Globalisation and free trade are making it easier than ever for consumers to research and purchase branded products from an ever-growing number of ecommerce retailers. With the cost of living continuing to bite hard, many consumers are shopping around to try and find the lowest-priced items available and falling foul of unauthorised third-party or counterfeit sellers.
Nigel Allen, Marketing Manager – 2D Codes & High resolution at Domino, outlines how the application of digital variable data printing technology can help protect against illicit trade and distribution, and raise consumer awareness of the risks associated with counterfeit and grey market goods.
The rise of counterfeit and grey market activity
With globalisation and free trade opening up myriad ecommerce opportunities, branded products at prices well below the usual local retail price have become a common sight to online bargain hunters. How is that price differential possible? Are these genuine items or counterfeit products?
Some of these items may be genuine products diverted from official supply chains and sold by unauthorised resellers, perhaps through illicit distribution channels. In such instances, products are imported from countries with a lower selling price to be resold, offering savings against the local retail price on the ‘grey market’ – a 20-billion-euro industry. Product diversion onto the grey market is often price driven, and commonly seen in coveted high-end designer brands, luxury goods, electronics, and fashion. While the products themselves are authentic, this grey market practice can be damaging to the brand holder’s legitimate sales efforts and reputation.
Other products found online at a lower price point may be counterfeits, which mimic the look and feel of genuine products, but may be sub-standard in quality. Consumers inadvertently purchasing products from counterfeit sellers will place orders for items that they believe to be genuine but receive something else – something which may fall apart after a few weeks of use or, worse, cause direct harm. Some of the most common counterfeit goods currently on the marketplace include makeup, skincare products, supplements, and medication.
Business & consumer impact
The creation and sale of counterfeit products – as well as the diversion of products from official supply chains onto the grey market – may impact a business in many ways: from an initial loss in sales, to reputational harm, and damaged relationships with business partners.
For example, brand reputation can be negatively impacted if a product falls short of consumer expectations and diverges from local product requirements, such as being supplied with incompatible chargers or with foreign language instructions. Consumer dissatisfaction is a major threat, as brand standards for customer service are unlikely to be upheld by unauthorised resellers. Other factors, such as returns and warranties, will be difficult to administer, and may be limited to statutory legal minimums, leading to dissatisfaction, and risking the brand’s reputation with the consumer.
Counterfeit and grey market products can also pose a health risk to consumers. A counterfeit lipstick or perfume might seem innocent – but such products are regularly found to contain questionable or untested ingredients, making them entirely unsuitable for their intended use. Even genuine products that have been held in improper storage conditions after leaving the official supply chain could cause harm, for example, with temperature-sensitive chemical formulations in pharmaceuticals, food supplements, cosmetics, and perfumes.
Protecting consumers and enhancing traceability with digital print
So, how can brands protect themselves and their consumers from product divergence and counterfeiting?
Anti-counterfeit packaging is a great place to start – and can be as simple as equipping products with unique identifiers within scannable 2D codes, such as QR codes powered by GS1. Such codes can be used for product verification, while also providing options for traceability.
Digital print provides a cost-effective way of adding such features onto packaging and labels – either within the factory as part of a late-stage customisation process, or via a converter providing an outsourced labelling and packaging service. Businesses already benefiting from cost-effective digital print for labels and packaging can easily implement product verification by adding variable codes to their designs at virtually no additional cost.
Using digital print to add variable data is relatively straightforward – and once on the product packaging, a simple scan can direct any stakeholder to a website to verify a product’s legitimacy. Counterfeiters can easily replicate the look and feel of product packaging – but while a serialised QR code can be copied, scans of duplicate codes can quickly be spotted and tracked, and corrective action taken. Adoption of secure serialised QR codes – issued by specialist providers and incorporating a unique security feature in their centre – is increasing; particularly in sectors where product adulteration can put consumers at risk, such as pharmaceuticals, spirits, and motor oil.
What’s more, a serialised, smartphone-readable QR code powered by GS1 can not only be used as a vehicle to verify the authenticity of a product but can also provide capabilities to track product usage and distribution as brands can access insights from the location of the scan data. Each scan will reveal where a particular product has ended up, helping brands to recognise where legitimate products may be leaving legitimate supply chains.
Beyond the Brand
Today, an increasing number of logistics providers have recognised the significance of upholding their suppliers’ brand reputation, and many are now offering services, e.g., Amazon Transparency, to uniquely identify and verify products via scannable 2D codes.
In addition, the EU has recognised the potential of 2D code technology and has identified dynamic, serialised QR codes as an effective data carrier in the future roll-out of digital product passports. Digital product passports will soon be required on certain products to provide traceability along every step of the supply chain, as well as deliver information on sustainability and recycling.
With the first pilot product passport due for implementation in 2026, brands – and converters supplying packaging and labels – would be well-positioned to start investigating digital print technologies for variable data coding early on.
Conclusion
The fight against counterfeits and grey market products is global and reaches every industry – from industrial goods, electronics, and automotive to food and beverage, life sciences, and personal care. Today, with industries and consumers around the world all facing the same economic pinch, the risk is more real than ever – and the industry is starting to take action.
Partnering with a reputable digital printing provider, who can aid with the serialisation of labels and packaging, and facilitate traceability and transparency in global supply chains, is key for brands and converters across both regulated and unregulated sectors.
Notes to Editors:
About Domino
Digital Printing Solutions is a division within Domino Printing Sciences. The company, founded in 1978, has established a global reputation for the development and manufacture of digital inkjet printing technologies, as well as its worldwide aftermarket products and customer services. Its services for the commercial print sector include digital ink jet printers and control systems designed to deliver solutions for a complete range of labelling, corrugated, and variable printing applications.
All of Domino’s printers are designed to meet the high-speed, high-quality demands of commercial printing environments, bringing new capabilities to numerous sectors, including labelling, corrugated, publications and security printing, transactional, packaging converting, plastic cards, tickets, game cards and forms, as well as the direct mail and postal sectors.
Domino employs over 3,000 people worldwide and sells to more than 120 countries through a global network of 29 subsidiary offices and more than 200 distributors. Domino’s manufacturing facilities are located in China, Germany, India, Sweden, Switzerland, UK, and the USA.
Domino became an autonomous division within Brother Industries Ltd. on 11th June 2015. For further information on Domino, please visit www.domino-printing.com
For more information, please contact:
Kathrin Farr
Content Executive and Copywriter
Domino Printing Sciences
Tel: +44 (0) 1954 782551
Kathrin.Farr@domino-uk.com
Jade Taylor-Salazar
PR and Content Manager
Domino Printing Sciences
Tel: +44 (0) 1954 778780
Jade.Taylor-Salazar@domino-uk.com
