Risky business: The impacts of counterfeiting on your brand

A few decades ago, counterfeiting was mainly a challenge for luxury brands, but in recent years counterfeiting has become a growth industry.

Fake products of all kinds – handbags, clothing, pharmaceuticals, DVDs, perfumes – are all readily available, thanks to the proliferation of the internet and continued use of social media. In short, technology makes it easier for counterfeiters to take advantage of genuine brands and their customers.

Facing the consequences

Brands are negatively impacted in terms of both their reputation and their bottom line. In addition, there are health and safety concerns for consumers who buy fake electronics, cosmetics, perfumes or medications that don’t meet safety standards and are manufactured using poor quality materials. Then there is the effect on the economy; in the European Union alone it is estimated that up to 5% of imported goods are fake, which equates to €85 billion and has caused 800,000 job losses.

That said, consumers aren’t knowingly buying these fakes. In fact, according to the most recent MarkMonitor Online Barometer – Global Online Shopping Survey 2018: Facts, figures and fakery, 45% of global consumers actually worry about unintentionally buying a counterfeit product, and 84% said they wouldn’t intentionally buy one as a gift. The report was compiled using research data from 2,600 consumers across the UK, US, France, Germany and Italy.

Aware of the dangers

In addition, consumers are savvier than they have ever been before; they have a heightened awareness of the threats that are present when they shop online. Almost two-thirds (63%) of respondents in the research said they check the trustworthiness of websites by looking at online reviews, 43% said they check for SSL certificates, 43% look at the returns policy, and 39% analyse grammar and spelling on websites. This sentiment was also reflected in the fact that 46% of respondents said they still have concerns over using their credit cards when buying on the internet. These worries ranged from hackers accessing personal details (65%) to identity theft (59%) and having money stolen (56%).

Availability of fakes

Yet despite this awareness, consumers continue to be duped by counterfeiters. The research shows that 30% of consumers have accidentally bought a fake product online in the last five years. In addition, 24% of consumers said they had inadvertently bought a fake product in the last 12 months online, with 31% spending up to £50 and 23% spending £51-£100 on them.

These fake products ranged from clothing (31%), electrical goods (27%) and footwear (23%), to jewellery and accessories (23%), toys (22%) and perfume / cosmetics (20%). Further insight revealed that the counterfeit products had been purchased from trusted channels – 26% bought from online marketplaces, while 17% bought through smartphone apps.

In the past, it was easier to spot fakes, largely because they were far cheaper. However, the prevalence of these goods online, coupled with the increasingly sophisticated methods that counterfeiters use to market them, means it’s harder than ever before to spot them. Often, they are not noticeably cheaper or visibly different from the real thing.

Impact on the brand

There’s little doubt that counterfeiting is detrimental to brands, but this is certainly put into perspective by looking at the reactions that consumers had to inadvertently buying fakes. The research showed that once they discovered the product was a fake, 27% warned family and friends, 26% stopped spending money on the brand, and 22% said their perception of the brand worsened.

Furthermore, 88% of consumers who have fallen victim to counterfeiters believe it’s the brands themselves that should be doing more to protect them from the threat.

This is perhaps one of the reasons that online brand protection is becoming more customer-focused.

A new approach to brand protection

In complementary research – The future of online brand protection: Threats, trends and business impact – also conducted by MarkMonitor, 46% of brand protection professionals surveyed said the most important aim of a brand protection plan was to protect the consumer, while 84% reinforced the fact that that consumer behaviour played a major role in how they prioritise this plan.

The research also revealed that online brand protection is evolving; not just in terms of becoming more customer-oriented, but also in response to a changing cyber threat landscape and the impact that cyber crime is having on the organisation as a whole.

What can brands do?

The threats posed by counterfeiting are ever-growing. In order for brands to safeguard themselves and their customers, they need to develop and maintain a comprehensive online brand protection strategy that covers all channels and is an integral part of a wider plan. A key component of this is educating consumers on how to shop safely online and not be duped by counterfeiters.

For many brands the best approach is a consumer-centric one; this means focusing efforts on where customers are most likely to encounter fakes — protecting the path consumers take to find the genuine brand by creating a clear picture of what customers see when searching across websites, marketplaces, and social media. In essence, brands focus protection efforts on the first few pages in search listings marketplaces and paid search ads, for example, so that they are as clean as possible from counterfeit, pirated and grey market listings.

Conclusion

There is little doubt that counterfeiting has a detrimental impact on brands, consumers and the economy. It is a global issue that shows little sign of slowing down. What remains critical is that brands remain vigilant in protecting shoppers online to avoid the risk of them unwittingly buying a fake product, and this means having a comprehensive (and customer-focused) brand protection strategy in place that protects their reputation, bottom line and, most importantly, their customers.

Photo by NeONBRAND on Unsplash

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