eBay Acquires Company to Fight Fake Products

eBay revealed that it has purchased 3PM Shield, also known as 3PM Solutions, a Chicago-based company that offers advanced marketplace compliance solutions.

3PM Shield is a small technology company that offers solutions for brands to help them track items by third-party sellers on marketplaces such as eBay, Amazon, and Walmart.

Its technology enables brands to quickly identify potential sources of illegal or counterfeit items and brand compliance of its products.

On its website, the company claimed its technology analyzes millions of products per day and can offer brands more consistent decision-making solutions for taking actions, such as requesting marketplaces remove listings for Intellectual Property or government regulation violations.

In addition, 3PM Shield offers brands an overview of customer satisfaction by monitoring online reviews by customers. Online reviews could also help provide clues about potential fake products or new products being offered through unauthorized sales channels.

For example, one of the biggest issues for multinational brands is gray market importation, which is the practice of importing goods into a country through channels that are not authorized by the manufacturer or trademark owner.

These goods are typically purchased from overseas markets where they are sold at a lower price and then resold in another market where prices are higher.

While these goods are often genuine products, the unauthorized importation of products can lead to consumer confusion as the items are not covered by the manufacturer’s local warranty or support services.

How Will This Benefit eBay Sellers and Buyers?

eBay said that it’s been working with 3PM Shield already to help it identify potentially problematic listings on its marketplace.

“3PM Shield has been a valued and effective external partner in helping eBay tackle these challenges and we look forward to unlocking additional capabilities as we bring their technologies in-house,” said Zhi Zhou, Chief Risk Officer at eBay.

So, it appears, while the company was offering solutions to help brand owners monitor marketplace compliance, it was also working with eBay to identify potential issues on its platform.

Some sellers who sell branded products on eBay may have received take-down notices from eBay’s Verified Rights Owner (VeRO) program in the past. 

The VeRO program is a system that allows trademark and copyright owners to report and have infringing items removed from eBay’s platform.

3PM Shield offers services that can help brands to submit requests to eBay to have items removed from the marketplace.

In its press release announcing the acquisition, eBay did not provide many details on how it plans to use the technology that powers 3PM Shield.

The company may use the technology to enforce its listing policies, and that may already have been happening to some degree.

But eBay also could use it to expand the VeRO program, offering brands an expanded on-platform monitoring and reporting solution.

How Will This Impact eBay Authenticity Guarantee Categories?

eBay has been expanding its Authenticity Guarantee program to more categories and more countries. In the United States, eBay currently offers its authentication program in the sneakers, handbags, watches, jewelry and trading cards categories.

But eBay’s Authenticity Guarantee program is an after-the-sale solution where an item is sent to an authentication service for inspection before being forwarded to the buyer.

While eBay works with outside partners on this program, in 2021, the company did acquire Sneaker Con’s authentication business to bring some authentication services in-house.

In contrast, the technology that 3PM Shield brings to the table for eBay is the pre-sale monitoring of potentially infringing or illegal products.

Conclusion

The acquisition by eBay of 3PM Shield is another solution to its tech stack to help the marketplace bring more accountability to its platform.

Clearly, eBay still understands that trust is an ongoing issue with eBay, as too many buyers have been burned before.

However, this also brings more accountability to sellers, which means honest sellers should in theory see less competition from sellers offering fake or illegal products.

There will never be an online marketplace that will be free of such items. And at times, honest sellers may get caught up in enforcement actions as well due to errors or unknowingly violating a brand’s intellectual property rights.

However, anything that helps clean up eBay further and provide a fair and safe marketplace for all users is good. The acquisition by eBay of 3PM Shield seems to support that goal.

eBay closed the transaction to acquire 3PM Shield LLC on Thursday, February 9, 2023. The transaction was disclosed on February 13 with no additional details. It is unclear if eBay plans to continue to offer marketplace compliance monitoring on other ecommerce platforms.

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