Keith Goldstein is the President and Chief Operating Officer of verify mewhere he leads operations and product strategy and development.
Emerging technology often means that we are both victims and beneficiaries of innovation. Nowhere is this more clearly demonstrated than in the fight against counterfeiting and fraud. As technology has become more advanced, so has the ability of criminals to steal IPs and sell fake products. While new technologies such as QR codes, NFC chips and proprietary tracking software offer new ways for companies to protect their brand and products from theft, many view counterfeiting as a standard cost or brand protection as simply more money than it is worth.
It is vital that brands understand the global impact of counterfeiting and the damage to brands’ reputations and bottom line.
How Counterfeiting Affects Global Business
Counterfeiting is a serious problem. While estimates vary, the total number of counterfeit goods sold each year comes to about $1.7 trillion to $4.5 trillionallowing forgery at least the tenth largest economy-just above Canada’s total GDP and possibly the fourth largest above Germany. It is also responsible for 2.5 million lost jobs worldwide. In addition, American companies and consumers are also often the biggest victims of counterfeiting. American shoppers tend to buy the largest share of counterfeit goods, about 60% to 80% of all goods sold.
Retailers and luxury brands suffer the most from counterfeiting, especially those who sell their products in global markets. While counterfeiting is difficult for these companies, it also has wider geopolitical implications. For example, IP theft from criminals in China was partly responsible for: rates levied by the US a few years back.
How counterfeiting affects brands
From a financial point of view, counterfeiting is a huge source of competition on a global scale. Brands need to worry about both legitimate competitors eating up market share and counterfeiters destroying trust. In addition to taking away revenue from a company, counterfeiting also affects the consumer’s ability to trust their goods in an open market. Without the right security and tracking measures, consumers quickly lose trust in brands to protect their customers from theft. IP and brand protection company IncoPro found that: 52% of consumers have lost confidence into a brand after buying a fake product online, while 64% lost confidence in online marketplaces. This even led to Nike stopping selling its products on Amazon.
4 ways brands can reduce counterfeiting
Counterfeiting is often swept under the rug. Brands don’t know how to deal with the press or reporting, so they don’t trade. Meanwhile, the global interconnectedness and widespread unregulated fabric of the Internet have left many governments powerless to fight online counterfeiting, as has their ongoing struggle to online piracy.
For this reason, it is the duty of brands to protect their products and their image against theft and fraud. Fortunately, they have several tools and strategies at their disposal to protect their business and maintain the trust of their consumers.
1. Track and Trace Networks
The ability to locate products via GPS enables full traceability throughout the supply chain and promotes greater transparency. Proprietary and serialized codes allow companies to monitor products, pallets and shipping containers throughout their supply chain. These codes can be scanned with a standard smartphone to verify or with proprietary technology to provide a higher level of security. Unique secret taggants and inks can make security even more complex, giving brands complete control in the fight against counterfeiting and product diversion.
2. Online Brand Protection
Online IP theft is especially devastating to startups, whose equity and value are often a measure of their intellectual property. Fortunately, anti-piracy algorithms and broad tracking networks allow brands to track and identify violations related to their products, so brands can protect their company’s IP.
3. Digital Printing
The development of advanced, high-speed digital printing enables brands to print variable, dynamic serialization codes both overtly and covertly on packaging, labels and a wide variety of substrates. This helps with traceability, authentication, track and trace and consumer engagement.
4. Additional Forms of Authentication
In addition to digital prints, there are several ways brands have implemented modern technology to authenticate products, including:
• Invisible pigments integrated on products or labels from the point of manufacture, which are impossible to remove or cheat.
• QR codes hidden in clothing that can be scanned on a smartphone.
• NFC chips on electronic products that can be scanned by a physical scanner.
• NFTs that link physical objects to digital wallets to verify authentic clothing and prevent tampering.
• Variable dynamic codes with secret security markings printed directly on clothing and clothing labels.
Counterfeiting continues to be a serious threat to all brands selling goods online in a global marketplace. But brands are not helpless. Brand protection offers several additional benefits, including new ways to engage consumers and gain business intelligence across the supply chain.