How Much Money Are You Losing to Counterfeit Goods? It's Probably More Than You Think — Here's How to Protect Yourself

Ecommerce has experienced astronomical growth, with global retail ecommerce sales expected to exceed $4.1 trillion in 2024. As a business owner, you'd undoubtedly love even a small slice of that pie, and yet the industry should be doing better than this.

Counterfeit knockoffs are a bigger problem than you'd think. In 2019 alone, 2.5% of the world trade ($464 billion) was attributed to counterfeit goods. That's nearly equivalent to the GDP of Belgium. If your business sells any sort of products, there's a good chance you've already been or will be affected by counterfeiting. In other words, your business is taking a financial hit because of this rampant problem. The only question is: How much will you lose?

Indeed, counterfeits are everyone's problem. For you, the business owner, knockoffs lower the value of your brand, erode consumer trust and eat into revenue. For consumers, knockoffs aren't only lower in quality but may also pose safety hazards — such as skin infections from counterfeit makeup products.

Related: How Counterfeit Products Affect Brands and Consumers

Types of anti-counterfeit technologies

What can be done to clean up the Wild West of ecommerce? Every type of ecommerce business ecommerce needs to be aware of anti-counterfeit technologies that can help them preserve the integrity of their brands. The main categories of anti-counterfeiting technologies are:

• Electronic – An electronic ID or tracking device attached to the product
• Marking – A visible or invisible mark on the product
• Chemical/physical – Chemical substances or physical processes used to authenticate the product
• Mechanical – Material elements or processes used for authentication or anti-tampering
• Digital – Involves information embedded in and extracted from digital files and electronic devices

There are benefits and drawbacks to each, but generally, all anti-counterfeit technologies work by detecting whether an item is authentic and whether it has been subjected to fraudulent activities. In an increasingly digital world, digital anti-counterfeiting technologies hold considerable promise.

Smart tags and smart packaging

Smart tags allow consumers to determine whether a product is authentic. They may be inserted into products or placed on their packaging ("smart packaging"). Two commonly used examples are QR codes and NFC tags.

From these tags, consumers can extract a unique code that can determine the product's authenticity. Similarly, consumers can register their product's code, allowing companies to track it.

This is a fairly simple way to fight counterfeit products, and yet it can go a long way toward protecting your company's reputation and revenue.

Brand protection software

As helpful as smart tags are, their usefulness relies upon the intentional extraction of data. Brand protection software, on the other hand, continuously monitors digital properties for unauthorized usage of intellectual property. It works in the background, scouring websites, social media sites and the dark web to identify brand name and logo infringement.

When the software identifies a potential violation, it triggers an alert. The company may then take action, such as sending cease and desist letters. In other cases, a law enforcement response may be called for.

Brand protection software is a significant weapon in an anti-counterfeit unit's arsenal, as it runs continuously in the background and applies real-time analytics to generate insights about potential threats. Some software even offers automated enforcement responses, further curbing the need for extra manpower.

Related: Amazon Settles With, Bans Influencers Who Marketed Counterfeit Goods

Blockchain solutions

Blockchain technology relies on the premise that sometimes the best way to protect something is to distribute it widely rather than housing it in a central Fort Knox-like location. Blockchain involves a digital ledger that stores bits of information across an entire network. Each "block" that stores one part of the digital "chain" of data is highly secure and tamper-resistant. Its decentralized nature means that there is no single point at which it could fail.

While blockchain is perhaps best known for its association with cryptocurrency, it has applications beyond this field. In fact, it can be used in combination with anti-counterfeiting technologies to create a highly traceable and transparent supply chain. Your business can use blockchain technology to track products and trace their ownership. By uncovering the authentication history of a product, it's possible to more accurately identify and quickly address counterfeit products.

Customer touchpoint tracking

As helpful as tech is, sometimes companies fail to see the forest for the trees. Counterfeit products exist because A) Someone is willing to make them and B) Someone is willing to buy them. To truly fight the problem, it's necessary to address both halves of the equation.

Consumers are sometimes aware they are purchasing counterfeits. This may be particularly common among aspirational shoppers — those who want the prestige of a luxury brand but can't afford the price tag of the genuine article. How can you convince consumers that knockoffs aren't worth it, but the real deal is?

Consider digging deeper into the buyer's journey. By mapping a holistic view of all of the consumer's touchpoints (my company's software, Atrilyx™, does exactly that), it's possible to identify exactly where customers become disengaged from the brand and in danger of intentionally choosing counterfeits. This allows you to adjust your marketing campaigns as needed to communicate the value of choosing the authentic product.

Related: Your Buyer's Journey is Now Online. Is Your Customer Experience Digital-First Too?

It's a war, not a battle

During the ancient Roman Empire, it was common practice for traders to place counterfeit wine trademarks on amphorae, masking cheap wine as expensive fine wine. Today, wine is still being counterfeited. As long as there are goods, there will be counterfeit goods. Even if you're an SMB owner, you could still be losing money to counterfeiters right now without even realizing it.

It's a costly and widespread problem — a war, not a battle — and no single solution is sufficient to suppress it. However, by combining multiple technologies and strategies (including touchpoint tracking at the consumer level), you can build up a robust defense that protects your brand. Doing so is essential — every single day, your business could be losing money to counterfeiters.