The incidences of counterfeiting continue to escalate–rising from $1.2 trillion in 2017 to an anticipated $1.82 trillion by 2020. Years of technological advancement have made it harder to spot inauthentic products. As a result, consumers are increasingly deceived into purchasing inferior or inauthentic goods. Such products may have been produced using substandard components or in an unregulated factory. The outcome can range from poor product performance to serious safety issues.
Infractions like this can put brands’ reputations at great risk and cost them billions of dollars in marketing to regain consumer trust. And this doesn’t even consider operational expenses to threaten supply chains or lawsuits levied by angry consumers or other brands.
This problem is so pervasive, it appears as if no industries are immune to it.
In the past few months alone, in the e-commerce world, Amazon has faced a series of lawsuits from brands claiming the e-commerce giant doesn’t do enough to prevent fake products from being listed on its site. At the same time, Shanghai-based e-commerce marketplace Pinduoduo is being investigated over sales of counterfeit goods.
Seizures of counterfeit products are also alarming. Two recent seizures at the Texas border in Laredo resulted in $59 million in seized counterfeit merchandise. The trademark-infringed merchandise represented a wide range of well-known brands including Adidas, Apple, Calvin Klein, Coach, Gucci, Mark Kors, Nike, Rolex, Samsung, Sony, Under Armor, and DC and Marvel Comics, among others. In Europe, 360 tons of illegal or counterfeit pesticides—one of the most regulated products in the world—were seized. This poses a major problem for the companies whose pesticides are being counterfeited, but also a potential risk to consumer health and environmental degradation.
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This epidemic of inauthentic products appears to be consuming the mindset of today’s American consumers too. According to a June 2018 Harris Poll commissioned by Applied DNA Sciences, Inc., roughly four in five Americans (79 percent) are concerned that products they purchase which they expect to be high quality could be made using low quality materials; more than seven in 10 Americans (71 percent) are concerned that products they purchase have made false claims; and, nearly two-thirds (65 percent) worry that products they purchase at full price could be knock-offs.
The Harris Poll confirms that selling inauthentic products can be extremely detrimental to a company’s brand equity and profitability. In fact, nearly all Americans (94 percent) say that, if they found out a product they bought at full price was inauthentic, they would take the following actions:
- 73 percent would stop buying from the company that sold it,
- 67 percent would try to return the product,
- 63 percent would tell friends/family about their negative experience,
- 43 percent would formally defame the company that sold it by writing a negative review, and
- 43 percent would report the company to regulatory
Behavioral impacts fluctuate based on age and gender, with women more likely than men and older adults more likely than younger adults to act.
- 77 percent of women versus 69 percent of men, and 81 percent of adults aged 45+ versus 64 percent of adults aged 18-44 would stop buying from the company that sold the inauthentic product
- 72 percent of adults aged 45+ versus 59 percent of adults aged 18-34 would try to return the product
- 66 percent of women versus 60 percent of men and 69 percent of adults aged 45+ versus 54 percent of adults aged 18- 34 would tell friends/family about their negative experience
- 46 percent of women versus 40 percent of men would write a negative review about the company that sold it
- 48 percent of adults aged 45+ versus 36 percent of adults aged 18-44 would report the company to the authorities
Consumers are also demanding that companies they buy from are abiding by the highest ethical standards. This extends to all stages in the supply chain, from production of the very first component to the packaged for-sale product. The Harris Poll confirmed that Americans are not naïve to the fact that unethical business practices are prevalent. Nearly three quarters of Americans are concerned that products they purchase could be made using forced labor or by companies that use bad business practices (74 percent and 73 percent respectively). Again, differences arise when it comes to gender and age:
- Women are more likely than men to voice concern about forced labor (80 percent versus 69 percent) and companies with bad business practices (79 percent versus 66 percent)
- Older adults, ages 65+, are more likely than their younger counterparts to feel forced labor may be rampant—81 percent are concerned about this when it comes to the products they purchase compared to 73% of 18-to-64-year-olds
Consumers can become more proactive to ensure an authentic purchase. The United States Government Accountability Office suggests that consumers become familiar with a brand, know its products and only buy products from brands they trust. Consumer should also only buy from trusted retailers, know the difference between “fulfilled by” and “sold by,” and be wary of “too good to be true” prices.
If brands and retailers had a way to authenticate products and offer that to their consumers, it’s likely they can get consumers to return to shopping in their stores and on their own websites. They can also take advantage of emerging technologies, such as molecular track-and-trace that ensures authenticity throughout the supply chain, as essential components in the fight against the proliferation of inauthentic products.
Manufacturers can also take on a more proactive role in educating consumers about product authenticity and supply chain integrity. With so much at stake, it’s clear that companies must make the necessary changes and provide real solutions to strengthen their brand protection strategies in order to successfully combat the increasing global counterfeiting issue.
MeiLin Wan leads the textile group responsible for providing clients with innovative molecular-based solutions to provide traceability, transparency and trust in global supply chains at Applied DNA Sciences.
Note: The Harris Poll was commissioned by Applied DNA Sciences and conducted online within the United States between June 21 and 25, 2018 among 2,019 U.S. adults ages 18 and older.