Amazon Is Fighting This Trillion-Dollar Epidemic
Battling wildfires with innovative technology... How one startup aims to help millions of homeowners... Amazon is fighting this trillion-dollar epidemic... The company's latest plan in the war against 'fakes'...
It seemed like the entire state of California was on fire...
Almost every time I (Christian Olsen) turned the evening news on last fall, I saw planes dropping water on wildfires in the state.
It was the deadliest and most destructive wildfire season ever... When it was all said and done, 8,527 fires burned through roughly 2 million acres in 2018, causing more than $3.5 billion in damages.
Unexpected disasters like wildfires are exactly why Americans have homeowners' insurance. It's tragic to lose everything... But at least you know the damage will be covered.
Of course, it'd be even better if you could avoid the losses altogether...
One Silicon Valley-based tech startup aims to help millions of homeowners do just that...
Earlier this month, Cape Analytics – a private company in Mountain View, California – announced a new product. It utilizes "machine learning" to help insurance companies assess the risk of wildfires. (Machine learning is essentially when artificial intelligence – or AI, for short – learns from its experience... and never forgets it.)
Cape Analytics' technology uses pictures captured from surveillance planes to flag homes that are at a higher risk of catching fire. In turn, insurance companies can alert their customers of the biggest potential danger spots. As Forbes noted recently...
According to the company, its tools are able to determine the presence of vegetation to a resolution of six centimeters. The company claims its tools can also determine the density of that vegetation, enabling them to figure out how much the vegetation in a given neighborhood could fuel the growth of a wildfire.
"We want to streamline the process for our customers so they can be more strategic in assessing risk and determining if mitigations exist," said Kevin Van Leer, manager of client solutions at Cape. "We can help insurers work with customers to develop mitigations that reduce the risk to their property."
Buildings within the highest-risk wildfire zones should have minimal vegetation within 30 feet, according to the Federal Emergency Management Agency. That affects roughly one in 10 structures in California. And the California Department of Forestry and Fire Protection recommends another 70 feet of "reduced fuel" space to fight the spread of fires.
This new technology isn't Cape Analytics' first initiative to help folks avoid costly disasters...
The wildfire-risk tool expands on the company's initial product, which launched in 2014.
Back then, the company designed an application that helped insurance companies in Florida figure out the condition of roofs and any potential risks – like tree branches that could fall on them during storms. Over the past five years, that product has expanded across the U.S.
Insurance companies aren't the only ones using AI to solve a major problem today...
As longtime Digest readers know, e-commerce giant Amazon (AMZN) has revolutionized the way we shop...
You no longer have to push a heavy cart around or carry 10 shirts on your shoulder while dealing with a bunch of unruly teenagers at your local shopping mall. And when you're done, you don't have to wait in long lines or worry about where you parked.
You just search, click, and pay... And then, you can get your items as soon as the same day.
In 2018, Amazon's revenue totaled more than $232 billion – up about 31% from the previous year. And the company's net income soared an incredible 232% over the same period – from $3 billion to $10 billion.
Third-party sellers – folks who sell items on the platform and pay a fee to Amazon – made up more than half of the items sold during the fourth quarter of 2018. Amazon made more than $13 billion from these sales, up 27% from the same period a year prior.
That's phenomenal. The company is making billions of dollars for just hosting these sales on its site.
But Amazon is also dealing with a major problem from these sales... the spread of counterfeit goods on its platform. As the Wall Street Journal noted in late February...
Amazon has struggled for years to eliminate counterfeits, and many brands have complained that fakes have increased as the company added selection, lowered prices and opened its platform to ever more sellers. The company has contended publicly with brands' complaints that it hasn't adequately policed its site, including Birkenstock and luxury brand Swatch.
Before we go any further, we need to be clear...
This problem isn't just affecting Amazon. It's a worldwide epidemic...
Total counterfeiting across the globe – including everything from defense equipment to clothing to watches – totaled $1.2 trillion in 2017, according to last year's Global Brand Counterfeiting Report. By 2020, that number is expected to jump 50% to about $1.8 trillion.
Losses from online counterfeiting were estimated at $323 billion in 2017, according to the report. And the estimated losses for sales of fake high-end consumer goods – things like Versace suits, Cartier jewelry, and MAC cosmetics – came in at about $98 billion.
However, as one of the world's biggest retailers, Amazon is also one of the biggest victims...
Last August, market-research firm Gartner L2 published a report about Amazon's counterfeiting problem.
From 2016 to 2018, Gartner studied 350,000 one- and two-star reviews on Amazon for 321 brands – from hair care products to headphones to apparel. And it discovered that one out of every three products from third-party sellers received at least one review saying the item was "fake" or "counterfeit."
Makeup and skincare brands were most affected... According to Gartner's report, three-quarters of the L'Oréal, Olay, and e.l.f. listings received at least one "counterfeit" review.
Although Gartner's report looked at just a small portion of the hundreds of millions of products for sale on Amazon, it's clear that the company can't just let the third-party counterfeiters run wild.
If it did, customers could start to lose their trust in Amazon – and the company's sales would drop.
But at the same time, it would be almost impossible to monitor so much inventory on a continuous basis. Humans simply can't accurately figure out what's real and what isn't.
That's why Amazon is now using AI to wage the war against counterfeiters...
The company announced "Project Zero" in late February. It's a new anti-counterfeiting program that gives brand owners the tools they need to fight scammers more easily than before.
In the past, the brand owners would need to report the fake items to Amazon. Then, the company would review the report and remove it. Instead, Amazon has now essentially shifted the monitoring duties to the brand owners. More from the Wall Street Journal...
Companies invited to participate in the Project Zero initiative can log into a special portal and search for keywords or an image of their products. Brands click on any listings they believe are infringing and Amazon removes either the item or seller automatically.
Project Zero also includes a tool that produces a unique code for every product. The brand owners put these codes on their products during the manufacturing process. And every time a product with that code is purchased on Amazon, the code can be scanned at a warehouse to verify that it's authentic. That way, fewer counterfeit goods will reach customers.
Most important, Amazon is using the brand owners' actions to improve its automated protections...
As part of Project Zero, brand owners can give their logos, trademarks, and other key data to Amazon. And by using the self-service tool, they're helping to show Amazon which products are fake. In turn, the company's AI grows smarter through machine learning. It continuously scans more than 5 billion listings every day, searching for counterfeit items.
According to Amazon's initial press release to unveil Project Zero, these automated protections stopped 100 times more suspected counterfeit items than the old reporting process.
It can be risky buying brand-name items online... By the time you receive the fake item on your doorstep, it's usually too late. But in the coming years, with the help of its AI technology, Amazon hopes to completely eradicate counterfeit goods from its website.
We've been tracking the emergence of AI in Stansberry Innovations Report for months...
In November, our team recommended a company that's operating in three business sectors that will capitalize on the AI revolution – self-driving cars, video games, and supercomputers. Subscribers who followed our advice are up more than 25% in five months.
And then in January, we highlighted a global company that cuts across multiple industries. It's the best "pure play" way to get exposure to smart robots. From that issue...
[This company] builds the "smarts" that robots need on the factory floor. You can find its products in auto-manufacturing plants, semiconductor-fabrication sites, and oil-drilling rigs. And it's ready to ride a technological swell across all sectors like we've never seen before.
So far, this recommendation is up around 10% in three months. But we're just getting started... We believe this stock will outperform the market by a wide margin in the years ahead.
In Stansberry Innovations Report, we're always on the hunt for the next big winner in the AI megatrend... In fact, this month's recommendation – which is scheduled to hit inboxes tomorrow – could be just that. It's a small, innovative company that's leveraging AI to help doctors diagnose potentially fatal heart conditions faster than ever before.
If you'd like to be among the first to know about the best ways to profit from the AI revolution and other innovative shifts – like gene therapy and robotic surgery – I urge you to try a risk-free, trial subscription to Stansberry Innovations Report. Get started right here.
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In the mailbag, a subscriber shares his thoughts on Steve Sjuggerud's new movie, New Money. Are you a Stansberry Innovations Report subscriber? We'd love to hear what you think about the publication. Drop us a line at feedback@stansberryresearch.com.
"What a superb job you've done on the new movie! It was great to see and hear some of the players in this amazing transformation that China is undergoing. I hope the movie dispels whatever 'home country' biases your readers may have and encourages them into investing in China.
"I subscribe to both Steve and Stansberry Pacific Research and have used their recommendations for some great results. I have a pretty fair percentage of my portfolio invested in China now but, after viewing the movie, will be adding to that!" – Paid-up subscriber Jim G.
Regards,
Christian Olsen
Charlotte, North Carolina
April 25, 2019