eCommerce and the Counterfeit epidemic
10 February 2020 by Chris Behier
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For quite some time now, Counterfeiters have been using the online channel to sell their fake goods to consumers. It is reported that 1 out of 5 products sold on eCommerce sites are fake (Source – Local Circles). While some consumers are looking for the best price, they get taken in thinking it is a legitimate item on sale to then feel “ripped off” with no support in getting their money back/return. Worse yet, there are fake product stores that advertise on social media that promote end-of-life products for a fraction of the price, take your money and disappear after a campaign.
How do you battle the price war on an unfair battlefield? What tools are at your disposal to legitimize your products and make them stand out? How do you ensure that clients know that the goods, experience, and support are all legitimate? How do you make your store inspire confidence and trust?
How fake do Counterfeiters go?
With digital theft of imagery, product description all the way in stealing and making fake reviews – don’t underestimate their due diligence in trying to make their products seem legitimate. Most of their business models are “dive-in-dive-out” when it comes to their penetration into the market.
From fashion products to computers, nothing is too much of a reach for them. High-value items are their preferred pool of products, extending deep discounts in the hopes to reach a significant interest to their website. Even if their conversion is not high, the volume they attract makes up for it, especially given that the tools in marketing can target consumers pretty specifically in their purchase behaviors (Facebook, Google, etc.).
What’s happening in the market to combat the onslaught?
No eCommerce platform is immune to the phenomenon, from the largest marketplace like Amazon to the smallest eCommerce store – all are impacted by Counterfeiters and fake sites. They use the same methods in setting up their business using banking/credit card services/PayPal/eCommerce Stores/Advertising – all of which is within easy access for an entrepreneur but have become "masters" in setting these up. Where they fail the most is in taking shortcuts where they can be exposed and reveal themselves if the consumer is astute enough to catch the discrepancies.
Amazon fights back
Back in 2017, Nike and Amazon partnered together to combat the counterfeiters on their platform, and recently in late 2019 disbanded the partnership. Amazon is adding tools to ensure product uniqueness, and if they are resold, the product owner can only provide permission to use the product ID/Description/Imagery. AI is being used to find and flag similar products that come close in description to circumvent this methodology, making it difficult for counterfeiters to come close to the same product offered as a genuine one.
Alibaba takes steps
In 2018 Alibaba announced its anti-counterfeiting alliance had tripled in size to over 1000 members since January 2017. In 2019, China is implementing legislation that holds eCommerce platforms accountable for the sale of counterfeit goods by third parties using their platform. The requirement is in the form of response time once a breach has been reported/detected and must act quickly on a hefty fine would be imposed. Together between product owners, the platform, and legislation, the protection of consumers is in-focus, however, during this journey, it leaves legitimate shopkeepers exposed in loss of revenue, and in some cases a tarnished reputation due to the poor experience of fake/defective goods with their name.
Shopify’s Challenge joins Facebook, Twitter, Youtube, and Google Ads.
Like many online services, distinguishing from a legitimate operation remotely is difficult. Sure, they ask for Photo ID, do various background checks, and if it all pans out, then they can grant you access to advertising or setting up a store. Because of the speed in setup today, this has made the problem even more challenging. Most of the monitoring to catch the fraudsters and counterfeiters is based on behavior after the access is granted. The speed in shutting them down is then based on the account gets suspended and questions are asked later – interfering legitimate activity, all they while fraudsters are getting wizened up on how to game their AI.
eCommerce Platforms liability and challenges
Shopify has a team focusing on identifying and taking down fake sites, sites that sell fake products or copycat/clone sites. Social Media has taken similar steps in using their own tool-set to ensure that the use of their platforms is legitimate. As an example, Facebook looks at geo-location and the account access to see if it is being used in the same country to which the store is located. This being among several other account behaviors being monitored real-time to see if what they call “unusual activity” gets flagged for review. The advantage in using Shopify is that you have a team in place to ensure no fraudsters is out to clone your site, or sell your products without your knowledge – leaving the standalone platforms like Magento, WooCommerce, BigCommerce without much recourse since there is no real central structure to audit the activity.
While the right practices in setting up your store, with the correct naming of your company, articles of incorporation/sole proprietor being registered linked to a bank account/PayPal/CC services it puts all the pressure on you to ensure you highlight what it takes to discern fakes/fraudsters from your authentic products and let your visitors know. It isn’t a great/glorified marketing vision or mission statement to impress your clientele, but it is to protect them and ensure they have the information to distinguish what is authentic from fake (place it in a Q&A). Additionally, if you have retailers, resellers, partners – listing them on your website is important to legitimize them. If you got 4.5-star reviews, the 0.5 shows that not everyone gets the perfect experience – fraudsters tend to overplay their fake reviews to an ultimate perfect experience. Ensure you have PayPal available at checkout as it gives recourse to consumers to question a sale if the account transferred to do not match the name of the brand/website. When using Amazon, ensure you research your product on the platform first before signing up – this audit and battle must take place to contest all products that have been copied from your authentic ones first, once cleaned up, establish your products as the authentic items to protect yourself from the copycats.
This battle will continue in 2020 and beyond, but with additional computer resources and AI there is hope to where fraudsters digital fingerprints will continue to be revealed, and better tools will continue to push back on them. Counterfeiters are also using AI to identify their shortcomings to then shore up their counterfeit products and make them as close to the original. The only way the upper hand will be given to the legitimate brand and shop owner is through greater AI automation in continuing to check for fakes.
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