How Counterfeit Goods Are Destroying Brand Reputation

Whether you’re buying a cycling helmet or new school equipment, everyone wants to make sure what they’re buying online is the real deal.

But as total online spending reached a new record of 18.2% of all retail spending in July this year, the number of counterfeit goods found on the web continues to rise.

The total value of counterfeit products globally is expected to reach $1.8 trillion by 2020 according to the 2018 Global Brand Counterfeiting Report, driven in part by more convincing fake products.

There has been an explosion in what some are calling “super-fakes” – high-end luxury goods which look exactly like the real thing with Alibaba founder Jack Ma even going as far as to say that counterfeits “are made in exactly the same factories, with exactly the same raw materials [as authentic goods].”

The result has meant more consumers get duped into buying fake goods and more sales taken away from legitimate businesses.

With that in mind, we take a look at the impact counterfeit goods are having on consumer behavior and why effective brand protection is a must for companies in the e-commerce boom.

Consumer trust being lost

The proliferation of counterfeit goods online is having a major impact on consumer buying behavior. Over three-quarters of UK consumers (76%) would be less likely to buy products from a brand if their reputation was associated with counterfeit goods, according to independent research commissioned by Corsearch.

The importance of brand reputation was also highlighted in the report – 44% of consumers said that a brand’s reputation was very important to them when it comes to online purchases, while only 3% said a brand’s reputation wasn’t important.

But any sort of exposure to counterfeit products seems to adversely affect brand confidence. 66% of consumers that had been ripped off after unintentionally purchasing counterfeit goods have lost trust in buying from that brand again, while 34% of all consumers surveyed were less likely to buy from the brand’s own website if its products had been susceptible to counterfeiting elsewhere online.

The issue of brand confidence is a large one, and is one of the reasons why companies like Alibaba have set up special task forces to find and stop the sale of counterfeits. The consumers surveyed shows there can be long-term damage to buyer behavior for brands hit by counterfeit goods. But surely there is another, much simpler way in protecting brands?

All brands have become a target

There’s no arguing the opportunities that e-commerce has given brands, helping better engage customers and drive revenue, but the internet and online marketplaces have made it much easier for counterfeit organisations to take advantage of high-quality brands.

In the digital age, any enterprise with a recognised brand can become a target. The ease of use of online marketplaces means threats to brands can now come from anyone, anywhere and anytime. It takes just minutes for a counterfeiter to upload an image and description and compete with legitimate businesses.

The sophistication of illegal counterfeit groups is another issue. Increases in the quality of production methods, materials used and the packaging means everything has to be scrutinised in order to determine if a product is fake or not. It’s the exact reason why Salvatore Ferragamo decided to insert microchips in the heels of its shoes – although there’s no telling if counterfeiters will one day be able to fake the microchips!

To counter the increase in quality, brand protection strategies must be able to evolve alongside online threats. Companies invest time, money and resources to build their brand online, so it’s only natural that businesses protect some of their most valuable resources.

New, sophisticated software that utilizes machine learning and image detection technology is able to scour all corners of the internet, identify infringements and present and prevent damaging threats to brands. This increased automation has rapidly increased the time taken to spot fakes and take them down, helping brands protect themselves against lost sales, brand dilution, and damage to reputation.

More investment in brand protection is needed

In the short-term, companies will remain focused on optimising their e-commerce channels as online sales continue to prove their worth. But as the production of fake goods shows no signs of slowing down, brands will also need to pay attention to long-term damage caused by the rise in counterfeits available to consumers.

Retailer and brand investment in the quality of the online experience is clearly essential as counterfeit goods continue to increase in both number and sophistication. Brands of all sizes risk ignoring this problem at their peril.

Click below to see the full findings from the research and learn how brands can stay protected online.