Survey says up to half of brand sales are lost to online fakes

Almost 75 per cent of brands have lost money as a result of counterfeit goods being sold online, a survey has revealed – although this has improved compared with the previous year.

Carried out by online brand protection firm MarkMonitor, the survey shows how brands' sales have taken a hit from the growing prevalence of fake goods being sold online, with results providing an insight into the current state of the online counterfeit marketplace.

According to 150 business executives who took part in the survey at the recent MarkMonitor Annual Spring Symposium, 42 per cent said they had lost up to 10 per cent of their sales, while 23 per cent believed the impact was somewhere between 11-50 per cent in lost revenue.

While the results paint a less-than-rosy picture of the market, the 2017 findings are actually an improvement on those from the year before. In 2016, 86 per cent of brands had been impacted by copycat versions, with 39 per cent saying that 11-50 per cent of their sales had been lost as a result.

Chrissie Jamieson, senior director marketing communications at MarkMonitor said it was clear that more work still needed to be done to stamp out counterfeits and protect brands. "While this year's figures are an improvement on what we found from the 2016 Symposium, it is clear that brands still have their work cut out when it comes to protecting themselves and their customers against the financial implications caused by counterfeit goods," she said. "There are numerous methods that exist for effectively mitigating the counterfeiting threat – it's simply a case now of helping brands actually put those measures in place."

As consumers increasingly flock to the Internet to do their shopping, so to have counterfeiters, taking advantage of a broader target audience and loopholes to sell fake goods anonymously with limited risk of being caught and prosecuted.

According to a Europol report in March, the online sale of counterfeits is thriving. "Virtually all illicit commodities are now traded online either on dedicated criminal online marketplaces or by exploiting otherwise legal online platforms," the report said. "The number of goods on offer and frequency with which new products become available indicates that the online trade in illicit goods is thriving and highly dynamic."

Meanwhile, a report last year by fellow online brand protection firm NetNames claimed that one in six products bought online is a fake, while a third of all counterfeit seizures in the EU are linked to internet distribution channels.

Interestingly, the MarkMonitor survey found that brands were more concerned about the damage to reputation from online counterfeits than from the loss of sales. Sixty-five percent of respondents cited damage to reputation as the most significant factor in the business of fakes versus 26 per cent citing concerns over lost revenue.

Indeed, brands have reason to be worried. According to a MarkMonitor survey of consumers at the end of last year, almost 80 per cent believed brand reputation was at risk from cybercrime, notably in instances of brand impersonation to dupe consumers into providing personal and financial details.

One of the positives, however, to come out of the most recent survey was the growing awareness around the importance of a comprehensive online brand protection strategy, MarkMonitor says. Sixty-two percent of respondents believed these strategies needed to encompass all aspects of the internet including online marketplaces, websites, social media and mobile apps. This position was up on last year's survey when 59 per cent of respondents noted the need for an online brand protection strategy.

However, awareness of the dark web – a "hidden" part of the world wide web that allows for anonymity – as an emerging counterfeit trend was still low. Sixty-one percent of respondents said they didn't understand or only partially understood what the dark web was, and 54 per cent were unsure as to whether the dark web had affected their brand.

"The findings from the dark web-related questions show that there is a serious need to raise widespread awareness around what the dark web actually is and how it can damage brands financially and reputationally," Jamieson said.

She added: "The counterfeiting threat is persistent and evolving, and so it continues to demand a proactive approach from business if they are to successfully protect themselves. This is why it is just as important as ever to adopt a robust brand protection strategy that anticipates and incorporates the latest trends and threats."