly review the case, and then…speculate.
Alibaba Is Suing Users Over Counterfeits, But Not Asking For Much In Damages
Who Is Alibaba Suing? Someone selling “Swarovski” (cough) watches on Alibaba.
How Did It All Go Down? “Data analytics” and covert purchases led Alibaba to the counterfeit lair. And in classic Chinese law enforcement style — (which is a close cousin to classic Crockett and Tubbs style) — police raided a Shenzhen warehouse, uncovering 125 knockoff watches. (Cue the Price Is Right WhompWaaaaa, right!? Only 125 watches? That’s not a raid; that’s Capone vault territory…but I digress.)
On What Grounds Is Alibaba Suing? The online retailer claims terms of service violations and intellectual property infringement.
How Much Does Alibaba Want? ¥1.4 million (yuan), which, at the time of this writing, converts to about $202,000 US
Is The Timing of This Alibaba Counterfeit Lawsuit Suspicious?
Did you know that the United States Trade Representative’s office chucked Alibaba onto the Notorious Markets List, a compendium of places around the world — both online and off — where counterfeiters gather to collect or sell their wares. So, at face value, the timing seems a tad suspicious.
But then again, maybe that’s rushing to an unfair conclusion. After all, several months ago, Alibaba super-sized its anti-counterfeit army. Its mission: Hunt fraudsters. So, all things considered, who’s to say we’re not witnessing a bit of bad — but ultimately coincidental — timing?
Ecommerce Lawyer On Alibaba’s Counterfeit Lawsuit: “Alibaba Has A Piracy Problem”
Ecommerce attorney Aaron Kelly acquiesced that Alibaba “has a piracy problem.” What can people do about it? “Like anything,” he reasoned, “investing in anti-counterfeit efforts will help. But we also have to be honest about the marketplace.” He clarified, “To be clear, I think both Alibaba and Amazon are important companies — and that’s not some obsequious hedging. They both provide robust platforms that make life easier for entrepreneurs. What could be better than that? But with any marketplace, barbarians are at the gate. And what some people forget — or maybe don’t even realize — is that counterfeiters make money for the ecom platforms too. Sometimes, they make more than the average ethical seller, because, well, as the old saying goes, unfortunately, crime can pay.”
“To be clear,” Kelly enthused, “I’m not endorsing unauthorized knockoffs; just pointing out the uneasy win-win relationship that can sometimes exist between successful counterfeiters and online retail platforms.”
So, is fighting knockoff artists a useless exercise? “No,” Kelly explained. “It’s possible to shake counterfeiters with a combination of social engineering, protective measures, and legal maneuverings. But there’s always a chance that a scammer you successfully shoo away will just move on to a more vulnerable target.”
Ecommerce Issues? We Can Help.
Are you an online seller dealing with a business setback? We may be able to fix the problem, sooner rather than later. Our team, Kelly / Warner, helps Internet entrepreneurs, online sellers, and digital marketers with all manners of issues — from the mundane to the complicated.
Jack Ma — Alibaba’s outspoken leader — has once again brandished a few controversial sound bites about counterfeit goods on the website. Will his loose lips sink private label ships? Let’s review the situation.
Alibaba: E-Commerce Sin City?
Let’s face it: Alibaba is the E-commerce World’s Las Vegas — entertainment is omnipresent, cheap deals abound, and shysters lurk.
In fact, on account of Alibaba’s ostensible “shyster problem,” not only is a cabal of luxury brands suing the website for intellectual property infringements, but the U.S. government is threatening to chuck Alibaba back on the “Notorious Markets” blacklist [link to another article on our site about it].
So, in the midst of all this counterfeit turmoil, what did Ma blurt out at a recent investor event? Like a publicity maestro, Ma punted some red meat to the media, and they rush returned with headlines like “Alibaba’s Jack Ma says fakes are better than originals” and “Alibaba’s Jack Ma: Fake Goods Are Better Than The Real Deal”.
What Did Jack Ma REALLY Say About Alibaba Counterfeit Goods?
Let’s, for a minute, peel back the click bait and ask ourselves: “Does Ma REALLY think $10 Rolexi from the CURB COLLECTION are better than real, Swiss-crafted Rolexi? Welllllllllll, it’s debatable. Here are some excerpts from Ma’s statement:
“The problem is the fake products today are of better quality and better price than the real names. They are [from] exactly the [same] factories, exactly the same raw materials but they do not use the names,”
“We have to protect [intellectual property], we have to do everything to stop the fake products, but OEMs are making better products at a better price…”
“Counterfeiting is not a quality problem; counterfeiting is an intellectual property problem”
“The way of doing business has changed for the brands. It’s not the fake products; it’s not the IP that is destroying them. It’s the new business model that’s revolutionized the whole world.”
So, it’s clear that Ma understands the importance of intellectual property rights and is willing to work on diminishing Alibaba counterfeit goods. In fact, he seems to think that updating intellectual property laws would be the most effective solution. (Many folks strongly disagree with him on this point.)
Made In The U.S.A. China
The Alibaba founder also explained that a lot of China’s manufacturers are growing increasingly frustrated with the current ecosystem. Apparently, in China, nationalistic concerns are butting heads with the expectations of a global marketplace.
Or, to put it more bluntly, a growing number of Chinese companies are starting to feel used; like they’re doing all the work, while foreign luxury brands are pocketing most of the money.
As a result, many Chinese factories are looking to cut out the luxury middle man and sell direct to western consumers via the Internet. In fact, Asian manufacturers have launched a PR campaign called “Zhongguozhizao” which means “Quality made in China.” Think of it as the Made in the USA’s close Asian cousin.
The Takeaway For Private Label Sellers
So, what does all this mean for stateside e-commerce entrepreneurs? Welp, it may be time to start thinking about stronger contracts, especially if you’re partnering with Chinese manufacturers. The best defense is a solid agreement. Make sure yours includes provisions about counterfeiting and other intellectual property stipulations.
More “Alibaba Counterfeit Goods” Legal Resources
Click here to read more about what a good manufacturing contract should contain. If you’re ready to speak with someone about firming up your business, to lessen the risk of a counterfeit ring attack, let’s talk.