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Why are shoes the most counterfeited product?

Posted by David Casellas on Monday, Apr 10, 2017

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Why are shoes the most counterfeited product, and what steps can footwear companies take to end high-quality counterfeiting?

Today, shoes are the most counterfeited item in the world. Brands globally are being impacted by the practice, with brands most-affected by counterfeiting last year including international labels such as Nike, Adidas, UGG and Christian Louboutin. With the luxury footwear industry supported by brand appeal and design as opposed to function, the damage that counterfeits can cause is immense. This is particularly true as the quality of counterfeits rises, with a claim by Alibaba’s founder Jack Ma that in some cases counterfeits are “of better quality” than originals. But why are shoes particularly facing a problem with counterfeiting?

The shoe industry has experienced a massive growth in recent years, where the global economy has improved to the point that even the casual consumer can afford to keep up with rapidly changing fashion trends. And with the e-commerce boom, a tidal wave of celebrity-endorsed products and increased engagement in fitness activities, shoes of all types are enjoying high market performance. Of course as the genuine footwear market experiences success, counterfeiters respond with a multiplicity of imitation products, rolling fakes out rapidly to keep up with release dates.

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Basketball shoes are currently experiencing the fastest-growing market share, driven by product hype stirred on social media channels and by market influencers such as athletes. Collectors of these types of shoes are known as ‘sneakerheads’, and are avid supporters of buying genuine. One such ‘sneakerhead’ known as ‘Yeezy Busta’ has taken it upon himself to educate consumers on fake shoes, policing photos posted on social media. ‘Legit checks’ are also frequently sought by consumers to verify authenticity of second-hand products, and this shows that many consumers would choose to buy genuine.

However, the concept also illustrates the significant resale market for shoes. In order to maintain brand appeal, exclusivity is paramount for luxury footwear brands, and limited releases coupled with the rapidly-growing market has created an impossible demand for products. The result is that resales of popular shoes have prices sometimes ten times higher than retail, so consumers increasingly turn to high-quality counterfeits. There’s even an emerging market for proudly-purchased sneaker replicas, and collectors are swapping tips on where to find the highest-quality counterfeits.

Unfortunately for footwear brands, outsourced manufacturing has meant that counterfeiting has become difficult to control. A 2011 WikiLeaks exposure shows how Nike have struggled with counterfeiting, detailing corrupt law enforcement practices and an acknowledgement of ‘third-shift’ manufacturing, where factories illegally produce goods from designs they have been contracted for, creating near-identical products. Reporting on the footwear counterfeit industry, the New York Times interviewed a counterfeit producer who claimed that “the only way you can tell the difference between the real ones and ours is by the smell of the glue”. And counterfeits are highly damaging: to brands who risk their reputation as well as their revenue, to the global economy, and finally to to consumers, as counterfeit trainers and other fake fitness products have been linked with injuries and found to contain harmful chemicals.

So what can be done to stop counterfeiting in footwear? Brands that do anti-counterfeiting right, such as Nike and Ugg, often employ strategies that offer incentives to buying genuine, and seek to educate consumers on how to spot fakes as well as the importance in avoiding counterfeits. Insourcing manufacture should also be considered in protecting products, as the reality of counterfeiting in China is a deeply embedded part of modern culture. However, increased labour costs may make this transition undesirable. Other brands, recognising the strong link between e-commerce and counterfeiting, have taken steps to address their level of counterfeit on popular e-commerce sites. Birkenstock’s departure from Amazon was hailed as ‘the first domino’ in an anticipated industry-wide response to the site’s considerable problem with counterfeits, and reflects how brands are beginning to implement strategies that recognise the changing industry. However, making use of e-commerce sites’ takedown policies is perhaps a more realistic move for smaller brands, which are arguably the most impacted by the global counterfeit market. In light of the changing market, it is nevertheless clear that brands of every level should take steps to recognise their own level of counterfeit online and allocate resources appropriately, devising a strategy or investing in a technological solution as needed.

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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.