< Blogs

The $244,000 Wake-Up Call: How Counterfeits Can Destroy Your Dropshipping Business

Vivan Z.
Created on April 28, 2025 – Last updated on May 5, 20257 min read
Written by: Vivan Z.

Recently, Amazon Japan was ordered by the Tokyo District Court to pay a fine of 35 million yen (approximately 244,000 USD) and compensate the brand Excel Plan for its losses due to failure in effectively addressing counterfeit sales on its platform. This incident has raised widespread concern in the industry about the issue of counterfeit goods and serves as a wake-up call for sellers involved in dropshipping (cross-border e-commerce).

Counterfeit Crisis: The Hidden Threat in the Supply Chain

In this case, Excel Plan discovered counterfeit pulse oximeters on the Amazon Japan platform. These inferior products were sold at prices significantly lower than the genuine ones, severely affecting the brand’s market performance. Worse still, after receiving complaints, Amazon not only failed to take down the counterfeit goods promptly but also mistakenly removed the genuine products, causing Excel Plan to suffer heavy losses in just two months—from an initial sales figure of about 100 million yen to a dramatic drop to only around 610,000 yen.

This incident serves as a reminder that counterfeit goods not only affect consumers’ purchasing experience but can also seriously harm the interests of brand owners and potentially expose platforms to legal risks. In dropshipping, sellers typically rely on third-party suppliers, making supply chain management crucial. The issue of counterfeit goods, especially in cross-border e-commerce, is not just a quality concern; it also involves multiple risks, including compliance and brand reputation.

How to Avoid Counterfeit Issues in Dropshipping?

Choose Reliable Suppliers 

When selecting a dropshipping supplier, it is essential to choose one with a good reputation and legitimate qualifications. You can ensure the legality and quality of their products by reviewing certifications, past reviews, and product quality reports. This not only helps avoid counterfeit issues but also reduces return rates and customer complaints.

Check Supplier Certifications

First, ensure that the supplier has the relevant industry certifications. For example, in fields like medical devices, cosmetics, and food, products need to undergo quality testing and certification. You can request the supplier to provide certification for their products, such as CE certification (for the European market), FDA certification (for the U.S. market), and others. These certifications guarantee the legitimacy of the products and help prevent counterfeit goods from entering the market.

Review the Supplier’s Past Reviews

By evaluating the supplier’s historical performance, you can gain insights into their reputation and product quality. Most B2B platforms (such as AliExpress, 1688, etc.) have a buyer review system, where you can check the feedback from other sellers about the supplier. Focus on the following aspects:

  • Timeliness of delivery
  • Product quality
  • Customer service
  • Handling of returns and disputes

Good reviews are a crucial basis for selecting a reliable supplier.

Request Product Quality Reports

Legitimate suppliers usually have product quality inspection reports, especially when dealing with high-value items or products in specialized industries. For example, if you are selling electronics or medical devices, your supplier should be able to provide quality inspection reports issued by third-party testing agencies. These reports verify that the products meet relevant standards, helping you avoid counterfeit complaints and refund disputes caused by quality issues.

Strictly Control Product Sources 

Make sure your suppliers have a clear and traceable product source, and verify whether they have authorized channels to sell genuine products. For branded items especially, avoid working with unknown or low-reputation suppliers, as they may deal in refurbished, counterfeit, or unauthorized goods.

Maintain Active Communication with the Platform 

If you identify problematic products, communicate with the platform immediately and take proactive measures. In cases of counterfeit issues, platforms may not automatically remove all suspicious listings, especially when product information is incomplete. Actively following up on complaints and inspecting products can significantly reduce potential risks.

Ensure Clear Return and Compensation Policies 

Make sure your store has a comprehensive after-sales policy, especially regarding returns for counterfeit or damaged products. A clear policy not only effectively protects consumer rights but also helps reduce disputes caused by product issues.

Monitor Market Feedback 

Regularly monitoring customer reviews and feedback is a crucial step to shield your dropshipping business from counterfeit problems. Pay extra attention to products labeled as “best-sellers” or offered at unusually low prices — these items are often prime targets for counterfeiters.

How to Effectively Monitor Market Feedback?

Regularly Check Customer Reviews

Customer reviews are a key way to assess product quality. Pay special attention to best-selling or low-priced products and check if there are complaints related to counterfeit goods or quality issues. If similar problems appear frequently, it should raise a serious red flag.

Pay Attention to Abnormal Complaints

If the number of complaints for a particular product suddenly increases, especially those related to counterfeit goods, it may indicate potential quality problems. Investigate these complaints promptly to confirm whether counterfeit issues exist.

Monitor the Performance of “Best-Selling” Products

“Best-selling” products tend to get higher exposure, but they also easily attract counterfeiters. By closely monitoring the reviews and feedback of these products, you can quickly spot any non-compliant goods that may have slipped in.

Respond Quickly to Feedback

As soon as you receive a counterfeit-related complaint, immediately contact your supplier to verify the product’s source. If necessary, take actions such as removing the product or accepting returns to prevent the issue from affecting more customers and damaging your store’s reputation.

By effectively monitoring market feedback, you can promptly detect potential counterfeit problems and take corrective measures to ensure that your dropshipping business remains protected against the risks of counterfeit goods.

Lessons from the Amazon Japan Case

In its ruling, the court pointed out that Amazon failed to take effective measures to prevent counterfeit products from entering the market, and even after receiving complaints, did not promptly remove problematic listings. This judgment sets a higher standard for e-commerce platforms: not only must they establish a comprehensive product authentication system, but they must also rigorously verify the source and quality of the products they offer.

For us, as sellers operating on various platforms through dropshipping, this case serves as a clear warning: while pursuing profits, we must place greater emphasis on compliance and brand protection. Counterfeits are not just a legal risk — they represent a betrayal of customer trust. Against this backdrop, building a strong supply chain management system, selecting high-quality suppliers, and addressing counterfeit issues promptly are essential steps to ensure sustainable business growth.

Summary

The penalty imposed on Amazon Japan over counterfeit issues serves as a serious wake-up call for the cross-border e-commerce industry. As dropshipping sellers, we must learn from this incident: ensuring product quality and legitimacy is not just a responsibility to consumers, but also an investment in the future of our own brand.

Operating in compliance with regulations not only helps avoid legal risks but also strengthens brand image and builds greater market competitiveness.
buttom

DropSure is Your Best Partner
22 Years Experience
Affiliate Rebates
100% Quality Guarantee
Top-Up Rewards
10+ Global Warehouses
Custom Branding Support
Smart inventory System
24/7 Customer Support
Get a Quote in 24 Hours
Start Sourcing for Free

Keep Learning

With the rapid growth of e-commerce, dropshipping has become a popular choice for many entrepreneurs and small businesses. This business model allows sellers to fulfill customer orders directly through suppliers without holding inventory, thereby reducing capital and warehousing costs. In recent years, Hong Kong has increasingly attracted global dropshipping sellers due to its unique geographical location and convenient business environment. According to data from the Hong Kong Census and Statistics Department, Hong Kong’s total import and export volume reached HKD 5.5 trillion in 2023, with trade infrastructure ranking among the best globally. Additionally, data from the Global Shipping Association shows that Hong Kong’s port ranks in the world’s top ten in terms of cargo throughput, ensuring efficient logistics and global distribution for dropshipping businesses. So, is Hong Kong really the right place to start a dropshipping business? Let’s explore the pros and cons to help you make a better decision. Unique Advantages of Dropshipping in Hong Kong Strategic Location and Market Advantages Hong Kong is strategically located in the heart of Asia, bordering mainland China, making it not only a hub for convenient supply chain connections but also a global center for freight and logistics. This is crucial for Dropshipping sellers as it translates to faster shipping times and lower shipping costs. Hong Kong is close to major Chinese ports such as Shenzhen and Guangzhou, offering a range of flexible transportation options, including air, sea, and land transport. This logistical advantage enables Dropshipping sellers to deliver products to customers in different countries in a shorter amount of time, making Hong Kong an attractive choice for those looking to expand into the Asian market. Developed Logistics Network Hong Kong’s logistics network […]

Have you ever found yourself asking, “What is a supplier? What is a manufacturer?” These two terms are thrown around a lot in e-commerce, but they’re not the same. If you’re running a dropshipping business or any online store, it’s important to understand how these roles work and how they impact your business. Let’s break it down step by step. What Is a Supplier? A supplier acts as the middleman between manufacturers and businesses. They don’t make the products—they buy them from manufacturers and sell them to businesses like yours. Suppliers are essential because they provide ready-made products, saving you the hassle of dealing with raw materials or production. Why Are Suppliers Important? Suppliers make your life easier. They usually carry a wide range of products, so you don’t have to work with multiple manufacturers. For example, if you’re selling yoga equipment, a supplier could provide yoga mats, straps, and blocks all in one place. This makes the process faster and more efficient. Suppliers are especially useful for businesses that need small quantities or a variety of products. They also simplify inventory management since you can restock quickly without long production times. What Is a Manufacturer? Manufacturers are the creators of products. They take raw materials and turn them into finished goods. Think of them as the foundation of the supply chain. Without manufacturers, there would be no products for suppliers to distribute. Why Work with a Manufacturer? Manufacturers are ideal if you want custom products or plan to order in bulk. For instance, if you want yoga mats with your logo or a specific design, a manufacturer can make it happen. They allow you to control the quality, materials, […]

The fourth quarter (Q4) represents the peak sales season for e-commerce businesses, driven by major shopping events such as Black Friday, Cyber Monday, and the holiday season. For sellers aiming to maximize revenue, a well-structured strategy combining data-driven decisions, operational efficiency, and targeted marketing is crucial. Here’s how to set your store up for exponential growth in Q4. 1. Data-Driven Product Selection Success in Q4 starts with choosing the right products: Analyze Market Trends: Use historical sales data and trend analytics to identify categories with rising demand. Focus not just on high-volume items, but also on products with strong profit margins and low saturation. Prioritize Potential Best-Sellers: Evaluate sales velocity, reviews, and competition. A product that is trending but not oversaturated can yield significant returns. Leverage Predictive Tools: Tools that forecast market demand can help you anticipate popular items before competitors, giving you a first-mover advantage. Tips: Regularly monitor “hot product lists” and update your inventory weekly to ensure you’re stocking items that buyers are actively searching for. 2. Optimize Your Store for Conversion High traffic alone does not guarantee revenue. Conversion optimization is essential: Improve Product Listings: Craft clear, benefit-focused product titles and descriptions. Include keywords that match search intent for Q4 shoppers.   Visual Content: High-quality images and short product videos showcasing usage scenarios increase buyer confidence and engagement. A/B Testing: Test different layouts, call-to-actions, and promotional messaging to identify what drives higher click-through and purchase rates. Tips: Prioritize mobile optimization—Q4 shoppers often browse and purchase via smartphones. 3. Strategic Promotions and Discounts Promotions during Q4 are a major driver of sales, but they need to be planned carefully: Limited-Time Offers: Create urgency with flash sales, countdown timers, and exclusive bundles. Early-Bird Campaigns: Launch promotions ahead of major […]

Recommended for you