Determining Product Counterfeiting Risk
As brand owners, you need to take care of many things. Identifying potential product counterfeiting risk is a key step in selling your products globally. The level of risk associated with each product differs based on several factors such as:
- Market Demand
- Price Point
- Expected Margins
- Supply Chain Complexity
- Locations Where the Product is Sold
- How Complex It is to Copy the Product
The following product counterfeiting risk checklist contains 6 quick and valuable points to see if your product is vulnerable to copying and counterfeiting:
- Is your product sold on a large online marketplace or manufactured in countries known for fake goods?
If the answer is yes, then your manufacturing process can potentially be compromised at a local level and you may lose control over your distribution channels.
- Is your product distributed through a complex supply chain?
If the answer is yes, then there are many opportunities for counterfeit products to come in.
- Does your product and/or packaging have any security features?
If the answer is no, it is likely that there is nothing to deter counterfeiters from copying your product.
- Is your product high in volume and low in variable cost (e.g. standardized products)?
If the answer is yes, it can potentially be a prime target for counterfeiters to replicate.
- Is your product sold at high gross margins or does your product have a high perceived value to consumers?
If the answer is yes, regardless of its price, the product will be an attractive target to counterfeiters. Counterfeiters will likely aim to leverage your marketing efforts as the original supplier/manufacturer and benefit from it.
- Does your product have a large market share?
If the answer is yes, it is will be more appealing for counterfeiters to target as their copying efforts will yield better returns.
While businesses should always attempt to identify every counterfeiting risk for their products, resources are often limited. Hence, it would make sense economically for businesses to focus on risks that are considered to be a high and are required to be tackled immediately.
Counterfeiting risks can be determined by comparing the severity of its impact with the possibility of the specific risk happening. For instance, a risk would be considered to be high when fake products are causing harm to users, resulting in bad publicity where consumers shun the brand for a long time. Other mild and unlikely risks that may not happen are to be considered low risks and may not necessarily be prioritized if resources are an issue.
The 2 key priorities to prevent losses to counterfeiting risk are to:
- Identify your highest value products
- Assess the reliability of the supply chain.
With your highest value products identified and the supply chain assessed, a brand protection strategy can be implemented to prevent losses and drive business forward in the market. The objective is to address the checklist highlighted above with confidence.
Product authentication can be achieved by incorporating security features onto your product or its packaging. Good security features would allow consumers to easily authenticate genuine products before and after its purchase. High security features also create barriers for counterfeiters and in turn deters copying. On top of that, the incorporation of security features onto a brand’s products also functions as a signal to potential counterfeiters that a brand owner is serious about their product and is ready to take on the fakes.
Supply Chain Visibility
Each and every product should have their own unique trackable ID. As such, distribution channels can now be visible. Heatmaps showing exactly what products are being shipped by which distributor, for which location, can also be captured. This visibility helps to prevent counterfeit products from further entering distribution channels by giving brand owners valuable insights on where a breach is occurring.
Brand owners can use their brand protection solution as a channel for consumer engagement and publicity. Successful brands have built PR campaigns around consumer engagement where they educate their consumers on how to identify genuine protects, starting a “Buy Real” movement. A consumer engagement program with digital verification via smartphones also gives brand owners an added advantage to recommend suitable products to consumers
In essence, identifying the vulnerabilities of your product in a brand’s fight against counterfeiting is often overlooked by most brand owners – urgency is only felt when the products are sold outside their country. Unfortunately, when that happens, it usually takes a lot of effort to stop a brand from bleeding through revenue loss, brand damage and liabilities associated with counterfeited products.