Webinar: Counterfeit Cosmetics in Ecommerce
Webinar: Counterfeit Cosmetics in Ecommerce

Expert Steps For Combating the Surge in Counterfeits

11/12/20

As e-commerce became the primary shopping channel during the pandemic, it opened up more opportunities for counterfeiters to drive digital sales by impersonating brands.

While there are still some counterfeits being sold on the street in major cities, a significant volume of fake goods today is sold online. Setting up a website, social media account or product listings on a marketplace is inexpensive and simple for fraudsters, which has led to a growing problem of fakes as transactions shifted online. This year, counterfeiting has escalated along with online shopping. From March to September, brand protection firm Red Points’ fashion and footwear clients have detected 91 percent more counterfeits in the market than in the same period of 2019.

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Infamous Swim has learned that even young labels can face copycats. When the Australian company launched about two years ago, counterfeits began cropping up almost instantly on marketplaces like Alibaba and eBay. “You put so much work and effort into small business, and unfortunately most of the time it is the small businesses that have innovative and exciting new ideas that are the ones that are copied a lot,” said Gemma Crowe, the owner and designer of Infamous Swim. To combat counterfeits, the label began working with Red Points on brand protection.

This year, the brand made a push into the U.S., and found that consumers there had already been introduced to its mommy and mini swimwear styles through fakes on platforms such as Amazon. Counterfeiters took the imagery shot by Infamous Swim and used it to promote knockoffs that were retailing for $12, less than one-tenth the price of the original. Beyond marketplaces, influencer posts and keyword searches also sent shoppers to buy these fakes. According to Crowe, with the rise in online shopping, it has become costlier to compete with her copiers for online advertising placements.

The impact on brand reputation when a customer buys a counterfeit is massive. Often the quality is subpar, since the counterfeiters are more concerned with duping consumers and making money than creating well-made goods. For both emerging and established brands, knockoffs can lead to lost sales as shoppers decide not to buy again from a particular company.

There are also word-of-mouth implications. Red Points research shows that 47 percent of consumers who end up with a counterfeit leave a negative review on the marketplace or with the brand. Additionally, 28 percent of shoppers hold brands accountable for the fact that they received a knockoff, even if they didn’t make their purchase directly with the brand.

According to a survey from Yotpo, two-thirds of consumers look to reviews for sizing and fit information before they buy apparel. If a portion of the reviews are for fake merchandise, that can throw off shoppers’ ability to determine what will work for them. From the brand perspective, this also skews data about fit and quality, potentially convincing companies they have product issues that are instead solely related to the fakes. Correcting against this, Infamous Swim is reaching out to customers directly and asking for their order information to gauge what is legitimate feedback related to swimsuits it has produced.

“When you start to see a lot of negative reviews about your quality, most [brands] start to think about something happened in their production to change the quality,” said Daniel Shapiro, vice president of partnerships and brand relationships at Red Points. “And I would tell most brands you need to look to see if you have a counterfeit problem, because it is a telltale sign that you’re having a counterfeit problem if you begin to see a lot of reviews around poor quality.”

Read the full article in Sourcing Journal.