Study: Nearly 1 in 4 Consumers Report Purchasing Counterfeit Items Online

Zach Brooke
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Key Takeaways

What? 24% of online shoppers have bought counterfeit items on the internet. Online counterfeiting is flourishing.

So What? Counterfeiters are fixing their prices to appear reasonable for older models or overstock inventory.

Now What? Marketers can curb counterfeiting by informing consumers about counterfeit merchandise.

As online counterfeiting flourishes, marketers need to stay one step ahead of the counterfeiters and apathetic consumers

Twenty-four percent of online shoppers have bought a counterfeit item via the Internet, according to a recently released report by enterprise brand protection firm MarkMonitor. Many purchasers were unaware they were buying fake merchandise, which included fashion, electronics and digital media, until after they paid for it.

The report surveyed the online shopping habits and counterfeit awareness of 3,450 people from the U.S. and Europe, and highlights the growing sophistication of online counterfeiters. While consumers are relatively adept at identifying suspect e-mails—only 1 in 20 click unsolicited e-mail links promoting inauthentic goods—only 22% of consumers reported knowingly browsing a site offering fake products.

“They find it much more difficult to determine the difference between the genuine website and a fake,” said Charlie Abrahams, senior vice president of worldwide sales for MarkMonitor.
Abrahams said many counterfeiters fix their prices to appear reasonable for older models or overstock inventory, abandoning promotion of obvious too-good-to-be-true bargains. They’ve also taken advantage of a marketing blind spot for many high-end manufacturers.

“When you talk to brand owners, particularly the luxury retailers, they’ve never thought of their products being associated with words like cheap or discount, so they’ve never taken possession of any Internet properties that are likely to attract traffic from people who put in ‘cheap’ or ‘discount Gucci,’” Abrahams said.

The proliferation of websites pushing knock-offs is increasingly problematic as consumers are buying more online than ever before.

The MarkMonitor study notes that, on a global scale, 34% of all shopping is conducted online. Americans are the biggest Internet shoppers, with U.S. respondents making 39% of purchases over the Web.  

“Counterfeiting has been around forever,” said Peggy Chaudhry, an associate professor of management and operations at Villanova University, who has been studying counterfeiting for the past 30 years. “The technology that’s available has made it easier for people to counterfeit.”

“I could make a believable website. I could use desktop publishing to come up with believable packaging for something,” she added.

According to the International Chamber of Commerce, the total value of counterfeit goods in 2015 is estimated to be as high as $1.77 trillion. And it could get worse.

The MarkMonitor report found younger consumers were more inclined to purchase counterfeit items, suggesting that the market for fakes could swell as those buyers gain purchasing power. Thirty-nine percent of 18- to 34-year-olds said that they bought counterfeits, and 42% admitted they were likely to purchase bogus items in the future.

But the impact of counterfeiting on brands goes beyond the bottom line.

Abrahams says he’s seen several manufacturers receive damaged counterfeit items, with consumers mistaking them for the legitimate branded products.

“Brand owners hope that the quality associated with a given brand is what makes a person want to buy the genuine article,” Abrahams said. “I’ve been with plenty of brand owners where the motivation for them is trying to protect the consumer from buying counterfeit merchandise. It really damages the perception of the brand in the market.”

High-status luxury items also are particularly vulnerable to negative perceptions of brand quality, as potential consumers see knock-offs associated with people unlike themselves in terms of style or net-worth, something Chaudhry calls ‘brand dilution’ or ‘brand switching.’

“Losing your brand’s cachet since the wrong target of consumers are wearing your branded items in public—this is a problem,” Chaudhry said.

So what can marketers do to curb counterfeiting and protect their brand from imposters? 

There may be no silver bullet, but some strategies have shown effectiveness.

One such tactic is informing consumers that counterfeit merchandise often fund organized crime. Chaurdry said she has witnessed many of her students persuaded by ads such as Interpol’s ‘Turn Back Crime’ campaign.

“They didn’t realize how buying fake sunglasses on their holiday relates to organized crime,” she said.

An even more powerful argument involves appealing to consumers’ fears of identity theft, as 64% of respondents said they were concerned about their safety online. “Consumers are still very concerned about their personal security,” Abrahams said. “They are worried about getting their credit card details stolen or malware downloaded on their equipment.”

Ultimately, some of the most expensive brands may be better off allocating resources to countermeasures other than consumer messaging.  

“The reality is there’s a group that get up in the morning and they’re not going to pay $1000 for a handbag. They want a $20 equivalent,” Abrahams said. “It’s generally considered among the brand-owning community and the rights-owning community they’re not the people you should be concerning yourself with because you’re not going to convert them into buying the genuine product.”

 

Kusadasi, Turkey, October 23, 2008: An outdoor market in Kusadasi features counterfeit designer hand bags with the original desinger logos at cheap prices.

 


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Zach Brooke
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