At a recent GreyScout client meeting, we were told the following eye-opening fact: “In China, there are more fake products sold under our brand than genuine products.”
Although it is a definite sign that you have a successful brand – this is where any positive association with counterfeit activity ends.
Once pedalled almost exclusively by street-front vendors in places like Canal Street in New York City and Beijing’s Silk Market, counterfeit products have naturally become widely available in e-commerce marketplaces.
The rise of e-commerce has created a worldwide marketplace, in which retailers of all kinds can freely and easily trade goods and expand their reach across international borders.
Unfortunately, while the rapid advancement of digital technology has created a wealth of opportunities for e-commerce vendors, it has also made it easier than ever for counterfeiters to produce and sell unauthorized versions of licensed products.
According to the US Chamber of Commerce, Counterfeit products cost the global economy over $500 billion a year.
From designer handbags and jewellery to electronics, counterfeit goods are everywhere. These counterfeiters are stealing sales by undercutting prices. But it’s not just lost sales that brands need to be concerned about. Left unchallenged, counterfeit activity can have a lasting negative impact on brand equity over the long term.
This is especially true in the world of e-commerce where negative reviews referencing fake or counterfeit products are forever available and linked to the brand.
Of course, this is only in the case where a customer is aware they have received a counterfeit and taken the trouble of leaving a review to warn others. Consider another potential scenario, where a customer unwittingly receives a fake product and considers it to be genuine branded goods, perhaps comparing it with a true genuine item from a competing brand – this can make the difference between winning a long-term customer, loyal to your brand or handing additional market share to your competitors.
So, How Do They Do It?
To begin thinking about tactics to combat counterfeit goods, it’s good to have a base-level knowledge of where they come from and how they are made.
The variation in appearance and quality of counterfeits can be vast – from glaringly obvious fakes to exceedingly high quality that can difficult to tell apart from the real thing, even for a seasoned brand manager. (we know of one case where a well know watch manufacturer did not realize they had received a fake for repair until they opened the case to reveal the mechanism inside)
Other factors, such as product category, also impact the approach – it’s no coincidence that clothing apparel and footwear top the most counterfeited charts.
Take brand-name sneakers from well-known brands such as Nike or Reebok, for example. Counterfeiters with minimal equipment and material will now go to a shop that sells the real sneakers, buy a pair, take them apart, study their stitching and moulding, draw up their own design and begin to produce some very convincing fakes – going from start-up to revenue-generating in a matter of days.
So, how do you avoid your products getting into the hands of counterfeiters?
Educate, Guide and Protect Your Customers
At one time, fake goods were easy to spot. However, this is no longer the case as counterfeiters are becoming very professional at what they do. In many cases, counterfeiters may have an “inside man” with access to a product’s supply chain, making producing fakes simply a matter of procuring materials and labour.
It is now necessary for brands to take an educational approach – through marketing, social media, and other methods – to inform their consumers of what makes their products unique and how to spot fakes.
What’s more, brands need to take steps to ensure the pathways that lead their customers to find fake versions of their products are severed and unauthorised 3P resellers are shut down and removed quickly. Be diligent. Keep an eye on marketplace search listings, paid ads, and grey market listings.
With your customers able to spot fakes thanks to your compelling, easy-to-read content and messaging, you can also offer them a reporting tool to let you know of any fake versions of your goods that are out there. Consumers can be incentivized to report counterfeits with the offering of discounts, coupon codes, and other rewards.
Protect Your Intellectual Property
For e-commerce brands selling patent-protected products and designs, being diligent when it comes to protecting your intellectual property (IP) is critical. It all starts with formally registering your IP and Trademarks. Then, work with a trusted manufacturer, who has signed an NDA (Non-Disclosure Agreement) to keep vital information under wraps. You should also fight “rogue websites” by registering any possible domains that could be associated with your brand.
Use Brand Protection Software
Protecting your brand from the trillion-dollar counterfeiting industry can be a full-time job, but brand protection software can make it easier. Brand protection technology like GreyScout with keyword monitoring, image recognition, and machine learning can autonomously alert you of fakes on the internet so that you can take swift action.
The Bottom Line
Counterfeiting harms everyone: from consumers to e-commerce vendors, to the global economy. With counterfeiters getting savvier, it’s now critical for brands to remain on the offensive to protect their customers and their brand with a strategy that focuses on pinpointing where customers are finding fakes, how these fakes are getting there and ensuring systems are in place to quickly remove these offending listings and resellers on each channel.
Having a brand name that’s strong enough to be distinguishable from counterfeit versions is no longer adequate. Brands now need to defend themselves and protect their customers by having effective tools and systems in place and having a reputation for taking proactive measures to stamp out fakes for good.
