Luxury products and counterfeiting: challenges and solutions
Luxury products are typically considered as a high-status symbol and are often associated with exclusivity and unrivaled quality. However, while luxury is meant to showcase prestige and economical power, counterfeiting has a negative impact on the unique value of these products.
What is counterfeiting? What are the consequences for the luxury industry?
A counterfeit product is referred to as a direct copy of another original product of a valuable brand, from the design and style to the packaging and logos, but with generally inferior quality. These copied products are made to convince the buyer that they are identical to the original and make consumers think they are buying the original branded product.
Today, counterfeiting is considered as a fast-growing major global phenomenon, especially with the increase of modern technologies and the expansion of e-commerce that enable counterfeiters to easily manufacture and sell cheap replicas. These counterfeit products cost companies millions if not billions of dollars each year and can have detrimental effects on their brand’s image. In fact, a study has shown that the overall counterfeit products market in 2019 was over 446 billion US Dollars.[1] These fraudulent products are not only the source of a high dissatisfaction for customers who were tricked into buying fake low-quality items, but they can also cause serious health and safety issues as these products do not necessarily comply with the regulations in place.
Counterfeit products: key findings at European borders in 2020 [2]
Counterfeiting is highly detrimental to the luxury industry
Unique selling point
In the luxury industry, originality and rarity are the main drivers for success. If a luxury product becomes commonplace, there’s a high chance that it will lose its attractiveness and unique selling point, therefore wasting all the research & development, design, marketing, and advertising resources invested in creating a distinctive product.
Brand image & reputation
Counterfeit products sales do not always directly affect infringed brands. However, they often lead potential customers to change their minds after seeing how the product has lost its exclusivity and unique character. The luxury market relies heavily on reputation and the feeling of exclusivity that its customers get to experience when buying such original products. The mass-selling of counterfeit products is a clear threat to luxury brands and what they stand for.
Safety & lawsuits
Another great issue is that counterfeit products do not comply with safety standards. This often puts the consumers’ health at risk, and if they believe that the brand is responsible for selling those faulty products, its reputation is damaged, and it is at risk of a lawsuit.
How to protect your brand?
Historically, companies have relied greatly on customs to identify suspicious behaviour. Facing an ever-growing threat, enforcers, intermediaries, and border controls must develop new solutions to help remedy this issue. Indeed, it can be quite challenging for a brand to stop or fight counterfeiting, but solutions do exist.
Several brand protection solutions are available on the market, such as holograms, watermark 2D barcodes, matrix digital codes, etc. All these solutions support to some extent asset authentication but, compared to RFID and NFC, these methods are easier to copy or tamper with.
Using RFID and NFC technology, it is possible to authenticate your products and identify their origins. Each RFID / NFC chip has a unique international identifier that is impossible to duplicate. NFC chips can then be read with a simple smartphone equipped with NFC technology, or a specific NFC reader. This means that consumers, distributors, or customs officers can very quickly, and easily, authenticate a product and check if it is not a fake. RFID chips do not only store information along with their unique ID, allowing for quick and accurate product authentication, but also provide precise visibility of the products’ journey throughout the supply chain.
The longstanding issue of counterfeiting is definitely a great challenge for all brands, especially in the luxury sector. However, solutions exist to protect brands, in particular those based on contactless technologies.
Sources
[1] Le commerce mondial des contrefaçons (europa.eu)