How much money are you losing on fakes? It’s probably more than you think – here’s how to protect yourself

E-commerce has seen astronomical growth and global e-commerce retail sales are expected to exceed $4.1 trillion in 2024. As a business owner, you’re certain to love just a small piece of this pie, and yet the industry must be doing higher.

Counterfeits are a larger problem than you might think. Only in 2019 2.5% of world trade ($464 billion) was attributed to counterfeit goods. This is almost equivalent to Belgium’s GDP. If your organization sells any products, there is a high probability that you have experienced or will experience counterfeiting. In other words, your organization is suffering financial losses due to this rampant problem. The only query is: how much will you lose?

Indeed, fakes are everyone’s problem. For you, the business owner, counterfeits reduce the value of your brand, undermine consumer confidence and eat into revenue. For consumers, counterfeits are not only of lower quality, but may pose safety risks – similar to skin infections caused by counterfeit makeup products.

Types of anti-counterfeiting technologies

What will be done to sort out the Wild West of e-commerce? Every variety of e-commerce business needs to concentrate on anti-counterfeiting technologies that may help them maintain the integrity of their brands. The principal categories of anti-counterfeiting technologies are:

• Electronic – Electronic ID or tracking device attached to the product
• Marking – Visible or invisible mark on the product
• Chemical/physical – Chemicals or physical processes used to authenticate a product
• Mechanical – Material elements or processes used to authenticate or prevent tampering
• Digital – Includes information contained in and extracted from digital files and electronic devices

Each has benefits and disadvantages, but generally speaking, all anti-counterfeiting technologies work by detecting whether an item is authentic and has not been subject to fraudulent activity. In an increasingly digital world, digital anti-counterfeiting technologies hold great promise.

Smart tags and smart packaging

Smart tags allow consumers to determine whether a product is authentic. They will be inserted into products or placed on their packaging (“smart packaging”). Two commonly used examples are QR codes and NFC tags.

From these tags, consumers can extract a unique code that may determine the product’s authenticity. Similarly, consumers can register their product code, allowing corporations to track it.

This is a fairly easy way to combat counterfeit products, and it might probably still help significantly in protecting your organization’s fame and revenue.

Brand protection software

While smart tags are helpful, their usefulness depends on intentional data extraction. Brand protection software, in turn, continuously monitors digital properties for unauthorized use of mental property. It works in the background, searching web sites, social media and the dark web to discover brand name and logo infringements.

When the software identifies a potential breach, it triggers an alert. The company may then take motion, similar to sending a cease-and-desist letter. In other cases, law enforcement could also be called upon to respond.

Brand protection software is an essential weapon in an anti-counterfeiting arsenal because it runs constantly in the background and uses real-time analytics to generate insights about potential threats. Some programs even offer automated enforcement responses, further reducing the need for additional manpower.

Blockchain solutions

Blockchain technology is based on the concept that sometimes the best way to protect something is to distribute it widely moderately than to place it in a central location similar to Fort Knox. Blockchain involves a digital ledger that stores pieces of knowledge across the network. Each “block” that stores one a part of the digital data “chain” is highly secure and tamper-resistant. Its decentralized nature means there is no single point at which it might probably fail.

While blockchain is perhaps best known for its association with cryptocurrency, it has applications beyond this field. In fact, it might probably be used in conjunction with anti-counterfeiting technologies to create a traceable and transparent supply chain. Your company can use blockchain technology to track products and track their ownership. By discovering a product’s authentication history, you can more accurately discover and deal with counterfeit products more quickly.

Tracking the point of contact with the customer

While technology is helpful, sometimes corporations fail to see the forest for the trees. Counterfeit products exist because A) someone wants to make them and B) someone wants to buy them. To truly combat the problem, each halves of the equation should be addressed.

Consumers are sometimes aware that they are buying fakes. This will be especially common among aspirational buyers – those that want the prestige of a luxury brand but cannot afford the price of the original item. How to persuade consumers that fakes are not value it and that the real deal is?

Consider digging deeper into the buyer’s journey. By mapping a holistic view of all consumer touchpoints (my company’s software, Atrilyx™, does just that), it is possible to pinpoint exactly where customers are losing touch with a brand and where there is a danger of intentionally selecting counterfeits. This allows you to tailor your marketing campaigns to convey the value of selecting an authentic product.

This is a war, not a battle

In the ancient Roman Empire, it was common practice for traders to trademark counterfeit wines on amphorae, disguising low-cost wine as expensive, good wine. Today, wine is still counterfeited. As long as there are goods, there will probably be counterfeit goods. Even if you are a small to medium sized business owner, you could also be losing money to counterfeiters at once without even realizing it.

It is a costly and widespread problem – a war, not a battle – and no single solution is sufficient to quell it. However, by combining multiple technologies and strategies (including tracking touchpoints at the consumer level), you can build a solid defense that protects your brand. This is essential – your corporation might be losing money to counterfeiters every day.