Drive online sales growth in fashion with Online Brand Protection

The trade in counterfeit clothing, textiles, footwear, handbags, cosmetics, and watches is worth US$450 billion annually, but brands are fighting back.

Ecommerce is a key avenue of growth for high street fashion brands. However, online counterfeiting poses a key barrier to this growth with 33% of retailers stating that it is one of their top three external threats to their ecommerce businesses[1].

Counterfeits are most often found on social media platforms and online marketplaces, impacting fashion brands’ sales and revenues. Ecommerce managers and marketers need to be aware of not only the threats posed but also the opportunities presented. If brands are able to take down the most prolific infringers and drive consumers to legitimate channels, they can reduce the reputational damage and increase their online sales.

In this piece we break down the threats posed by counterfeiting within the fashion industry, before going on to detail how brands can fight back using Online Brand Protection.

Online counterfeiting is increasing

The availability of online counterfeits is increasing, with consumers unknowingly purchasing fake products on social media platforms and online ecommerce marketplaces. The threat is particularly severe for the fashion industry as it is consistently the single-largest target for counterfeiting activity in regions such as the US[2]. Through enforcement for one of our customers in the fashion and luxury space, we have discovered that online infringement is also increasing in India, making up 66% of total notices sent between April and May 2019.

Incopro research reveals that clothes are the most regularly purchased counterfeit product by UK consumers, making up 43% of all counterfeit purchases[3]. Unable to view the product in person before purchase, the subtle physical differences that hint to whether a product is fake or genuine are hidden from consumers. Highlighting the scale of this issue, Incopro research also finds that 26% of UK consumers unintentionally purchased counterfeit goods online in the last 12 months[3].

The lack of online traceability further complicates the matter. Marketplaces that facilitate third-party sales are plagued by counterfeiting, with a recent purge of thousands of vendor accounts on Amazon revealing the sheer scale of this problem[4].

On social media platforms, the threat is also growing. Instagram and WeChat are both inundated with fake apparel and increasingly sophisticated techniques are used to throw brands’ legal teams off the scent. According to a study published in April, nearly 20% of all Instagram posts about fashion products featured counterfeits, representing a 171% increase from 2016[5]. Enforcement for one of our fashion and luxury customers reveals that Instagram remains the social platform housing the greatest number of counterfeit infringements in Asia.

Returns fraud is endemic

Fake products are increasingly being found in physical stores due to returns fraud; consumers buy an authentic product and return a counterfeit, keeping the original product and profiting in the process.

The returns fraud economy is estimated to be worth $24 billion[6] and is a particular issue for brands offering premium jeans where the financial incentive is far greater. Retailers have been known to refuse returns of Nordstrom products given the scale of fraud associated with the brand.

There is an ever-increasing amount of these fraud-based returns, and this is heavily credited to the rise in gift card fraud. Bad actors are also aided by fake receipts and price tags, but also by cloned credit cards.

Significantly, most counterfeit products used in return fraud are sourced online. By shutting down the largest counterfeiting operations, the availability of fake goods to fraudsters would be reduced and the financial impact to brands mitigated.

An opportunity for online growth

An ecommerce survey conducted by WBR Insights notes that 81% of retailers see marketplaces as an opportunity rather than a threat[1]. In a 2019 ‘State of Fashion’ survey conducted by McKinsey & Company, 54% of respondents indicated that increasing omnichannel integration, alongside investing in ecommerce and digital marketing, is their number one priority for 2019 for the third year running[7].


It’s true that brands can offer their goods to a wider pool of consumers by harnessing marketplace infrastructure and keep most of the profit in the process. However, the continued strain placed on brand owners by counterfeiting is holding many back.

A comprehensive Online Brand Protection strategy will allow you to root out and take down the most prolific criminal networks exploiting your brand. Image matching technology and regularly updated keyword searches will allow you to discover infringements that do not include your brand name or trademarks on Chinese marketplaces such as DHgate.

Proactively dealing with counterfeits allows brands to tap into the potential of marketplaces without worry of damage to brand reputation or revenues by spurned consumers. By converting buyers who may have otherwise unknowingly purchased counterfeits, you will drive online growth for your brand and increase revenue.

Leading technology consultancy Forrester notes that comprehensive Online Brand Protection is able to increase online sales by 3% per brand covered per year[8].

Protect your brand and increase your online sales

Incopro is responsible for protecting over $200 billion of annual revenue across 600 brands using technology.

The most prevalent and damaging online counterfeiters are targeted in our enforcement efforts in order to safeguard brand reputation and increase online revenue for our clients. We achieve this through AI-assisted image matching technology and advanced clustering that groups together related entities across over 20 data-points to uncover the largest commercial scale infringers operating against your brand.

Find out how Online Brand Protection can increase your brand’s online sales

Download the full report here

 

 

References:

[1] Report: Personalisation, Automation and Internationalisation – WBR Insights, 2019:
https://etaileurope.wbresearch.com/downloads/personalisation-automation-and-internationalisation

[2] Clothing, jewelry, prescription drugs among America’s most counterfeited items – USA Today, 2019:
https://eu.usatoday.com/story/money/2018/07/26/clothing-jewelry-prescription-drugs-among-americas-most-counterfeited-items/37022305/

[3] Report: Counterfeit products are destroying brand value – Incopro 2018:
https://www.incoproip.com/reports/counterfeit-products-are-destroying-brand-value

[4] Fighting fakes was a big reason behind Amazon’s big vendor purge – Business of Fashion, 2019:
https://www.businessoffashion.com/articles/news-analysis/fighting-fakes-was-a-big-reason-behind-amazons-big-vendor-purge

[5] Instagram has a counterfeit fashion problem – Vox, 2019:
https://www.vox.com/the-goods/2019/5/2/18527181/instagram-counterfeit-industry-chanel-gucci-louis-vuitton

[6] Counterfeit jeans and the rise of the $24 billion returns fraud economy – The Fashion Law, 2019:
http://www.thefashionlaw.com/home/counterfeit-jeans-and-the-rise-of-the-24-billion-return-frauds-economy

[7] Report: The State of Fashion 2019: A year of awakening –  McKinsey & Company, 2019:
https://www.mckinsey.com/industries/retail/our-insights/the-state-of-fashion-2019-a-year-of-awakening

[8] Study: The Total Economic Impact Talisman – Forrester Consulting, 2019:
https://www.incoproip.com/reports/forrester-total-economic-impact-report

Related Blog Posts

Discounted prices on highly sought-after brands bring consumers en masse to Amazon on Prime Day, but the sale

In the digital age, any enterprise with a recognised brand can become a target. The ease of use of online

This comprehensive guide is designed to arm you with the essentials of online brand protection.