We may earn commissions if you use the recommended services on this site.  

Birkenstock Identifies Knock-offs on Facebook as Key Risk in IPO Filing

Latest Business News

Birkenstock Warns of Counterfeit Risks in IPO Filing

Birkenstock, the iconic sandal maker founded in 1774, has filed for an IPO and highlighted the dangers posed by counterfeit brands that utilize social media platforms to promote their products. The company, originally from Germany and now based in London, plans to go public on the New York Stock Exchange under the ticker symbol "BIRK." Birkenstock has long faced challenges in protecting its intellectual property, with copycats attempting to undercut the brand with cheaper alternatives. In its IPO prospectus, Birkenstock acknowledges the competition from "private label offerings" by retailers, as well as the presence of "knock-off products" that deceive consumers on platforms like Facebook by claiming to be authentic. The company expresses concern that the sale of counterfeit products on third-party e-commerce platforms could harm its brand and reputation.

Counterfeit Issues with Amazon

Birkenstock's IPO filing does not specifically mention Amazon, but it does reveal the company's decision to refrain from using certain third-party websites due to the sale of counterfeit products. In 2016, Birkenstock publicly severed ties with Amazon in the U.S. after encountering a surge of unauthorized sales and counterfeit items on the platform. The company also prohibited authorized Birkenstock merchants from selling on Amazon, citing unacceptable business practices and the inability to effectively address the issue.

Direct-to-Consumer Expansion and Ownership

Since parting ways with Amazon, Birkenstock has significantly expanded its direct-to-consumer efforts in the U.S., with e-commerce representing 38% of its revenue for the fiscal year ending September 30, 2022. In February 2021, Birkenstock sold a majority stake in the company to L Catterton, a private equity firm backed by LVMH. Following the IPO, L Catterton will maintain majority ownership of Birkenstock.

Counterfeit Concerns on Social Media

Counterfeit products are not limited to e-commerce platforms like Amazon. Birkenstock's IPO filing points out that Facebook, specifically its parent company Meta, is aware of the counterfeit activities taking place on its platform. In collaboration with luxury brand Gucci, Facebook filed a joint lawsuit in 2021 against a user selling fake Gucci products on its U.S. sites. The lawsuit highlights the ongoing efforts to combat counterfeit content and remove millions of pieces of fraudulent content from Facebook and Instagram. In conclusion, Birkenstock's IPO filing emphasizes the risks posed by counterfeit brands, particularly on social media platforms. The company's decision to address these concerns and expand its direct-to-consumer efforts reflects its commitment to protecting its brand and reputation. As Birkenstock prepares to go public, it remains vigilant in combating counterfeiting and maintaining the resilience and credibility of its multigenerational business.

Conclusion: Implications for New Businesses

Birkenstock's IPO filing and its emphasis on the risks posed by counterfeit products have significant implications for new businesses.

Protecting Intellectual Property

Birkenstock's struggle to protect its intellectual property underscores the importance of robust IP protection strategies for new businesses. Companies must be proactive in safeguarding their brand and products to prevent copycats from exploiting their success.

Navigating E-Commerce and Social Media Platforms

The company's experience with counterfeit products on Amazon and social media platforms like Facebook highlights the challenges of operating in the digital marketplace. New businesses must be vigilant in monitoring these platforms and taking action against counterfeit activities to protect their brand and reputation.

Direct-to-Consumer Strategy

Birkenstock's focus on expanding its direct-to-consumer efforts following its split from Amazon serves as a valuable lesson for new businesses. Direct-to-consumer strategies can provide greater control over brand representation and customer experience. In conclusion, Birkenstock's IPO filing offers valuable insights for new businesses, particularly in terms of protecting intellectual property and navigating the challenges of the digital marketplace. As they grow, new businesses must remain vigilant against counterfeit activities and consider direct-to-consumer strategies to maintain control over their brand and customer experience.
Story First Published at: https://www.cnbc.com/2023/09/12/birkenstock-ipo-filing-warns-of-knock-offs-on-facebook.html
Brought to you by BusinessFormation.io
Know Your State's Registered Agent Requirements: What is a Registered Agent
Learn How To Create An LLC: What Is An LLC and How To Start an LLC Online

LLC Filing & Registered Agent Services

Compare Online LLC Filing Services Today

We work with the market leaders in business formation and registered agent services.

Getting started is simple and inexpensive. Form your business today & secure your brand name before someone beats you to it! Click below to view the Top 3 Best LLC and registered agent service providers.
View Top 3 Providers Now

Filing An LLC Can Be Complicated

Streamline Your LLC Filing Online for $39

Northwest Registered Agent is the best-rated service for first time filers.

Get professional LLC formation & registered agent services for only $39 + state filing fee. This offers includes your full LLC setup, plus a private business address, lifetime support, and more.

Trusted by Millions. Save 82% Today.