2014-03-04 21:40:06

Why Online Counterfeiting Can Leave Ugly Scars for Beauty Brands

2014-03-04 21:40:06

 By Alina Halloran, vice president, global online brand protection, OpSec Security

Many counterfeit products can be found online.

Beauty brands have come a long way in advancing their packaging security, online brand protection efforts and supply chain logistics. 

Yet despite these efforts, the war against counterfeits has grown increasingly complex, thanks in part to the Internet. 

Alina Halloran, vice president, global online brand protection, OpSec Security

In addition to vetting every single component of their online supply chain rigorously, beauty brands need to further educate retailers about legitimate supply channels for obtaining inventory. 

The allure of a low bulk price in illegitimate online channels can spell danger for any beauty brand or retailer – and, ultimately, the consumer. With counterfeiting now expanding into everyday personal care items such as toothpaste, shampoo and nail polish, the stakes are even higher.

As proof of these threats, OpSec recently conducted online surveillance monitoring for the following items for sale across popular e-commerce sites: shampoo, toothpaste, teeth whitening strips and mascara. Listings across both business-to-business (B2B) trade boards and business-to-consumer (B2C) trading platforms uncovered several illicit health and beauty products offered for sale. 


Some Disturbing Examples

 

• More than 40,000 dubious sellers offered brand name products and packaging in massive quantities. A top seller on a popular auction site posted a listing with more than 100,000 units of a name brand shampoo available. What makes this suspicious is that brand owners typically use select distributors to bring their products to consumers – not trading platforms. Thus, it’s quite clear this is an Asian factory offering to produce counterfeit product – with no quality control – for a distributor of counterfeits.

 

• Many listings go so far as to show pictures of the factories where these items are produced, raising a red flag. In reality, brand owners do not want to highlight the fact that their products are produced in Asian factories. The pictures present in these type of ads are from factory owners (or their affiliates) “advertising” their manufacturing prowess to distributors of counterfeits.

 

• One listing offering a name brand toothpaste at 6,000,000 units per month (itself a red flag), displays photos of the factory, claiming the product is “suitable for adults, kids, home, travel, prison or hotel use.” The listing also includes an image of “Crystal” toothpaste that looks startlingly similar to Crest toothpaste packaging.

 

• A Chinese manufacturer on a leading trade board offered a quantity of more than 1,000,000 units per month of a brand name mascara.Another listing for mascara features an infringed image and negative buyer feedback.

 

• One seller, offering a popular brand of teeth whitening strips, offers discounts on bulk purchases and claims to avoid tax issues by noting “gift” on the item. This is a tactic counterfeiters often employ to not only avoid taxes for the purchaser but to help them import product.

The Bottom Line

Counterfeiting not only tarnishes brand reputations and cuts into sales, it can cause unnecessary harm to consumers—a threat that is of particular concern for health and beauty brands. 

However, with thorough internet monitoring and maintaining control of distribution channels, the health and beauty industry can make great strides in the war against counterfeit products and rogue websites.