It is a nightmare scenario for any brand:
A consumer orders a product online. But when it arrives, it’s a cheap knockoff of what she thought she was getting.
Worse, it is spoiled, expired, or contains questionable ingredients.
Worse still, it somehow injures the consumer or makes her sick.
And then, as the cherry on the whole horrible cake, the consumer tells the world about her experience through the merciless megaphone of social media.
It’s a scenario that is playing out more and more as counterfeiting of merchandise increases. According to a report last year from the Organisation for Economic Co-operation and Development, fake goods accounted for just over three percent of world trade in 2016, or about $590 billion, a figure that is growing at a fast rate. And that’s just the value of what customs agents catch. The total economic value of counterfeit and pirated products is estimated to be much higher, and is projected to reach up to $2.3 trillion by 2022. Footwear and apparel have been especially hard hit, but no segment is immune; beauty, pharmaceuticals, automotive, and food are also regular targets.
As counterfeiters get better at their craft and more sophisticated in their means of infiltrating supply chains, it’s becoming increasingly difficult to tell a fake product from the real thing, and counterfeits are more likely to show up in trusted sales channels. That puts consumers at risk not just for disappointment, but also for illness or injury from shoddy goods, not to mention financial or identity theft by fake-goods dealers. Brands, meanwhile, are at risk for reputational damage and financial liability.
Fortunately, there are many proven anti-counterfeiting measures—some physical, some digital, some overt, some covert—that brands can implement in their packaging and on products themselves. Here’s a brief look at some of the most effective:
Adding a hologram to a package is a time-tested solution. Introduced in the middle of the last century, holograms overt features still in wide use today, signaling authenticity at a glance. The trick is to apply one that is hard to duplicate—a more important consideration than ever, as counterfeiters get better at what they do.
These are coatings applied to a package’s seal that remain covert—invisible— except under an ultraviolet light. Luminescent topcoats can be applied in any color, and can contain a distinguishing brand logo. They work especially well for pharmaceutical products, which are at increasing risk for counterfeiting as more consumers bypass pharmacists—who historically ensured a medication’s authenticity and quality— and order medications online. Indeed, in research conducted by Incopro, a provider of brand protection software, six in 10 of Google’s first-page search results for a branded antibiotic were for sites suspected to be unlawful. Luminescent topcoats let consumers authenticate their online purchases at home with a small ultraviolet light.
Because luminescent topcoats are hard to copy, they’re also a strong solution for high-value and luxury goods. In most applications, they can be combined with holograms for two layers of security.
Tagging items with an NFC inlay gives each one a unique digital identity—a “digital twin” that can be tracked and traced online across the supply chain. Combining NFC tagging with blockchain records can provide brands and consumers alike with a complete, tamper-proof, easily accessible view into a product’s provenance and journey through the supply chain. Digital anti-counterfeiting solutions like NFC deliver the added benefit of meeting increasing government and consumer demands for visibility into every step of a product’s journey from source to shelf.
The evolving retail landscape means more opportunities for counterfeiters
The need for anti-counterfeiting solutions will only grow in the near-term, and we can expect counterfeiters to move beyond high-value, luxury items and into widely used, lower-value consumer goods.
Some of the most interesting trends in retail—including the continued growth of e-commerce, small-parcel shipping, omnichannel sales, and secondhand markets—also make it easier for counterfeiters to operate. So does the increasing complexity of supply chains. With the numerous, tenuously connected links in those chains located around the world, and the lack of comprehensive transparency and accountability that results, it’s easy for counterfeiters to exploit gaps in oversight.
Avery Dennison can help
The most effective anti counterfeiting strategies include tamper-evidence features and will embrace a mix of physical solutions—like holograms and luminescent topcoating— and the digital, like blockchain and RFID. They will provide verification tools for both brands and consumers. At Avery Dennison, we offer a full range of physical and digital solutions, including custom holograms and holographic threads, luminescent topcoats and adhesives, security papers, ultra-destructible films, and a range of RFID and NFC products. We regularly help brands around the world develop the right solutions for their particular products, sales channels, and supply chain. Counterfeiting presents a real risk to companies and consumers, but it’s a risk that a thoughtfully developed solution can contain.