Counterfeiting headache of high end fashion industry

Not every shining object is gold. Things can be verisimilar. They may be pleasing to your eyes but not so pleasing to your body.

“Alibaba gets sued by Gucci for fakes…again” this headline was published in CNN money on 15 March emphasizing that counterfeits are a cause of major concern for the fashion industry.

“Wearing apparel and accessories continue to be the number 1 commodity classification based on number of seizures”, IPR Seizure Statistics (2014). This sentence itself is an eye opener that fashion has seamlessly blended into your lifestyles and manipulations to the fashion industry should not go unnoticed.

According to the International Chamber of Commerce (ICC) spread of counterfeit goods is worldwide, with the reports displaying the global value of all counterfeit goods at approximately $650 billion annually in 2018 and a rise of  $1.77 trillion in 2015.

Understanding counterfeiting in the fashion industry

Counterfeit is an illegally made product purporting to be a genuine product but is of lower quality.

Fake, duplicate and sometimes knock-offs are used synonymously for the term counterfeit. Clothes, shoes, jewelry and handbags from designer brands are made in varying quality; sometimes the intent is only to fool the naïve buyer who only looks at the label and does not know what the real thing actually looks like.

Counterfeiters often display genuine goods on their sites and ship counterfeit goods to the consumers. Besides, it difficult for brands  to even determine if a site is selling counterfeits without making costly purchases from the site.

 Reasons for existence of counterfeits

  • Ignorance from the brand itself

BK Rao, Senior Category Head Marketing, quoted, “Willful counterfeiting means there is a lacuna in the brand itself. That means the original brand is somewhere weak. That is why a consumer is willing to go for a fake product. The brand hasn’t made itself counterfeit-proof and there is an opportunity for the brand to address and to fulfil that consumer need gap in terms of pricing, distribution and manufacturing.”  

  • Online sales
  • Bruce Foucart, deputy director of the International Chamber of Commerce’s Business Action expressed his concerns, “Online has meant that access to fashion counterfeits has exploded. There are so many ways for counterfeiters to sell this stuff and the challenge is to get these channels to adopt better practices.”
  • The International Trademark Association shows internet sales of counterfeit goods has been growing tremendously. Criminals prefer to sell counterfeits on the  internet as they can conveniently hide behind the anonymity of the Internet. The Internet gives them access to consumers globally and they remain secure outside the limits of law enforcement agencies.

Networks involved with counterfeiting leads to several sites selling the same products on various servers. Making it an arduous task for the brand owner to stop them without working with authorities. These sellers are difficult to track because counterfeited shipping papers can not be tracked by customs and fake brands masquerading as a non-descript fashion company that in reality is full of fake commodities.

  • LALA report by the U.S. Government Accountability Office, 2018 showed that a estimate of  79% of Americans bought products online. They found numerous products sold online by Amazon, Walmart and eBay counterfeit.
  • Demand of counterfeit commodities in the market

The third and one of the most influential factor for the counterfeiting of goods in the fashion industry is their high demand. A common man who cannot afford high end brands seeks for cheaper alternatives and has little concern about the variation in quality, performance, durability and reliability. The primary concern is just to have a brand label or a logo at an affordable price.

Virgil Abloh of OFF WHITE said, “You can’t copy something that isn’t wanted”. 

Rayban, Rolex, and Louis Vuitton are the most copied brands worldwide, with Nike being the most counterfeited brand globally according to the Organization for Economic Co-operation and Development.

The youth blinded by peer pressure tries to imitate their lifestyle with influencers and in order to show-off among their peep’s are in search for knock offs or even duplicate brands works wonders for them. Being low on budget this seems to be the only option for them. The ultimate reason is the desire of labels be it genuine or fake. A study by analytics firm Ghost Data suggests that nearly 20 per cent of all posts about fashion products on Instagram, feature counterfeits.

  • Ease

Copying a pharmaceutical is not easy, while copying, say, a pair of Nikes is not so hard,” quotes Dr Amanda Budde-Sing of the US Air Force Academy’s international management department and author of a paper on Australian bootmaker Ugg’s long trademark battle.

Effects of counterfeiting on fashion industry

Reputation suffers when consumers attribute product dissatisfaction  towards a original product by consuming a imitation of that particular product.

Counterfeit goods are a “…major plague for fashion and luxury brands.”The brand may even resort to lowering their prices in response, which further devalues the brand as it is perceived to not warrant the premium price anymore.

According to the World Customs Organization, counterfeit goods have cost the fashion industry nearly 400,000 job losses and losses of  over £5 billion in revenue over the last 20 year.

         Darker side of counterfeit

Tommy Hilfiger’s Alastair Grey reported, terrorists bought the guns used with funds gained from selling illegal luxury sneakers. Grey discusses the cause of discounting of crime is giving sellers money to partake in terrorism, human trafficking, child exploitation and various other inhumane activities.

Steps taken by enterprises against counterfeit

  • A non-profit, International Anti-Counterfeiting Coalition co-founded by brands like Levi’s works to tackle the situation of counterfeiting. Its president Bob Barchiesi, famously quoted, “Counterfeiting may really be down to the huge task of changing mindset: make the purchase of fashion counterfeits socially unacceptable.”
  • Alibaba recently implemented a machine learning system to detect counterfeit products and sellers, which had a major impact in cracking down fake goods.

  Case studies

  1. During a counterfeit bust in New York in 2007, federal police seized $200 million in fake designer clothing, shoes, and accessories. Labels seized included Chanel, Nike, Burberry, Polo, and many more.  
  2.  In a span of 3-days, Instagram identified 20,892 fake accounts selling counterfeit goods, with Chanel (13.90%), Prada (9.69%) and Louis Vuitton (8.51%) being the top affected brands, according to Social Media and Luxury Goods Counterfeit: a growing concern for government, industry and consumers worldwide study from The Washington Post.

 Beat the counterfeit

“Controlling ‘willful counterfeiting’ is a tricky situation as here the consumers may indulge in purchasing a fake product due to lower pricing. To combat such scenarios, we need to come up with stringent laws where the trade selling the product and consumers are fined heavily. The laws should be made known to the public through seminars along with educating them on the adverse effects of ‘willful counterfeiting’,” argued Mansoor Ali, Chief Sales and Marketing Officer, Hamdard.

Lastly, public awareness drive is needed to inform consumers and change their perception of counterfeiting as a harmless activity by exposing the worldwide economic crisis in the fashion industry.

 

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