Smart Phone Market Review Unbranded
Explore global online markets for the presence of potential illicit seller activities across 5 popular smart phone brands. Measure the size and distribution of the problem across brands and regions. Identify areas at significant risk of counterfeiting and/or diversion.
Content
Smart Phone Market Review
Prepared by: NewMomentum, Inc. Q4/2011
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Confidential
Contents
Objectives of Market Review Methodology Key Findings General Market Summary Suspect Market Summary Conclusions
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Confidential
Objectives of Market Review Explore global online markets for the presence of potential illicit seller activities across 5 popular smart phone brands. Measure the size and distribution of the problem across brands and regions. Identify areas at significant risk of counterfeiting and/or diversion.
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Confidential
Methodology
Select Products
5 brands 23 products Standalone phones; not phone and plan bundles offered through legitimate carriers
Monitor
Process Data
Filter, label, and classify collected data Apply risk indices based on business rules to identify Potential suspect sellers Potential suspect listings
Measure Results
Overall market summary Suspect market summary Breakdown by manufacturer, region, suspect classification
17 online marketplaces 1 month of monitoring
Alibaba
eBay Taobao
Amazon
mercadolibre
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處無
人何任
Confidential
Key Findings
• Internet monitoring revealed over 25K listings of the subject products offered for sale by over 11K sellers
• • Total available sales volume reported was over $33 billion (calculated as quantity offered for sale X price in the listing) Potential sales volume was over $8 billion even after adjusting for “outliers” by capping maximum quantity per listing at 100K units
• Significant discounts were offered by the 11K sellers
• • 23% of the sellers offered products at a 31% to 45% discount 22% of the sellers offered products at a 46% to 60% discount
• Discounts varied largely by region
• • APAC showed the highest level of discounting with 64% of the sellers offering products at >30% discount EMEA showed the lowest level of discounting with only 24% of the sellers offering products at >30% discount and 23% actually selling above list price
• APAC represented over 50% of the listings found
• Taobao was by far the biggest source of listings with more than 12K of the 25K product offerings
• Over 8K sellers (76%) have significant risk indicators
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General Market Summary
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General Market Summary
Number of Sellers
1,050 2,199 757 5,101 Brand A Brand B Brand C Brand D Brand E
Total Unique* Sellers: 11,016
* Sellers can represent multiple brands
4,657
Number of Listings
1,835 3,328 1,034 12,706 Brand A Brand B Brand C Brand D Brand E
Total Number of Listings: 25,759
6,856
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Confidential
General Market Summary
Reported Available Sales Volume
$28,284,830 $926,953,165 $3,601,750,173 $248,571,516
Brand A Brand B Brand C Brand D Brand E
Total Reported Available Sales Volume: $33.8 billion
$29,005,406,014
Adjusted* Available Sales Volume
Brand A $28,284,830
$248,571,516 $759,751,075
Brand B Brand C Brand D
$3,912,433,001
Brand E
$3,301,114,161
Total Adjusted Available Sales Volume: $8.3 billion
* maximum quantity per listing capped
at 100K units page| 8 Confidential
Top Ten Products
Brand B Product 1
$2,474,519,953
Brand A Product 1
$1,313,228,391
Brand A Product 2
$875,741,300
Brand B Product 2
$826,594,208
Brand A Product 3
$766,218,837
Brand A Product 4
$551,784,024
Brand C Product 1
$448,453,683
Brand A Product 5
$245,277,898
Brand A Product 6
$160,182,552
Brand C Product 2 $-
$131,747,130 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000
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Confidential
Region Breakdown
60% 50% 40% 30% 20% 10% 0% Americas 31%
56%
# of Sellers by Region Americas APAC EMEA Total
14%
3,379 6,143 1,494 11,016
APAC
EMEA
70%
62%
# of Listings by Region Americas 4,537 APAC 16,012 EMEA 5,210 Total 25,759
60% 50% 40% 30% 18% 20% 10% 0% Americas APAC EMEA 20%
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Top Ten Marketplaces Based on # of Listings
TAOBAO
12,720
FUDZILLA
4,009
AMAZON
1,663
PAIPAI
1,407
MERCADOLIBREBR
1,319
MERCADOLIBREMX
1,288
ALIEXPRESS
1,039
MERCADOLIBREAR
982
HC360
432
ALIBABA -
432 2,000 4,000 6,000 8,000 Number of Listings 10,000 12,000 14,000
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Confidential
Discount Levels
25% 23% 22%
20% 17%
15% 11% 10% 10% 9% 7%
5%
0% Selling above list 1,013 sellers Discount < 15% Discount 15% 30% 1,908 sellers Discount 31% 45% 2,519 sellers Discount 46% to 60% 2,441 sellers Discount > 60% No price available 732 sellers
1,152 sellers
1,251 sellers
Discounts offered by the 11,016 monitored sellers
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Suspect Market Summary
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Confidential
Suspect Indicators
Suspect Listings: Listings Risk Index (LRI)
• • Points awarded to each listing for potentially negative indicators Higher score equals higher probability of illicit listing
Indicator Quantity Available = 1,000 to 10,000 units Quantity Available >= 10,000 units Product Offered at Discount > 40% Listing on Known High Risk Marketplace Listing Indicates Phone is “Unlocked” Seller Claims to Be a Manufacturer High Risk Selling Location or Port Listing Indicates Product Copy or Replica Points Awarded 5 8 10 8 5 5 5 9
Suspect Sellers: Seller Risk Index (SRI)
• • The sum of the LRI scores for all listings for a specific seller Higher score equals higher probability of suspect seller
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Suspect Listings Summary
Indicator Quantity Available = 1,000 to 10,000 units Quantity Available >= 10,000 units Product Offered at Discount > 40% Listing on Known High Risk Marketplace Listing Indicates Phone is “Unlocked” Seller Claims to Be a Manufacturer High Risk Selling Location or Port Listing Indicates Product Copy or Replica Points Awarded 5 8 10 8 5 5 5 9 # of Listings 2,627 410 4,318 12,720 2,039 297 507 65 # of Sellers 1,248 221 2,885 5,085 1,088 85 187 29
# of Listings
12,000 Number of Listings 10,000 8,000 6,000 4,000 2,000 0-5 6 - 10 11-15 16-20 Listing Score Range Over 20 2,738 1,699 536 10,081 10,705
Distribution of 25,759 collected listings by listing score
Higher ranked listings are more likely illicit
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Confidential
Suspect Sellers Summary
Suspect Sellers: Seller Risk Index (SRI) • The sum of the LRI scores for all listings for a specific seller • Higher score equals higher probability of suspect seller # of Sellers
5,000 4,500 4,000 Number of Sellers 3,500 3,000 2,500 2,000 1,500 1,000 500 0 - 10 11 - 25 26 - 50 51 - 75 SRI Score Range 76 - 100 Over 100 167 176 886 2,455 2,591 4,741
Distribution of 11,016 unique sellers by SRI score
Higher ranked sellers pose greater potential risk
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Confidential
Suspects by Product
700 800 700 600 500 400 300 200 100 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100 Brand B Product 1 / Sales Volume Rank #1 600 500 400 300 200 100 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100
Brand A Product 1 / Sales Volume Rank #2
500 450 400 350 300 250 200 150 100 50 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100
1600 1400 1200 1000 800 600 400 200 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100
Brand A Product 2 / Sales Volume Rank #3
Brand B Product 2 / Sales Volume Rank #4
These Brand A products carry the greatest risk for illicit sales
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Top 10 Suspects for Brand A
Confidential
Highest-Ranked Seller Info
Seller Detail
Top 10 Listings
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Confidential
Listing Detail
Confidential
Conclusions
• Illicit activity in the smartphone arena is very high
• Crosses regions, marketplaces, and brands
• Recommend each brand enacts a proactive program to protect their IP
• • • • Online monitoring to provide a view into counterfeit, gray market and reseller infraction activity Authentication tools to verify whether the products listed for sale are yours Track and trace tools to know where your product exited authorized channels Continued monitoring to measure the impact of authentication solutions and identify enforcement needs
• Recommend each brand enacts a program of ongoing investigation and enforcement actions
• • • •
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Test buys, seller company profiling, raids Cease and desist letters and DMCA letters to unauthorized sellers or others infringing on your brand Auction site de-listings, ISP take down notices, ad de-listings Engagement of IP counsel for criminal and civil litigation
Confidential
Contact Information
Pam Passaretti CEO (415) 710-4466 [email protected] Holger Hoppe CTO (707) 349-5515 [email protected]
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Confidential
Prepared by: NewMomentum, Inc. Q4/2011
page| 1
Confidential
Contents
Objectives of Market Review Methodology Key Findings General Market Summary Suspect Market Summary Conclusions
page| 2
Confidential
Objectives of Market Review Explore global online markets for the presence of potential illicit seller activities across 5 popular smart phone brands. Measure the size and distribution of the problem across brands and regions. Identify areas at significant risk of counterfeiting and/or diversion.
page| 3
Confidential
Methodology
Select Products
5 brands 23 products Standalone phones; not phone and plan bundles offered through legitimate carriers
Monitor
Process Data
Filter, label, and classify collected data Apply risk indices based on business rules to identify Potential suspect sellers Potential suspect listings
Measure Results
Overall market summary Suspect market summary Breakdown by manufacturer, region, suspect classification
17 online marketplaces 1 month of monitoring
Alibaba
eBay Taobao
Amazon
mercadolibre
page| 4
處無
人何任
Confidential
Key Findings
• Internet monitoring revealed over 25K listings of the subject products offered for sale by over 11K sellers
• • Total available sales volume reported was over $33 billion (calculated as quantity offered for sale X price in the listing) Potential sales volume was over $8 billion even after adjusting for “outliers” by capping maximum quantity per listing at 100K units
• Significant discounts were offered by the 11K sellers
• • 23% of the sellers offered products at a 31% to 45% discount 22% of the sellers offered products at a 46% to 60% discount
• Discounts varied largely by region
• • APAC showed the highest level of discounting with 64% of the sellers offering products at >30% discount EMEA showed the lowest level of discounting with only 24% of the sellers offering products at >30% discount and 23% actually selling above list price
• APAC represented over 50% of the listings found
• Taobao was by far the biggest source of listings with more than 12K of the 25K product offerings
• Over 8K sellers (76%) have significant risk indicators
page| 5 Confidential
General Market Summary
page| 6
Confidential
General Market Summary
Number of Sellers
1,050 2,199 757 5,101 Brand A Brand B Brand C Brand D Brand E
Total Unique* Sellers: 11,016
* Sellers can represent multiple brands
4,657
Number of Listings
1,835 3,328 1,034 12,706 Brand A Brand B Brand C Brand D Brand E
Total Number of Listings: 25,759
6,856
page| 7
Confidential
General Market Summary
Reported Available Sales Volume
$28,284,830 $926,953,165 $3,601,750,173 $248,571,516
Brand A Brand B Brand C Brand D Brand E
Total Reported Available Sales Volume: $33.8 billion
$29,005,406,014
Adjusted* Available Sales Volume
Brand A $28,284,830
$248,571,516 $759,751,075
Brand B Brand C Brand D
$3,912,433,001
Brand E
$3,301,114,161
Total Adjusted Available Sales Volume: $8.3 billion
* maximum quantity per listing capped
at 100K units page| 8 Confidential
Top Ten Products
Brand B Product 1
$2,474,519,953
Brand A Product 1
$1,313,228,391
Brand A Product 2
$875,741,300
Brand B Product 2
$826,594,208
Brand A Product 3
$766,218,837
Brand A Product 4
$551,784,024
Brand C Product 1
$448,453,683
Brand A Product 5
$245,277,898
Brand A Product 6
$160,182,552
Brand C Product 2 $-
$131,747,130 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000
page| 9
Confidential
Region Breakdown
60% 50% 40% 30% 20% 10% 0% Americas 31%
56%
# of Sellers by Region Americas APAC EMEA Total
14%
3,379 6,143 1,494 11,016
APAC
EMEA
70%
62%
# of Listings by Region Americas 4,537 APAC 16,012 EMEA 5,210 Total 25,759
60% 50% 40% 30% 18% 20% 10% 0% Americas APAC EMEA 20%
page| 10
Confidential
Top Ten Marketplaces Based on # of Listings
TAOBAO
12,720
FUDZILLA
4,009
AMAZON
1,663
PAIPAI
1,407
MERCADOLIBREBR
1,319
MERCADOLIBREMX
1,288
ALIEXPRESS
1,039
MERCADOLIBREAR
982
HC360
432
ALIBABA -
432 2,000 4,000 6,000 8,000 Number of Listings 10,000 12,000 14,000
page| 11
Confidential
Discount Levels
25% 23% 22%
20% 17%
15% 11% 10% 10% 9% 7%
5%
0% Selling above list 1,013 sellers Discount < 15% Discount 15% 30% 1,908 sellers Discount 31% 45% 2,519 sellers Discount 46% to 60% 2,441 sellers Discount > 60% No price available 732 sellers
1,152 sellers
1,251 sellers
Discounts offered by the 11,016 monitored sellers
page| 12 Confidential
Suspect Market Summary
page| 13
Confidential
Suspect Indicators
Suspect Listings: Listings Risk Index (LRI)
• • Points awarded to each listing for potentially negative indicators Higher score equals higher probability of illicit listing
Indicator Quantity Available = 1,000 to 10,000 units Quantity Available >= 10,000 units Product Offered at Discount > 40% Listing on Known High Risk Marketplace Listing Indicates Phone is “Unlocked” Seller Claims to Be a Manufacturer High Risk Selling Location or Port Listing Indicates Product Copy or Replica Points Awarded 5 8 10 8 5 5 5 9
Suspect Sellers: Seller Risk Index (SRI)
• • The sum of the LRI scores for all listings for a specific seller Higher score equals higher probability of suspect seller
page| 14
Confidential
Suspect Listings Summary
Indicator Quantity Available = 1,000 to 10,000 units Quantity Available >= 10,000 units Product Offered at Discount > 40% Listing on Known High Risk Marketplace Listing Indicates Phone is “Unlocked” Seller Claims to Be a Manufacturer High Risk Selling Location or Port Listing Indicates Product Copy or Replica Points Awarded 5 8 10 8 5 5 5 9 # of Listings 2,627 410 4,318 12,720 2,039 297 507 65 # of Sellers 1,248 221 2,885 5,085 1,088 85 187 29
# of Listings
12,000 Number of Listings 10,000 8,000 6,000 4,000 2,000 0-5 6 - 10 11-15 16-20 Listing Score Range Over 20 2,738 1,699 536 10,081 10,705
Distribution of 25,759 collected listings by listing score
Higher ranked listings are more likely illicit
page| 15
Confidential
Suspect Sellers Summary
Suspect Sellers: Seller Risk Index (SRI) • The sum of the LRI scores for all listings for a specific seller • Higher score equals higher probability of suspect seller # of Sellers
5,000 4,500 4,000 Number of Sellers 3,500 3,000 2,500 2,000 1,500 1,000 500 0 - 10 11 - 25 26 - 50 51 - 75 SRI Score Range 76 - 100 Over 100 167 176 886 2,455 2,591 4,741
Distribution of 11,016 unique sellers by SRI score
Higher ranked sellers pose greater potential risk
page| 16
Confidential
Suspects by Product
700 800 700 600 500 400 300 200 100 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100 Brand B Product 1 / Sales Volume Rank #1 600 500 400 300 200 100 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100
Brand A Product 1 / Sales Volume Rank #2
500 450 400 350 300 250 200 150 100 50 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100
1600 1400 1200 1000 800 600 400 200 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100
Brand A Product 2 / Sales Volume Rank #3
Brand B Product 2 / Sales Volume Rank #4
These Brand A products carry the greatest risk for illicit sales
page| 17 Confidential
Top 10 Suspects for Brand A
Confidential
Highest-Ranked Seller Info
Seller Detail
Top 10 Listings
page| 19
Confidential
Listing Detail
Confidential
Conclusions
• Illicit activity in the smartphone arena is very high
• Crosses regions, marketplaces, and brands
• Recommend each brand enacts a proactive program to protect their IP
• • • • Online monitoring to provide a view into counterfeit, gray market and reseller infraction activity Authentication tools to verify whether the products listed for sale are yours Track and trace tools to know where your product exited authorized channels Continued monitoring to measure the impact of authentication solutions and identify enforcement needs
• Recommend each brand enacts a program of ongoing investigation and enforcement actions
• • • •
page| 21
Test buys, seller company profiling, raids Cease and desist letters and DMCA letters to unauthorized sellers or others infringing on your brand Auction site de-listings, ISP take down notices, ad de-listings Engagement of IP counsel for criminal and civil litigation
Confidential
Contact Information
Pam Passaretti CEO (415) 710-4466 [email protected] Holger Hoppe CTO (707) 349-5515 [email protected]
page| 22
Confidential
