It took luxury-goods makers about a decade to realize that the Internet represented an opportunity. Now, they’re finally figuring out it’s also a threat.
As companies from LVMH Moet Hennessy Louis Vuitton SE to Kering SA increasingly sell online, top brands are stepping up efforts to combat Web sales of counterfeit and grey-market goods. Gucci owner Kering sued China’s largest e-commerce operator for allegedly facilitating the sale of dodgy products. U.K. handbag maker Mulberry Group Plc and others use technology to take down links to websites selling fakes.
The push comes as a new generation of consumers turn to social media to shop as well as to show off, and as criminals target the same bona fide customers as luxury-goods makers themselves. At stake is as much as $82 billion of sales that Frontier Economics predicts will be lost to intellectual property breaches this year.
“The Internet has become a place where people will buy 5,000-pound ($7,800) watches and 2,000-pound handbags,” said Charlie Abrahams, senior vice president of worldwide sales at anti-counterfeit technology provider MarkMonitor. “The challenge is, on the Internet, it’s very difficult for the consumer to tell if they’re buying the real thing.”
MarkMonitor is owned by Thomson Reuters, which competes with Bloomberg LP, the parent company of Bloomberg News, in providing news and information.
Poster Child
Twitter Inc. introduced a “Buy” button in September, allowing brands to sell directly via the microblogging service. Nine out of 10 suspect links are on social media, according to French startup Data & Data, which says it can detect as many as 10,000 cases a week per client using algorithms to process big data.
Until recently, one of the biggest issues facing brand owners was the sheer volume of infringements online as too-good- to-be true prices made it relatively easy to spot bogus bags and shoes. But the perpetrators are now producing better quality copies and charging more, fooling customers and posing a greater risk to the reputations of genuine manufacturers.
“A 50-buck Louis Vuitton handbag used to be the poster child for counterfeit goods,” said Louise Nash, managing partner at law firm Covington & Burling LLP in London. “In the past few years, pirates have realized they can make thousands of bucks a pop producing something close to a Mulberry bag.”
Mulberry, which uses MarkMonitor’s software to scan the Internet for counterfeits, says it has taken down 3,321 websites selling fake merchandise in the 24 months to March 2015. MarkMonitor seeks to cut off the problem at the source by isolating the handful of criminals behind many thousands of illegitimate sites, according to Abrahams.