“Fashion breaks my heart.” (Kanye West)
“A fashion is nothing but an induced epidemic.” (George Bernard Shaw)
The latest trend in Chinese fashion? Pretend you can afford expensive goods, by carrying around fake paper shopping bags featuring luxury brands logos.
Just two days ago, China Daily reported: ‘A random search using the keyword combination of "paper bag" with any famous brand name will find dozens - sometimes more than 100 - of results on Taobao.com, the most widely used shopping website in China. There are more than 80 online stores selling Chanel paper shopping bags. Some 70 are selling Gucci paper shopping bags.’ ‘In some other stores, the owners even provide fake purchase receipts. They can print the article number, price and purchase date at a customer's request on the receipt templates of the famous brands' outlets in Hong Kong and France.’
Just when you thought you have seen everything, they come up with a fake Gucci receipt.
The black market is not a new thing, but it is now penetrating the Internet, from imitation handbags and websites, to pet food and shampoos. At the beginning of 2011, the international Chamber of Commerce claimed that up to 7% of the world merchandise trade is fake, and that it would cost brands $135bn (£85.6bn), according to data examined by MarkMonitor.
Websites.
Fake retail websites bloom overnight, selling suspiciously cheap Louboutin and Gianmarco Lorenzi pumps. Most of the times they are easy to spot, but every now and then they look just like the real thing – you had to check the small prints to recognise Abercrombie & Fitch’s spurious brother.
Retail stores.
Two months ago, The Wall Street Journal reported the phenomenon of bogus stores; Ikea, Subway and others had been ripped off and replicated, from fake products to the whole shop. A slightly different case was when Apple found out there were 22 imitation retailers in China; the products were certified Apple goods, but the stores were rather dodgy-looking, and did not fool the eye of the company’s investigators. The employees t-shirts sporting a fake apple the size of a watermelon didn’t help either. The brand worked with Chinese authorities and employees of Pfizer (yes, the Viagra-makers) - real experts, as counterfeit pharmaceutical products abound on the Internet - in order to bust the pirates.
Facebook.
Obviously, counterfeiters are now targeting Facebook. And someone already accused the social network to be suspiciously slow in reacting to bogus advertising. Dealzon’s co-founder Ian Ybarra recently said: 'Facebook doesn’t have an incentive to shut this down,' as they make big bucks when people click on ads. He also said Facebook did not initially respond to his complaints about the false representation. Facebook replied to its critics by stating that it has 'stringent policies and processes in place' to deal with the issue. They say they filter the ads in order to spot the fakes and the ones that violate copyright, trademarks and so on. Moreover, they say the same users can report mendacious ads.
What brands do/should do in order to tackle the problem.
Luxury handbags and accessories maker Coach, has signed a memorandum of understanding with Taobao.com, AKA the Chinese Amazon, to stop the sale of fake products on the website. The crucial points in the MOU are stricter controls and implemented cooperation with the Chinese authorities.
Meanwhile, in Nevada, ‘Judge Kent Dawson ordered that luxury goods designer Chanel now has the legal right to seize domain names of over 700 sites that are attempting to sell counterfeit Chanel products. […] The federal judge also ordered that all search engines and social networks “de-index” the sites in question. Sites specifically named in the ruling include Google, Bing, Yahoo, Facebook, Twitter and Google+. None of the site owners have the right to contest the removal of the domain from search engines or contest the transfer of ownership until after the domains are seized. According to Arstechnica, an additional 228 sites were seized earlier this month after an investigation was presented to the courts.’ (Digital Trends)
Nevertheless, Subway told the Wall Street Journal that this is not entirely bad for business, as the fakes may help increasing brand awareness in new and crucial markets. In an interesting article on Forbes, Assistant Professor of Marketing Renée Richardson Gosline talks about the good side of fake merchandising. But this is another story, to be analysed in part 2. what we are talking about here is the dark side of the business, which means: if the market gets flooded with fake Prada bags, the product loses its exclusivity. Luxury brands must deal with the matter tactfully, as they both benefit from and lose out on black market.
Things brand do to challenge fraudsters:
- Raise the quality of the products - use more special metal here, put some more crocodile there, the pirates are not going to replicate this.
- Marketing, IT and legal departments work closely and tightly. Improve security tools, educate the customer, work with major credit cards to suspend unverified merchants’ accounts, keep a rigorous control over fake Google search results.
- Notify Google when a fake website shows up on Google; Deborah Greaves, Secretary & General Counsel at True Religion Brand Jeans, recently said: ‘Once you have done that a few times, it starts costing the counterfeiters more money to relist so they will have to either change their domain name or move on to a different brand. By continuing to attack them, they eventually give up.’
- Name and shame. Volker Bartels, Sennheiser’s executive management board representative explains the brand’s modus operandi: ‘We scan websites for fake product offers, we buy products advertised online that we think are fakes and check them. Once we determine it’s a fake, we close the website, take the person to court and make it public to let them know we won’t just let it happen.’
- Use advanced technology. German fashion brand Gerry Weber is working on radio frequency identity (RFID) chips to be applied on garments. RFID was introduced to help gather data about stocks, and to keep track of suppliers that were purposely producing excess stock in order to sell it under-the-counter. How this could affect customers’ privacy is still to be analysed.
Conclusion.
If the email address of the retailer you are buying from does not contain the brand’s name, the company is based in China, and the seller request money transfer by Western Union or the likes, then stay away from it, even if those Swarovski pumps look like a bargain.
London Web Agency Appnova – keep following us on Twitter @appnova and “like” us on Facebook for useful news and tasteful digressions about geeky stuff.