How Auto ID technologies protect against counterfeiting in e-commerce

More than $500 billion in 2021 was the value of the global trade in counterfeit goods. Every year this figure is growing, which is certainly caused by the transfer of many businesses to the web. However, lower revenues are not the only challenges facing e-commerce entrepreneurs. Trading illegal products also means a loss of customer trust, which for companies is invaluable in building market position.

Brands that produce goods and then distribute and sell them, whether domestically or in foreign markets, must take measures to stop the spread of counterfeit products. One solution they can use is Auto ID technology, as this technology gives them the tools to digitally identify and track products from production to delivery. In addition, it enables verification of authenticity, enhances security and ensures that the interests of businesses and consumers are protected.

Counterfeits on e-shelves

The e-commerce sector, with its vast and diverse online marketplaces, is particularly vulnerable to counterfeiting. The anonymity afforded by the Internet allows counterfeiters to sell unoriginal goods to unsuspecting consumers, affecting brand reputation and consumer confidence. The scale of counterfeiting on the Internet is staggering - almost every product category, from luxury items to everyday goods, is targeted by counterfeiters. According to a report by the Organization for Economic Cooperation and Development (OECD), trade in counterfeit and pirated goods accounts for 3.3% of global trade, and the value of imported counterfeit goods worldwide is $509 billion. [1]

Counterfeiting not only leads to direct financial losses for brands, but also poses a risk of danger to consumers, who may unknowingly purchase lower-quality or unsafe counterfeit products. The challenge for e-commerce platforms is therefore to effectively identify and remove such offers, which is becoming an increasingly complex task due to the huge number of transactions and the global nature of the supply chain.

One example of combating counterfeiting is Chinese e-commerce giant Alibaba's "The Alibaba Big Data Anti-Counterfeiting Alliance" project, which was implemented in partnership with 20 brands, including : Luis Vitton, Swarovski, Samsung, with additional law enforcement involvement. The companies and organizations joined forces, using advanced technologies and Big Data analysis to combat the production and distribution of counterfeit products. As a result, more than 380 million fake products were identified and 180,000 third-party store accounts were removed in 12 months - from August 2016 to August 2017.[2]

Agents with Auto ID badge

E-commerce companies concerned with minimizing the risk of counterfeit products entering circulation can leverage advances in Auto ID technology to authenticate items throughout the supply chain and at the point of sale.

The first line of defense against counterfeiting in the world of commerce is barcode printers. These devices generate unique and hard-to-counterfeit sequences, making each product effectively traceable and verifiable. The high-quality printing they offer creates intricate and detailed barcode patterns, raising the bar for potential counterfeiters. In addition, modern printers are equipped with security features such as passwords and encryption, significantly reducing the risk of unauthorized use of these devices to create counterfeit codes.

Another security feature is the integration of devices with database management systems. This means that codes are printed only on the basis of verified and authorized requests. This combination ensures that every label is an audit trail of the product from manufacturer to consumer. In addition, options to print variable data, such as serial numbers or expiration dates, allow each unit of product to be individually labeled, a barrier to the mass distribution of counterfeits.

Mobile terminals are equally widely used in the fight against counterfeiting. Their use for scanning barcodes, QR codes, or NFC tags enables instant verification of product authenticity. Thanks to integrations with specialized applications and access to a database of product information, employees can check the history of goods, their origin, as well as confirm authenticity from the manufacturer. If discrepancies or tampering attempts are detected, a real-time alert is sent to mobile terminals, allowing for quick intervention.

Similar effectiveness in reducing the number of counterfeit products on the market comes from the use of RFID technology in mobile terminals. The introduction of secure RFID tags, which are scanned at various stages of distribution, make it possible to quickly identify and eliminate counterfeit products from the supply chain.

The use of RFID technology in mobile terminals is also effective.

E-commerce with NFC

Consumers can also independently verify the authenticity of their purchases by scanning the NFC tags, providing direct access to information about product origin, production and distribution. Some e-commerce platforms have already begun to implement NFC technology, offering a more secure and interactive shopping experience, allowing customers to verify authenticity with a simple touch of a smartphone. These technologies not only deter counterfeiters, but also enable consumers to make informed purchasing decisions. Case studies from major shopping platforms show a significant decrease in counterfeiting incidents and improved consumer satisfaction when modern technologies are employed.

Customer education

Equally important as the application of technological innovations in the e-commerce world is user education. Sales platforms need to inform customers about the ways available to verify the authenticity of products and recognize reliable sellers. Such an educational project was carried out by Amazon in 2022 in cooperation with the U.S. Chamber of Commerce and the U.S. Customs and Border Protection.[3] The educational campaign on safe shopping and the harms and dangers of counterfeit trade reached more than 70 million consumers in the United States.

In the fight against counterfeiting, modern technology and customer awareness play equally important roles. The Auto ID industry is making a significant contribution to identifying and eliminating counterfeits from the market. These technologies make it possible to trace the origin of products, verify their authenticity and effectively communicate with consumers. But it is the combination of technological innovation with active participation and knowledge of customers that is the most effective way to prevent counterfeit crime while protecting intellectual property rights and consumer safety.