We take a look at the startups launching apps focused on identifying and finding counterfeit products, aiming to benefit consumers and brands alike.
Counterfeit goods threaten businesses across the globe, and the problem is only getting worse. The global counterfeit industry was last valued as worth a staggering $461 billion, or equal to 2.5% of all global trade. The 2013 OECD report also indicated that 84.5% of all seized counterfeits and pirated goods originated from Hong Kong and China. These countries have long been established as manufacturing hubs but as many businesses shift to domestic manufacture or cheaper outsourced options, disused Chinese factories have turned to producing counterfeits (see: Counterfeits: the where, why and how).
As e-commerce connects countries and particularly the US and China, the problem of counterfeit goods has become increasingly less contained. Many counterfeits are even being sold wholesale, sourcing street sellers and even brick-and-mortar retailers. E-commerce websites like Amazon, eBay and Alibaba have all experienced their share of backlash due to counterfeits, brand equity is at threat in all industries and consumers are in some cases being hurt by counterfeits, particularly within cosmetics, pharmaceuticals and food sectors.
As a result, many startups are starting to explore tech-based solutions that aim to benefit companies and consumers alike. Most are based on authenticating products, but there are some tech-driven approaches aimed at making products unreplicable or tracking transport steps. We have previously written on startups using the blockchain to fight fakes and piracy, and this article will explore and evaluate other efforts to countering counterfeits in the digital age.
Recently developed by NYU researchers, machine-learning Entrupy can analyse distinct characteristics of materials at a microscopic level in order to detect counterfeits, which invariably use lower-quality materials to cut down on production prices. The patented technology includes a device and mobile app which can both be used to scan and analyse various materials in reference to complex detection algorithms. It then compares features against a computer database of which data has been provided by several luxury handbag brands from Chanel to Balenciaga. The business model targets retailer and resellers, offering scalable plans depending on amount of scans required. The technology currently delivers around 98.5% accuracy in authentication, a figure which will increase as the AI learns.
Australian startup Authenticateit’s free app allows consumers to scan a participating product’s barcode to check if it has been flagged as unsafe, recalled, or is potentially a counterfeit. By providing information on products consumers can collect points which can be converted into iTunes or Google Play gift cards, and brands can collect and analyse data including location of counterfeit products.
Team of researchers Quantum Base is using Nobel prize-winning material graphene to protect brands against counterfeits. Led by University of Lancaster Professor Rob Young, the Quantum-ID (Q-ID) project which is due to launch next year tags products with miniscule and unreplicable graphene tags. A smartphone app scans the tags, using a smartphone’s built-in camera flash, to illuminate the incredibly complex atom structure which it then checks against a database.
Created by a New York IP lawyer in 2013, uFaker crowdsources detection of counterfeits. Anyone registered with the uFaker app can earn rewards by contributing details, location and pictures of discovered counterfeits. Rewards are granted by uFaker in the form of retailer discount vouchers, and registered brand owners can also opt to provide further incentives. Brand owners and companies can keep track of infringements, generate reports and communicate with investigators securely through the app.
Created by Italian startup Sinfotech, LabelTracking is an app that utilises the NFC capability of most smartphones to scan labels and check authenticity. It only works with products that have NFC-embedded Tag Over labels, that can be applied to all kinds of products from food to wine to luxury fashion. The app provides product information and checks off an ID number listed on the tag to double-check authenticity and prevent any tampering.
E-commerce is the greatest abettor of the global counterfeit industry in the world today, and so especially as e-commerce goes increasingly mobile it makes sense that technology and mobile applications could be the key to terminating it. Measures that benefit both consumer and brand alike are likely to have most traction, but it is imperative that these efforts become widespread soon lest counterfeit products, like pirated content, become a consumption habit for a changing generation. Already counterfeits or ‘replicas’ are a trend threatening to destroy the fashion industry as counterfeits increase in quality and e-commerce continues to enhance global trading relationships with little interference from authorities and brands.
Pressure is being put on e-commerce sites, particularly those based in the west, who are taking steps to address counterfeiting problems, but not enough is being done and counterfeits continue to populate these websites with counterfeiters circumventing restrictions. It is time for brands to recognise the need to employ a targeted brand protection strategy and research into best practices.