The 3 Biggest Impacts of Counterfeit on Brands!

by | Jul 13, 2021 | All Articles, Blockchain, Business, Track & Trace, Trending

Counterfeiting is a global issue that shows little sign of slowing down. This phenomenon is worth almost a trillion dollars a year in global trade and takes up to 5% of the total of imported goods in the European Union alone, which equates to USD100.66 billion and has caused 800,000 job losses. 

In this article, we’ll be shedding light on the biggest impacts that counterfeit has on brands.

We often hear about the deceit that customers face from buying fake products, but in truth, brands have it way worse, and many people (including brand owners) are unaware of the full extent of damage that counterfeit can create for authentic businesses.

Just envision working diligently to build a product that meets the high expectations of customers and have all of that progress shattered because of counterfeiters. Devastating right!

Here is how counterfeit detrimentally manifests in:  

Jump to specific parts:

The Sales 

The Brand’s Reputation

The Customer Trust

    Loss of Sales

    It is fairly evident that the more consumers get duped into buying fake products, the more sales are taken away from the legitimate business.

    According to MarkMonitor’s research, 47% of brands lose their sales revenue to counterfeit or pirated goods, with one in three reporting a loss of more than 10%, 

    The findings also showed that 58% of the participants agreed that securing and protecting their brands against counterfeit will be more challenging in the next five years.

    To make the threat more tangible, in the clothing industry alone, the sale loss has reached USD31.8 billion, and these numbers extend across multiple sectors with people opting to buy low-priced goods, unaware of it being fake and the damage it can cause to them and the brands.

    The same research compiled data from 2,600 consumers across the UK, US, France, Germany, and Italy, the findings revealed that 45% of the consumers are worried about unintentionally buying counterfeit products.

    What’s interesting is that the loss of sales isn’t only affecting the brand but the government and society as well, Why is that? All businesses provide essential tax revenue to the government through the sales tax that is levied on their products. Hence if fewer products get sold, fewer sales taxes get paid. This displacement of genuine economic activity brings about 70% – 90% of the financial losses.

    Damaged Reputation 


    Counterfeit impacts brands negatively in terms of both their reputation and their bottom line. 

    Incopro’s study report highlighted that 44% of customers believe that brand reputation is critical in making a purchase decision. 

    Other research showed that four out of 10 consumers who got scammed into buying fake products complain directly to the brand and leave bad reviews on their websites and social media platforms, unaware that the product at hand isn’t the original. They even demand refunds for the damage caused by the fake purchase, especially if the said product is under pharmaceuticals, beauty products, or any consumer goods that might have put their lives at risk.

    This problem can have a disastrous impact on the brand’s reputation since whoever reads these claims will believe that the brand makes low-quality goods and may even advise others against buying its products. 

    When the situation becomes untenable, The brand reaches the fatal stage of the counterfeiting life cycle.

    Losing Customer Trust 


    In addition to getting a bad reputation, counterfeited products can gradually break the customer’s trust in a brand and push them to switch to another. According to Retail Dive, more than 60% of consumers lose trust in a brand after unwittingly purchasing fakes.

    The MarkMonitor research that we mentioned earlier put this into perspective as it has revealed the reaction of customers once they have realized that the product they bought was fake: 

    • 26% of them stopped buying from the said brand. 
    • 27% warned their family and friends about the product.
    • 22% said their perception of the brand worsened after the occurrence of such a situation.

    The independent research commissioned by Incopro proclaims that 76% of UK consumers would avoid buying products from a brand if their reputation was associated with counterfeit goods, and that 66% of consumers that had been ripped off after unintentionally purchasing counterfeit goods have lost trust in buying from that brand again.

    What’s distressing is that 88% of the customers who have fallen victim to counterfeiters believe that the brand is part to blame and that it should be doing more to protect them from the threat.

    BrandTag as a Solution

    Counterfeiting is a sophisticated practice that is difficult to mitigate if you don’t implement a good strategy. 

    BrandTag, a SaaS (software as a service) solution arms brands with a vigilant brand protection strategy that shields their reputation, secures their bottom line, and most importantly, protects their customers.

    BrandTag’s solution ensures the protection of your brand by giving each of your products a unique ID for consumers to scan and get a wealth of information, providing proof of authenticity and helping you engage better with them.

    Want to find out more about BrandTag? Check out our article: All about BrandTag 


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