The explosion of e-commerce over the last year has been a godsend for brands and retailers that are struggling with store closures, but it comes with its own set of risks. For one, the combination of e-commerce growth and the holiday shopping rush has led to a significant increase in the amount of counterfeit goods being sold in the U.S.
According to data from brand protection agency Incopro, Black Friday saw a rise in the amount of counterfeits across sectors and platforms. EBay’s watch and jewelry category saw a 155% increase in high-risk listings (identified by Incopro’s fake-spotting algorithm) at select brands. On Amazon, some luxury goods saw a 121% increase in high risk listings and a 51% increase was flagged for some streetwear brands sold on the platform. Black Friday typically sees a growth in counterfeits being sold every year. Last year, there was a 156% increase in cosmetics counterfeits on Amazon from October to November, driven primarily by sellers in the space looking to bank off Black Friday sales.
“E-commerce has exploded this year, particularly around the holidays, and counterfeiters know this,” said Piers Barclay, chief strategy officer at Incopro. “In many ways, the counterfeiters are businesspeople, just like anyone else. So where there’s a lot of growth, that’s where they’ll be. Twenty years ago, counterfeiting was about selling something on the street corner. But the explosion of e-commerce and platforms like eBay has made it a lot easier.”
Brands and retailers alike are aware of this surge and have begun using a number of new tools to spot fakes. Stopping counterfeits doesn’t just benefit the consumer. Luxury brands lose around $30 billion per year due to counterfeiting, so preventing those sales is important for Amazon or any platform looking to court brands. With more brands going DTC in the last year, retailers need to safeguard those partnerships and continue bringing in new ones.
Amazon, for instance, announced last week a partnership with U.S. government’s Intellectual Property Rights Coordination Center, in collaboration with DHL. The goal is to help prevent the shipping of fake goods into the country. Amazon will provide data to the IPR Center and U.S. Customs to help them target likely counterfeiters for inspection before they enter the country.
The partnership’s announcement just days before Black Friday was no coincidence, a spokesperson for Amazon said.
“Amazon conducts investigations and sidelines inventory if we suspect a product may be counterfeit, ensuring our customers are protected,” said Dharmesh Mehta, vice president of customer trust and partner support at Amazon. “But we also know that counterfeiters don’t just attempt to offer their wares in one store; they attempt to offer them in multiple places. Now, by combining intelligence from Amazon, the IPR Center and other agencies, we’re able to stop counterfeits at the border, regardless of where bad actors were intending to offer them.”
This is an important step, given the fact that the presence of counterfeits on Amazon has been one of the big factors preventing luxury brands from feeling comfortable selling on the marketplace.
EBay is another high-risk platform, by virtue of its community model that counterfeiters target, especially since the platform didn’t start offering authentication until long after many of its rivals. It finally begun authenticating products in September, starting with watches and continuing with sneakers in November.
“We’re really hoping that, this holiday season, anyone looking for the next pair of Jordans will have eBay at the top of their mind,” said Tirath Kamdar, gm of luxury at eBay. “Authentication is an important factor, in that and we want to make sure that we are providing a safe and secure place, not just for people to find products that aren’t fake, but products that are what they say they are, including that they’re the right size and listed correctly.”
Even among smaller retailers, the need to prevent counterfeits is strong. Aleix Dai, founder of Canadian sneaker boutique Staying Fresh, said that his team started working with a new authentication program called ARthentix in October, to prepare for the holidays. It involves placing a special label inside the shoes that can verify the entire purchase history of the product when scanned using the ARthentix app. Dai said that almost all of the boutique’s business, which includes around 3,000 sneakers sold per month, has moved online and away from its two stores, making counterfeit prevention more of a priority.
“We used to, for security reasons, not offer any swaps or refunds, because in resale, there’s a lot of potential for us to take losses or get scammed,” Dai said. “But now, with the added authentication, we’ve started offering that. The [authentication] gives us some feeling of security and lets us do things that are more consumer-friendly so we can bring in more customers ahead of the holidays.”