During any periods of economic uncertainty, it is often the retail sector that is hit the hardest, particularly the high-end brands, as cost-conscious consumers become more reluctant to invest in luxury items.
While genuine products at discounted prices can indeed be found on the Internet, consumers can often find themselves unknowingly caught out by counterfeit goods instead. As a result, brands need to act with caution to protect consumers from being lured towards counterfeit sites and fake marketplace listings.
Compared to other global retailers, luxury brands have traditionally been far more hesitant at embracing e-commerce as part of their sales strategies. However, in today’s digitally-led world, it has never been more important for these brands to establish their presence across online and e-commerce channels. In fact, the latest McKinsey report on the fashion industry has found that e-commerce luxury fashion sales are set to increase fourfold from 2010 to 2020, which indicates that luxury brands are sitting up and paying attention to this warning.
If we take one of the biggest markets, the US, as an example – the latest research published by Walker Sands found that 27 percent of consumers purchased a luxury item on the web across 2016. That’s up 17 percentage points from 2015, and represents a 21-point gain over 2014, which provides a very strong indicator as to the concurrent growth we can expect to see across 2017. The digital marketing agency said its findings, which were based on an online survey of more than 1,400 US consumers, line up with industry predictions that digital luxury goods sales will triple to around $80 billion by 2025.
So, the outlook for luxury brands in terms of sales growth is clearly positive. However, there is a darker side to the story that comes in the form of counterfeit goods. With so much investment and activity taking place on the Internet by luxury brands, it has become easier for individuals with malicious intent to exploit the popularity and desirability of these products for their own personal gain. It is therefore imperative that businesses investing in online channels understand the importance of protecting both themselves and the hard-earned reputation of their brand.
Brand impersonation runs rampant online, and it permeates industries much broader than just fashion. From pirated music and films, to travel scams, fake pharmaceuticals, car parts, apparel and accessories, anything and everything can be exploited to the detriment of the genuine business. Brandjackers can leverage content and imagery, use URLs that appear authentic and employ other techniques that aim to siphon away traffic from its intended destination. In these ways, imposters can easily hijack a brand, and the businesses being duped are losing customers, profits and reputational value.
This issue is probably best illustrated by the number of successful legal cases that have been brought by luxury brands in recent years in a bid to tackle counterfeit activity. We have seen several high-profile cases, from Belstaff’s landmark civil lawsuit that awarded $42 million in damages and resulted in almost 700 counterfeit websites being handed back to the brand, to the recent case of French fashion house Chanel who sued an unnamed individual for selling counterfeit products with the company’s trademarks online.
Protecting a luxury brand against counterfeiting online has now become a fundamental requirement, and there are key elements that need to be factored into every strategy.