With changing consumer behaviours, the growth of online shopping and the diversification of products being purchased online, brand owners are being exposed to new or greater risks.
In the pre-Covid-19 world, many brand owners had established brand protection strategies in place to deal with the sale of counterfeit products. The value of counterfeit products is estimated to be in excess of US$500 billion, which equates to around 3% of global trade. Many of these products originate in South East Asia and are then distributed quickly via online marketplaces. Counterfeit products are a threat to all industry sectors and brands of every size.
In the immediate threat of the coronavirus pandemic, many online sellers of hand sanitisers, face masks and other hygiene products hiked their prices. At one point, a two-pack of Purell 1-litre hand sanitisers was being listed at US$350. The RRP for this product was around US$22. This practice of price gouging is illegal in several US states and the European Union. In the UK, the Competition and Markets Authority established a taskforce to crackdown on sellers trying to profit from the outbreak of Covid-19.
In response to price gouging, eBay and Amazon took proactive steps to clamp down on sellers and listings for over-priced hand sanitisers, face masks and other hygiene products. Throughout March 2020, tens of thousands of Amazon sellers and hundreds of thousands of eBay listings for coronavirus products were removed in an attempt to remove overpriced products.
Counterfeiters and infringers have been able to react very quickly to the increase in demand for coronavirus products. Unsurprisingly, there has been a dramatic rise in the number of listings for hand sanitisers, face masks and hygiene products online. Many of these products are non-genuine but rather than being direct counterfeits, they are lookalikes. A lookalike takes elements of the packaging or design of an established product and reproduces it. Often a lookalike will not include the brand of the original product and this can make it difficult for the brand owner to detect the products and prevent their sale.
Non-genuine brand extensions
Another new practice is the development of coronavirus products which incorporate established brands but are not produced by, or with the consent of, the brand owner. A commonly cited example of this is Bentley-branded face masks which are, at the time of writing, readily available on Amazon in the UK:
Increase in counterfeits
There is evidence to suggest that there has been an increase in the supply of counterfeit products into the market across a broad range of categories. Despite factory closures across China during January and February 2020, counterfeiters seem to have been encouraged, perhaps by the shutdown of enforcement of Customs authorities and brand owners, to keep pushing counterfeit products through online marketplaces.
In a time of lockdown, it is inevitable that consumers are spending more time online. This creates new opportunities for infringers through increases in phishing scams, fake websites and fake social media advertising and accounts promoting non-genuine products. The long-term effect of the proliferation of such behaviour is that this will threaten brands, the trust that consumers place in them and, ultimately, their value.
As consumer behaviours shift towards spending more time online, counterfeiters and bad actors have responded quickly to demand for coronavirus products. They have also adapted how they brand and market their products to try to avoid detection. The immediate need for coronavirus products has also led to brands unrelated to safety and hygiene being linked to products in this sector. In the next blog, we look at what steps brand owners need to take to defend the value of their assets.