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A new trend: buying and selling counterfeits through WhatsApp

Posted by David Casellas on Tuesday, Sep 20, 2016

E-commerce sites have of late been forced to react to a growing counterfeit problem. Alibaba have toughened measures, Amazon are 'Gating' brands and soon eBay will authenticate products. It is becoming more difficult for counterfeiters to operate on marketplaces, so some are exploring other innovative means, like selling through Whatsapp.

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We wrote an article a last month that explored how messaging app Telegram is being used to share pirated content. It would appear the Telegram is not alone in this form of digital brand abuse. There has been a recent shift towards using WhatsApp to buy and sell products, a trend that worryingly is most particularly concerned with counterfeit products. This practice has primarily taken hold in India where the app has more than 70 million daily active users - however we can be sure that if the model continues to grow it will soon make its way to Europe and the U.S. There are key benefits for both customer and seller, but WhatsApp's primary appeal is in its ecrypyted security

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The process works with a customer joining a seller's WhatsApp group, where images, offers and descriptions of wares are posted. The customers then can ask questions on the group or message the seller directly. If you are a seller of fake goods, it's a very attractive prospect that all your listings and conversations between buyers and sellers are encrypted end-to-end. Not only that, but all payments are processed over online - and often untraceable - systems, with no commission paid to a third party e-commerce platform. The incentive of selling on WhatsApp is therefore clear: with costs significantly lower, a higher level of security and a more autonomous process, it's likely to keep providing websites like Amazon and eBay with competition.

The benefits are reciprocated for consumers, who benefit from lower costs whilst maintaining the security and low traceability by using payment methods such as PayPal, Western Union, or pay-on-delivery agreements. Customers can also quickly request information and photos of products straight to their phones, making the purchase process rapid and personalised.

In this era of fast connection, response time is very valuable. Over WhatsApp a customer can talk in real-time with a seller, and see when messages have been delivered and read. This conversational exchange builds trust and is one of the key influencers in purchasing over Whatsapp. It's why in China, buying and selling via WeChat is seeing growth, as an emphasis on forming trust in business becomes more valued. WhatsApp and commerce through messaging also allow customers to haggle over prices and strike up deals in a more traditional vendor-style.

Sellers will also tend to specify products as fakes and this furthers the attraction for customers who are not being deceived. Where e-commerce websites are suffering from low trust levels, consumers can appreciate the honestly of sellers through WhatsApp. The majority of WhatsApp groups trade in fashion and apparel, a consumer group typically polemic on counterfeits, so having a seller that clearly states which products are fake is a huge incentive when compared to e-commerce sites where the customer is left to make their own judgement. Both wholesale and individual prices are usually offered, meaning that an individual can enter into a resale business.

There are now a small number of legal businesses operating over WhatsApp, and this may be a promising sales platform for small-to-medium-sized businesses in the future, given the positive user experience that it can bring. WhatsApp will soon have to begin regulating transactions, but must be careful in order not to destroy existing networks of genuine sellers. Although counterfeiters have been the first to take up this form of selling, the practice is growing among real and more well-established businesses - in fact guides can now be found online about how to set up and administer your own WhatsApp selling group.

It's understandable why companies and authorities are concerned by the move of counterfeit sellers to WhatsApp; the potential impact of counterfeits on the app is huge. Counterfeiting in nearly every industry is growing, some large brands are leaving e-commerce sites and others are also starting to consider securing their supply lines and sell only from owned sources. The move away from e-commerce might only be temporary but it's clear that new forms of selling counterfeits will seriously limit traditional means of prevention and removal. WhatsApp poses a particular threat as sheer numbers alone indicate the size of the market that counterfeiters could have access to;  Whatsapp boasts over 1 billion users, of which over 320 million daily active users. In balance this presents both an opportunity and a threat for businesses, and a careful hand will be required to oversee regulation.

The WhatsApp case, like the abuse of messaging app Telegram for pirating books, is an example of how anti-counterfeiting solutions must be technology-driven, and be ready to adapt with the volatile environment that rapid digital advancements are creating.

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About the author

David Casellas

Post Written by David Casellas

David Casellas is the Co-founder of Red Points and is head of international strategy and future planning. David is an expert in digital piracy and intellectual property protection. He has over 7 years of experience working with global brands and international bodies.