E-commerce Challenges

If you've ever bought from Amazon.com -- and chances are, if you live in the U.S., you have -- you've probably at some point inadvertently purchased a cheap knock-off that malfunctioned, broke apart or (perhaps in a worst-case scenario) caught on fire. While consumers have been disappointed by fake products, small innovators whose ideas have been stolen have been crushed. Take Bonnie Tyler of Southerport, Connecticut, who has experienced both the thrill of skyrocketing sales and the agony of rampant counterfeiting via Amazon and other online platforms. But the 71-year-old is fighting back and jokes that she plans to add "granny thug" to her title. How She Started A few years back, Tyler was making deviled eggs (here's her recipe) when she decided there had to be a more efficient way to peel hard-boiled eggs. Not your typical grandmother, Tyler worked in web development and designed a hand-held egg-peeling device using CAD software. She then took a course at her local library to learn how to print her prototype on a three-dimensional printer. "My instructor was 11," she says with a laugh. She and a colleague, Sheila Torgan, tried about 7 renderings before they had a proof of concept. "It really works," says Tyler of the device, a clear plastic cylinder that one shakes after the egg (and a little water) are added. Bonnie Tyler (seated) with Negg co-founder Sheila Torgan. (Photo credit: Courtesy of Negg) The two decided the world needed the innovation -- dubbed the Negg -- and ran two Kickstarter campaigns to raise about $33,000 to manufacture 5,000 peelers at a U.S. factory in December 2016. The run actually cost $60,000, so Tyler was forced to dipped into savings to pay for it. When the first Negg popped out of the equipment at the factory, "I just burst into tears," Tyler recalls -- happy tears, of course. To see her idea come to life was "mind-blowing." A Lucky Break Getting the word out about the product was the next challenge. "I was looking at 5,000 Neggs in my business partner's garage," Tyler says. "I would go over every once and a while and look at them and think, have I lost my mind?" A lucky break came when The Grommet, an online marketplace for makers, spotted the Negg on Kickstarter -- and placed a purchase order for 4,000 to launch on its platform (retail price: $14.95 each) in April 2017. The product was a hit. "It was really flying out the door," Tyler says. And then, more good fortune: HSN, the home shopping network, discovered the Negg when Tyler attended the International Housewares trade show and invited her to pitch the peeler on the channel. A camera-shy Tyler felt like she died "a thousand deaths" but "I got through it and everything peeled really well and it all sold out and it was like a miracle." After that exposure, sales on Amazon took off. "We had about a year of clear sailing, and we were going up the hockey stick," Tyler recalls. And then, in February 2018, the last thing Tyler or Torgan expected happened. "I got a call from a customer, 'the Neggs are being sold all over Amazon,'" says Torgan. "I go fly into my office at home and I see…gobs of them all over. They're like locusts." Counterfeiters, according to Tyler and Torgan, had seen the popularity of the Negg and reverse-engineered the device to figure out the design, and then cheaply manufactured it. "These guys had jumped online and had loaded the Internet with our product at a fraction of the price," Tyler says. "It was not good quality and it leaked. It was just a nightmare." An authentic Negg, a device that peels hard-boiled eggs. (Photo credit: Courtesy of Negg) Counterfeiters had even stolen the Negg's photos and videos to promote the fakes, much to Tyler's dismay. "It was very difficult for me to go online and see these people taking money right out from under us," she says. "In my old-fashioned way, it hurt my feelings that anybody would want to do that to me." Dealing With Fakes The situation is far from unusual. Amazon, the dominant player in e-commerce, has been besieged by counterfeiters in recent years. Amid criticism from the government, consumers and sellers, the site has stepped up efforts to try to combat fakes. In July, the company announced its new Counterfeit Crimes Unit. "We are working hard to disrupt and dismantle these criminal networks," said Dharmesh Mehta, Amazon's vice president of customer trust. Tyler, however, found that Amazon and other e-commerce sites weren't doing neary enough to help her small company's dire situation. While she reported the counterfeits, "the big players -- Amazon, Ebay, Alibaba ---wouldn't listen to us," she says. "It quickly became apparent that if we didn't get a lawyer we were going to be out of business." With the help of a legal team who agreed to work on a contingency basis, the Negg inventors took action…over and over again. While many counterfeiters are based overseas -- fake Neggs often ship from the port city of Ningbo, in east China -- their use of U.S. based e-commerce sites give sellers some recourse. Tyler and Torgan began taking counterfeiters to court on a regular basis, winning court orders to protect the Negg's trademark, copyright and patent. "The courts have been very supportive of us," Tyler says. "Once you get the court order, Amazon is obliged to shut them down." As for any support they've received from Amazon, Tyler chooses her words carefully: "When we got the lawyer involved, they got more helpful." Amazon did not return a request for comment on Tyler's experience. Trolling for Fraudsters Over two years since that initial discovery of fakes, Tyler estimates that the Negg's legal team has taken down about 800 counterfeit sellers. "Everyday when I go into the office, I spend the first half hour scouring the Internet trying to find these guys," she says. "It's a piece of the operation that I absolutely hate and abhor doing." The Negg has also received judgments totalling over $200 million in damages, although the co-founders don't expect to recover any of that because most defendants are based overseas. "There's no address attached to these people so you can't actually go find them," Tyler says. Based on her experience with the Negg, Tyler recommends that merchants with novel new products protect their intellectual property before launching. More information can be found on the U.S. Patent & Trademark Office's site. "I would immediately get your trademark," she advises, which is generally faster and cheaper to obtain than a patent. In her case, counterfeiters stole her brand name -- they even put "Negg" in their URL -- so having a trademark helped her take legal action. "Tech has made it so that you need to ," she says. Her business partner wants to see more laws put in place that protect innovators from high-speed Internet thieves. "We need to legislate this, and pass laws that bring fair-trade practices into the 21st century," Torgan says. Current laws "still don't account for the Internet." While the fakes have taken a serious toll on the business, Tyler and Torgan have sold about 600,000 Neggs to date, and they're debuting a new seasoning mix for deviled eggs. Sales have started to come back, but faith in humanity might take longer. "This has shaken mine completely," Tyler says. "It hurts all the little guys on Main Street." ◼

E-commerce Challenges

A Small Inventor Turns ‘Granny Thug’ to Take on Counterfeiters

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E-commerce Challenges

A Small Inventor Turns ‘Granny Thug’ to Take on Counterfeiters

The Story Exchange

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