The pandemic has caused a dramatic rise in the production of non-authentic goods worldwide, but technology is here to save the day.
Alongside the obvious surge in online shopping during lockdown, counterfeit beauty products are on the rise, specifically targeting those new to e-commerce. And, with a recent report from GlobalData which predicts that internet purchases will account for over 15% of all UK health and beauty spending by 2024, never has it been more essential to tackle this issue.
βCounterfeits always seize on opportunities for growth and with e-commerce sales booming, this is one of those opportunities,β says Daniel Shapiro, Vice President of brand protection agency Red Points. βGlobally, itβs a huge business β one of the largest criminal enterprises in the world and one theyβre estimating will be worth $4.5 trillion in just the next couple of years.β
Although the sale of non-authentic goods is nothing new, the problem lies in the fact that Covid-19 has made it a great deal easier to deceive consumers. The current situation, which brought about a mass disruption of supply chains that retailers are still struggling to keep up with, makes for ideal conditions that counterfeit brands have readily taken advantage of.
When the majority of legitimate factories were shut down and running out of stock, fake manufacturers jumped at the opportunity to slip through the cracks with their illicit production processes, avoiding official import and export channels in favour of smuggling.
βIn the midst of a very difficult year for business, in which revenue loss to a counterfeiter could be more detrimental than normal, the need for collaboration among brands, marketplaces, law enforcement and customers has only increased,β adds Shapiro. βBrands donβt have to shoulder this alone, but itβs not going away anytime soon, and they are going to have to set aside resources to fight it.β Unfortunately, while beauty conglomerates such as LβOrΓ©al and EstΓ©e Lauder have dedicated legal and security teams focused on keeping counterfeit products off the market, smaller, independent companies are considerably less protected and at increased risk of losing customers.
βHaving fake goods on the market can really impact a brandβs reputation and the trust of its customers,β finishes Shapiro. βIf a customer receives a product that doesnβt work, theyβre more likely to blame the brandβs manufacturing than to question whether itβs real or not.β
So, whatβs being done about it?
Fortunately, a solution has emerged. Another step towards the integration of technology and beauty, investment in blockchain and smart packaging is one potential answer to helping the industry overcome this escalating problem.
βThis is where innovation is key,β says Yamina Tsalamlal, associate analyst at GlobalData. βBlockchain allows for the tracking of the products provenance to ensure transparency. This can be used at the consumer level as well as by brands and retailers through something as simple as QR codes or specialist labelling that can easily track each step of the supply chain.β
Coupled with one-of-a-kind βsmartβ packaging thatβs impossible to replicate, providing consumers with a means of scanning, tracing, and reviewing a productβs journey is a brilliant and straightforward method of ensuring brands are protected. Plus, it eliminates the need for excessive corporate spending as is the case with eBay, which currently invests millions of dollars each year in artificial intelligence and machine learning to identify fakes.
However, this isnβt an overnight fix, as blockchain remains particularly experimental in beauty and thereβs a lot of work to be done before the technology properly takes off. So, in the meantime, given how easily someone is able to set themselves up as a seller with very little due diligence, the onus continues to lie with the consumer to do their research.