According to the OECD, in 2018 $509 billion dollars’ worth of counterfeit goods were sold globally. This not only damages brands’ reputations, but also weakens consumer trust and ultimately hurts the e-Commerce industry as a whole. Unfortunately, many online retailers do not have the knowledge or tools to filter counterfeit products for every single item sold on their sites. However, it’s more important than ever for businesses to ensure consumer perception of their brand isn’t undermined by counterfeit goods.
Brands should consider that any interaction consumers believe they’ve had with the brand, whether genuine or counterfeit, will impact their overall perception of and loyalty to the brand. Emerging brands that are online first and direct-to-consumer (DTC) are no exception to this rule, as consumers are less likely to forgive bad experiences from a brand they are unfamiliar with.
The Counterfeiting Problem
With e-Commerce sales on track to surpass $4.5 trillion by 2021 and incidences of counterfeit goods on third-party sites becoming more prevalent, all brands need to ensure their e-Commerce strategy accounts for the revenue loss that counterfeiters pose to their bottom line. Beyond the millions of dollars lost in sales, every counterfeit good sold online damages consumers’ perception of the brand.
Once a brand’s reputation is damaged, it is extremely difficult to regain consumer confidence. Rather than spending marketing dollars on reactionary campaigns to salvage the brand, businesses will be most successful if they invest in stopping the problem before it happens. Just tracking and monitoring where all of its products appear online is a great start in preventing counterfeiting from happening in the first place. From there, price tracking is key for spotting irregularities that will give away counterfeit products.
Controlling The Online Experience
According to a report from Finder, American workers alone spend at least 1.7 hours a day shopping online. Every interaction during that time will inform how trustworthy and convenient customers believe particular brands to be. Consumer brands that differentiate themselves through the quality of their products are at risk of losing loyal customers should they begin to believe that the quality or authenticity of the brand has deteriorated.
Mary Meeker’s latest Internet trends report cited that e-Commerce sales have grown to 15% of all retail sales. Counterfeit goods infiltrating the supply chain will have the greatest impact on online customers who aren’t able to physically examine their purchases for discernable differences from authentic goods .This will cut into brands’ ability to take advantage of the growing e-retail market.
With all the imperatives today’s online brands must focus on — like web design that prioritizes intuitive search, smart recommendations and personalized experiences — it’s critical that preventing counterfeit products does not fall by the wayside. Brands working to create the best-designed online shopping experience often deprioritize the experiences they have less control over. However, taking steps to protect customers from counterfeit goods cannot be overlooked as a component of curating the best online experience for your brand.
Counterfeits Aren’t Just For Big Brands
As direct-to-consumer businesses continue to grow, they should prioritize protecting themselves from imitations that could take advantage of unsuspecting customers who may not know how to correctly identify the brand. While DTC brands may not have the same challenges as luxury retailers, many newly formed brands in the retail market are faced with having to ward off imitators that lower the overall perception of their goods. It’s critical for DTC brands to track similar products on third-party sites from the beginning, to stay ahead of imitators looking to make a quick buck with similar products or branding. In this way, DTC vendors can continue to claim their position as positive disruptors for consumers, reducing price by selling directly to end consumers — not by reducing the quality of their products.
Today’s brands cannot rely on third-party resellers to take on the challenge that the counterfeit goods market presents. They need to have technology and strategies in place to be the eyes and ears of the brand, proactively seeking out instances of counterfeiting before they hear about it from a consumer or third-party vendor.
This is a business imperative for brands to protect consumers and their own reputations. Forward-thinking brands will make this a top priority and, in doing so, will offer a more complete online experience and limit the likelihood of loyal customers purchasing inauthentic products that hurt their carefully cultivated image.
Sanjeev Sularia is CEO of , a retail analytics and AI price optimization company that offers the world’s largest retail product index. Prior to founding , Sularia was the CFO for , a fast-growing high-end fashion e-Commerce site acquired by Snapdeal, and CFO for , a private label e-Commerce company acquired by Myntra. Sularia is a graduate of London Business School and a Forbes Technology Council member.