Globally, online sales accounted for $2.8 billion in 2018 according to . This presents a significant opportunity for brands, but they are not the only ones who are benefiting from this upsurge in online shopping. Counterfeiters, fraudsters and cyber criminals are cashing in too. Just as the web can be used to promote, market and sell legitimate brands, counterfeiters consider it ideal tool for the sale of fake goods.
Combating counterfeiters requires a concerted effort from brands, relevant authorities and the consumer. To understand more about online shopping behaviours and attitudes toward counterfeit products, MarkMonitor commissioned research firm Vitreous World to conduct an of 2,600 consumers across the U.K., U.S., Germany, France and Italy to find out how they view the role of brands in keeping them safe.
Facts about fakes
Counterfeiting has far-reaching consequences and negatively affects brands, consumers and the economy at large. From a brand point of view, there is a loss of revenue, loss of customer trust and loss of market confidence. For consumers, many are duped into buying fake goods, which means they’ve lost their money and could even be placing themselves at risk.
According to the research, 84% of global consumers said that they would never buy fake goods as gifts intentionally. However, 49% have done so unintentionally, which shows how counterfeiters are able to mimic brands very effectively.
The internet provides a multitude of channels for counterfeiters to market to consumers and, as research shows, consumers choose to shop online for convenience (58%) and choice (51%). In fact, 20% of respondents reported doing between 75% and 100% of their non-grocery shopping online, providing counterfeiters with a huge potential market.
However, consumers can feel exposed while carrying out these purchases. Indeed, 88% of consumers believe that brands should be doing more to protect them from the online counterfeit threat.
So, where do consumers feel most vulnerable, and which channels should brands be looking towards to provide information, protection and reassurance for their customers?
Trust is an issue
Consumers aren’t naïve, and they’re becoming more switched on when it comes to online shopping, particularly when it comes to security. They certainly have some awareness when it comes to counterfeit websites. In fact, 63% of respondents check the trustworthiness of websites by looking at online reviews, 43% check for SSL certificates, 43% look at the returns policy, and 39% analyse the grammar and spelling of a website.
Despite their awareness, consumers still experience some uneasiness when using their credit cards online. This is primarily due to concerns that hackers can steal their details (65%), their identity (59%) and their money (56%). Many marketplaces have mechanisms in place to deal with these risks; however, the challenge for brands remains that it is extremely difficult to police every channel.
Interestingly, most consumers (88%) trust online marketplaces, but only 33% would trust a sponsored social media advert. Clearly, while social media use is on the rise, consumers don’t necessarily see it as a platform to buy a trusted brand’s products due to the number of fake adverts they are bombarded with.
Which brands are affected?
Traditionally, most fake purchases have been within clothing and apparel, footwear, accessories, perfume, electrical goods, jewellery and toys, particularly in the luxury market. However, this is no longer the case. Today, every brand appears to be fair game, and the rise in counterfeit pharmaceutical products is particularly worrying.
In the past, the adage of “if it’s too good to be true, it probably is” was one of the ways to spot a fake. Now, however, counterfeit goods can be found scattered throughout the Internet, on social media sites, marketplace listings and branded websites.
They are not always noticeably that much cheaper, or visibly different from the real thing. Therefore, while extra vigilance is needed by the consumer, brands also need to ensure they’re doing all they can to protect their reputation, their bottom line and, most importantly, their customers.
This is not an unfounded reaction; over the last five years, 30% of consumers have unintentionally bought a fake product online. Of this number, 13% say they did so once, while 8% say they’ve been duped 2-3 times.
The consequences and costs
It goes without saying that fake cosmetics and pharmaceuticals can have a significant impact on health, while counterfeit electric goods and toys can pose a risk to health and safety. Additionally, consumers are very aware that the proceeds from counterfeit goods are often used to fund criminal activity.
The costs associated with buying a fake product, to the consumer and the brand, are much harder to quantify. Many of the polled consumers reported sending fake products back (32%), warned family and friends about the brand (27%), stopped spending on the brand (26%), posted a negative review about the brand (20%) and 16% even complained to the genuine brand itself.
With such negative connotations at play when a brand becomes attractive to counterfeiters, brands must do more to inform and protect their consumers — and this view is endorsed by 88% of respondents.
What should brands do?
Unfortunately, the market for counterfeit goods is growing. Brands can no longer afford to stay quiet — they need to educate and enlist the support of their consumers in order to safeguard themselves and their customers.
For example, some luxury brands offer online support so that consumers can check the authenticity of an online retailer and report any that are not listed as authorised suppliers. This is reassuring for consumers, but it needs to form part of a wider brand protection strategy that encompasses all channels and forms part of the company’s overall strategy. For many brands, the best approach will be a consumer-centric one; ensuring the path consumers take to find a brand is as clean as possible from counterfeit, pirated and grey market listings.
Combating counterfeiting should remain a key mission for brands – not just in the luxury goods market, but across all industries. For many, this will include developing a comprehensive online brand protection strategy as part of a wider brand protection plan, placing the consumer at its heart. Whether this plan is implemented and managed in-house, or with the help of a brand protection expert, the fact remains that it is vital in the fight against counterfeiting and counterfeiters for all brands.
To learn more, download the full report here.