How technology helps brands to fight counterfeiting
When we think about the world of luxury, we probably imagine that innovation is mainly about production processes or marketing. In reality, it involves all phases, from design to after-sales. Indeed, technology can help brands to tackle one of their main issues: counterfeiting.
Counterfeiting and the second-hand market
Beyond the simple economic risk of lost sales (which is particularly felt in the cosmetics and perfumery industry) fighting counterfeiting is necessary for two other reasons.
1. The opportunity of the second-hand market
Boston Consulting Group has predicted strong growth for the second-hand market. Indeed, for many consumers, used items are becoming an acceptable and common way of acquiring luxury goods. Moreover, these pre-used items are often the only way to get hold of some rare luxury bags or garments. But at the same time, according to the Global Brand Counterfeiting Report, luxury brands lose around $30 billion worth of sales to counterfeits online.
For many consumers, brand sustainability influences their purchasing choices. Indeed, they pay attention to the environmental and social impact of brands, choosing those that are more committed. In other words, the principles of the circular economy are penetrating the fashion industry and concepts such as "resell" and "reuse" are becoming the new paradigms.
However, consumers willing to buy second-hand products want to be sure about product authenticity. For these reasons, brands need to find a way to fight counterfeiting and have control over the second life of their products.
How to fight counterfeit with technology
A brand can protect its products in many ways. In fact, there are different types of technology useful in the defence against counterfeiting:
They provide for the use of electronic devices that make it possible to uniquely identify, authenticate and track products;
The products are marked with visible details or with systems verifiable by electronic devices.
Manufacturers can use special substances to mark the products. The verification process often requires laboratory analysis.
The product includes physical elements (labels, hidden materials) or particular processes to ensure its authenticity or prevent tampering.
- DIGITAL MEDIA TECHNOLOGIES
These are methods for embedding and identifying information in digital files or electronic devices to protect, identify and track the intellectual property.
3 examples of anti-counterfeiting technologies
Brands can rely on different tools when facing the proliferation of fake products. Here are a few examples.
Blockchain is a distributed database that allows information to be stored securely and transparently.
Brands can use blockchain to create a digital product passport of their products. This passport will contain all information about the product and the entire supply chain. This way, consumers will know where, when, how and by whom it was made. Furthermore, in the case of second-hand products, consumers will be able to trace the entire life of the product after the first sale. And the main advantage of blockchain systems is that they are very difficult to fake.
SMART TAGS AND SMART PACKAGING
One way to protect products is to insert a smart tag inside them or on the packaging (smart packaging). A smart tag can take the form of a QR code or NFC tag. Both contain a unique code that allows companies to track the product throughout its lifecycle and consumers to access this information.
These technologies are useful against counterfeiting in two ways.
First of all, when a customer purchases a product, they can register it on the brand's website or app. In this way the brand has a constantly updated database of all products and their current owners. So, if a product with a smart tag is put up for sale on the second-hand market, consumers can easily verify its authenticity.
Then, smart packaging is difficult to replicate and this discourages counterfeiters.
Other examples of anti-counterfeiting technology for smart packaging are holograms, micro-text and watermarks.
BRAND PROTECTION SOFTWARE
Thanks to AI, machine learning and image recognition software, brands can keep track of what's going on online. In fact, counterfeiters often use images and content taken directly from luxury brands for their online shops. Therefore, brands can rely on software that identify infringements. These tools are able to detect the item inside the image and report it. And it doesn't matter if the counterfeiter altered an original image or took a photo of an authentic product.