What Happens When a Chinese Factory Makes Knockoffs of Your Product
15th July 2014
Some customers were completely satisfied, enjoying month-long battery life and recommending the product to their friends. What was going on?
After launching their waterproof shower speakers on Amazon, FRESHeTECH started seeing a slew of negative reviews. The battery was only lasting a few days, products weren’t working, and customers were upset.
Meanwhile, other customers were completely satisfied, enjoying month-long battery life and recommending the product to their friends. What was going on?
FRESHeTECH had outsourced manufacturing to China, where their factory had convinced them to use an existing MP3 mold with some modifications. That meant the factory still owned the mold, so they could use it to create seemingly identical products with less expensive parts. The knockoffs – five or six of them – piggybacked on FRESHeTECH’s Amazon listing at a lower price.
“That created a customer service nightmare for us,” says partner Adam Schwartz. “We had a lot of upset people and we were losing a lot of revenue through sales that we should have had.”
The knockoffs sold tens of thousands before Schwartz emailed Jeff Bezos – at the suggestion of a friend – and someone from Amazon (presumably not Jeff Bezos) removed the knockoffs and some of the 1-star reviews.
This wasn’t the first time that FRESHeTECH had a huge China-related debacle. Before all this happened, a shipment of speakers was confiscated at the border by US customs officials because the product’s Bluetooth certifications were in the factory’s name, not the company’s. Schwartz had no idea what was going on for weeks, until he got a letter saying that customs was going to burn the inventory, fine them, and possibly prosecute them.
Schwartz rushed to get an official letter from Bluetooth, which took customs three weeks to process – and FRESHeTECH got billed for storage time. After all was said and done, the inventory had sat at the border for four months.
Recovered from the knockoff controversy, FRESHeTECH’s next challenge was in the courts. A Chinese patent troll had trademarked one of their names in the US and was claiming they were the original sellers. That took five months of fighting and “much more money than expected” to get the trademark back.
Today, FRESHeTECH is in a more stable place. Despite the knockoffs, they managed to sell over 70,000 Splash Shower Tunes speakers. They fired their old factory and started this year off with a new one, who helped them launch All-Terrain Sound: a portable speaker to take outdoors or biking. They made an appearance in May on The Today Show with Kathie Lee.
“There’s been a lot of days that we thought we may not be in business tomorrow and there’s been a nice amount of days that we had popped champagne,” says Schwartz. “There’s a lot of ups and a lot of downs.”