Counterfeiting is a global problem for which there are currently little to no effective preventive measures.

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Anti Counterfeiting

Fields of Application
Clothing
Handbags
Luxury goods
Shoes
Upmarket clothing

Counterfeiting is a serious problem that affects various industries, including the luxury goods and clothing industry industry.

Counterfeit luxury goods not only undermine the value of authentic products but also lead to significant financial losses for luxury goods brands. In this essay, we will explore the financial loss due to counterfeiting luxury goods, including the impact on sales, brand reputation, and legal costs.

The luxury goods industry is a prime target for counterfeiters due to the high prices of luxury products. Counterfeiters can sell fake luxury goods at significantly lower prices than genuine products, attracting price-sensitive consumers who are looking for a bargain.

According to the International Trademark Association (INTA), the luxury goods industry lost an estimated $30.3 billion in 2018 due to counterfeiting.

Lost sales are a significant source of financial loss for luxury goods brands. When consumers purchase counterfeit products, they choose not to buy authentic products. This results in a loss of revenue for luxury goods brands.

The INTA report estimates that the luxury goods industry loses approximately $12 billion in sales each year due to counterfeiting.
In addition to lost sales, counterfeiting also damages the reputation of luxury goods brands. Counterfeit products are often of inferior quality and do not meet the high standards of authentic products. When consumers purchase counterfeit products, they often associate the poor quality with the brand, which damages the brand’s reputation.

This can result in a loss of customer trust, decreased brand loyalty, and a decline in sales. The damage to brand reputation is difficult to quantify, but it can have a significant impact on the long-term success of a luxury goods brand.

Counterfeiting also leads to legal costs for luxury goods brands. Brands have to invest significant resources in monitoring the market for counterfeit products, investigating counterfeiters, and taking legal action against them.

These legal costs can be substantial and are often a significant drain on the brand’s resources. Furthermore, the legal process can be lengthy and complex, which can result in further losses for the brand.

Another source of financial loss due to counterfeiting is the cost of implementing anti-counterfeiting measures. Luxury goods brands have to invest in technology and other measures to prevent counterfeiting.

For example, Louis Vuitton, a leading luxury goods brand, incorporates unique codes and holographic labels into its products to make them more difficult to counterfeit. These measures can be expensive and add to the overall cost of production for luxury goods brands.

Counterfeiting is a global problem that affects luxury goods brands in various countries. According to a report by the Organisation for Economic Co-operation and Development (OECD), the trade in counterfeit goods is estimated to be worth $509 billion in 2016, equivalent to 3.3% of world trade. The report also found that most counterfeit goods originate from China, with the United Arab Emirates, Turkey, and Singapore also being significant sources of counterfeit goods.

Luxury goods brands are taking measures to combat counterfeiting, including investing in anti-counterfeiting technology, partnering with law enforcement agencies, and educating consumers about the risks of counterfeit products.

For example, Louis Vuitton has partnered with law enforcement agencies to raid counterfeit factories and has launched an awareness campaign to educate consumers about the risks of counterfeit products.

In conclusion, counterfeiting luxury goods leads to significant financial losses for luxury goods brands. Lost sales, damage to brand reputation, legal costs, and the cost of implementing anti-counterfeiting measures all contribute to the financial loss due to counterfeiting.

Luxury goods brands must continue to invest in technology and other measures to prevent counterfeiting and partner with law enforcement agencies to combat this problem. Consumers also have a role to play in preventing counterfeiting by being vigilant and purchasing products from trusted sources.