29 Sep
2021

Supply chain disruptions on brand protection: what to do about it

Red Points’ Daniel Shapiro explains how brand owners can fight back when infringers look to exploit supply chain gaps to sell fake goods directly to consumers in this co-published analysis.

Many primary manufacturing countries have significantly changed the way that they work and export goods as a result of the pandemic, which has directly affected supply chains. Take China as an example. The country is enforcing strict regulations in regions where new covid-19 cases have been detected. Whenever one case pops up, the whole region is closed down, including everything that relates to its supply chain.

Meanwhile, supply chains have been disrupted by illicit trade. When the pandemic hit in 2020, the need for N95 masks skyrocketed. But multiple points in the supply and distribution chain were disrupted by quarantines and mounting mortality rates. Fake masks then appeared on the market using the N95 designation without certification or qualification, leading to mass recalls.

With the holiday season fast approaching, an extra focus on brand protection will be vital to avoid a similar scenario of brands being targeted by bad actors taking advantage of the supply chain gap.

The unintended consequences of supply

According to Red Points’ new market research, over 70% of respondents plan to use large marketplaces such as Amazon, eBay and AliExpress for holiday shopping. In comparison, 50% of respondents said that they would purchase directly from a brand’s site.

With more and more shoppers increasingly likely to look beyond legitimate sellers’ sites if they are unable to buy from the main retailer, consumers are increasingly at risk of falling prey to impersonators and counterfeiters.

Unlike legitimate brands, counterfeiters are not restricted in the ways in which they ship products abroad and can use standard postage instead. This means they might be able to get to your shoppers before you do. These two factors create an opportunity for bad actors to negatively impact brand reputation, cause revenue erosion, and put consumers at risk.

Tips to safeguard your brand from the supply chain shortage domino effect

Apart from the revenue lost to bad actors infringing your IP, brand reputation faces damage. When someone buys something from a fraudulent website, they often end up complaining on the legitimate brand’s site. This deteriorates the brand trust and loyalty that legitimate brands work so hard to build.

While it might seem that brands are up against so many different obstacles, there are steps that should be considered to manage global supply chain shortages and tackle business impersonators.

Understand the current situation

Inventory concerns are real, as are bad actors looking to take advantage of this situation. While store shelves might be light or warehouse shelves at your distributors might be waiting for shipments, counterfeiters likely have multiple listings live on global marketplaces, social media platforms and stand-alone e-commerce sites.  Brands must create an action plan to defend their reputation, protect sales,  and ensure product safety to their consumers.

Protect your reputation

Brands should be aware of typosquatting, rogue websites and cybersquatting. All online content can be stolen and copied in a matter of hours, and these sites can easily scam would-be customers.

If you are a large organisation with offices overseas, each of your foreign domains will also need to be monitored. You should therefore work closely with the territory manager, the local team and wholesalers (or third-party suppliers) to detect spoofing websites.

There are also simple ways to self-validate your site security. Start by checking the domain registration for your website, as well as those similar to it. This is an indicator of legitimacy and you should be aware of any domains that are similar to your own. In those instances, pay a visit to the website to determine whether it is a scam.

The downside is that checking the domain registration manually can be constant work, as registering a lookalike domain and copying content from a legitimate website takes only a few minutes. For business owners that do not have time to constantly check domains, domain management services can be employed to conduct domain research that is speedier and broader than manual searching.

Protect revenue erosion

By the time a customer tells you that they have found a site impersonating your brand, the damage has likely already been done. Monitoring online sellers is therefore the best way to protect your brand and revenue, and get ahead of business impersonators. Insight into the typical evasion tactics of counterfeiters is key to success in this endeavour. This includes the following:

  • Keyword manipulation – counterfeiters use different tricks to sell products without using legitimate keywords protected by brands. They misspell words, change taglines slightly  and often replace the brand’s name with made-up names that are easy to recognise.
  • Image processing – it is common for counterfeiters to modify the original images of a genuine product and add or modify some elements to confuse consumers. Counterfeiters often remove the logo or blur it on the product image. Some even alter the size or colour of the product. These images are usually uploaded with the seller's contact information in a way that bypasses crawling automation, which only analyses written content.
  • Geo-adaptation and geo-blocking – some website owners use geo-altering techniques to block access from spoofed websites after being held accountable for IP infringement. For visitors connecting from blocked regions or IP addresses, the webpage appears to be down or has completely different content (usually not infringing).

Maintain customer safety

Keeping customers informed on issues such as counterfeit sites builds trust and helps to protect your brand. Therefore, show your customers how to verify whether they have reached a legitimate brand site.

Counterfeiters' biggest advantage over legitimate brands is that they can undercut them on price. So help your customers to identify legitimate products by outlining clear pricing guidelines.

It is also important to educate consumers about the methods employed by counterfeiters. Counterfeiters can evade detection and adapt quickly. They will take advantage of anything that increases their sales and they are always coming up with new methods. The more consumers stay in the know about the operations of these illegitimate sellers, the better protected they will be from the harms of counterfeit goods.

Finally, the site security for a website – usually shown with a padlock to the left of the URL in the browser – is an important indicator of authenticity. Ensure that your site has been validated and advise your customers to look for this when shopping for your brand.

Daniel Shapiro

Vice President of Brand Relationships | Red Points