The Internet offers opportunities which previous generations could only dream of. It connects us with practically the whole world. Your brand can travel the digital highway all the way from Shanghai to Amsterdam and New York to Paris. While this creates abundant possibilities, it also creates risks. With this in mind, many brand protection strategies still focus on bulk seizures, customs training and border protection. However, success depends on protecting your company against online counterfeiting and piracy in a way that fits the realities of the digital age. The volume of product listings on marketplaces, online stores and social media can be overwhelming and you would need a huge team to cover all of the channels. This is why effective online brand protection needs a well-thought-out strategy. Ultimately, it all boils down to prioritisation. Without a proper prioritisation strategy for targeting high-volume traders, your company is merely spending money on an ad hoc approach instead of combating fraudulent practices effectively.
Online and offline counterfeit trade are closely interconnected. Although many shipments of counterfeit goods are still sent by bulk in containers, more and more are being sent via express couriers. These individual deliveries may be small, but together they account for large numbers of counterfeit products that are difficult to detect in transit and stop.
New online stores engaged in counterfeit sales are launched every day, connecting with consumers through online marketplaces, social media platforms and search engines. These sites are managed by both individuals and networks of traders collecting single orders. These traders hold almost no stock and their suppliers are difficult to identify without intensive on-the-ground investigations.
Due to the sheer scale of the Internet, every strategy for combating online piracy and counterfeiting starts by dividing it into sectors. For brands operating online, the following three sectors are key:
- domains and online stores; and
- social media.
Each sector needs a different monitoring and enforcement strategy; however, information and analysis from each sector should be pooled. A brand owner that has insight on activities across all sectors can prioritise better. Such broad knowledge can even allow the brand owner to shut down a sales channel completely, using limited resources.
But when should you shut down a sales channel and when should you involve investigators or law enforcement authorities to investigate further? Simply taking down a sales channel is effective – at least in the short term; but when a lot of money is involved, traders will find alternative ways to sell their products and protect their assets. Unfortunately, perpetrators of online fraud are often highly professional and skilled – for example, bad-faith marketing experts will reach out to target groups via countless online stores and marketplaces and on all social media platforms. Simply put, their stake is too large for them not to create new sales routes for their counterfeit products.
Any information gathered on a high-volume trader should first be reviewed before deciding the best enforcement action. Sometimes, for example, it is better to leave infringing content online and provide a window for investigators or law enforcement agents to take action. They can identify and investigate the trader and locate the counterfeit products. By acting against that trader, you can obtain more information regarding the supply chain of the infringing goods. Of course, the ultimate goal is to identify the source of the products and take that down as well.
Reduce the damage and protect your brand better
To take down or not to take down? To make the appropriate decision, you must first prioritise the websites that have been causing most harm to your brand over those of lesser urgency. If you identify a counterfeit trader or network with a high volume of sales, do not assume that it will simply stop trading when you shut down one online store or marketplace listing. These traders are making money and will seek other means to promote their goods. Therefore, your strategy must be multi-layered: combine online monitoring with offline investigations to make a difference.
However, when many infringers and counterfeit products are present, where do you start? How do you best allocate resources and how do you decide whether a trader is worth investigating or whether a relatively simple takedown notice will instead suffice? To quantify this, you will need a standardised approach and model that enables you to prioritise. Consider using a prioritisation chart to calculate a precise threat rating per sales channel and prioritise your allocated resources to target the high-volume traders.
Figure 1: Prioritisation chart
Click here to view chart.
A prioritisation chart will help you to gain a better understanding of the priorities and focus areas. Where this takes the form of a radar chart (see Figure 1), it is easy to assess and select the risk areas. Select five or more radar points to calculate a prioritisation score. Per radar point, the score’s weighting may differ depending on your branch, product, resources and requirements. The following points (which can be adjusted and added to, depending on your strategy) should be used for a basic model:
- online presence;
- estimated stock; and
- estimated sales.
When monitoring infringement across different sectors, it is vital to connect data points such as phone numbers, email addresses and other digital fingerprints automatically. This enables you to get an overview of all marketplaces, social media accounts and online stores that an infringer is using to generate sales of counterfeit goods.
Besides the number of platforms used, the ‘look and feel’ factor can also be taken into account. When infringers are using your imagery to deceive and mislead consumers, the priority should be higher. The selection of counterfeit products for sale is also important: if they are copies of products from a new collection which are important to the business, you should focus on them first.
Use pricing to pinpoint trader in supply chain
As well as being one of the first indicators that products are counterfeit, pricing can be used to determine priority. The price of an item can provide insight into the position of the trader in the supply chain. As a brand, it is important to know the prices on the black market, from the factory to the end consumer. Each trader in the supply chain will have a mark-up; with that intelligence, you can estimate where a trader is situated in the chain. The factory or importer will not always be visible online; however, by using pricing, you can find its most direct visible clients. Start investigating the traders that are close to the source.
Pricing can also be examined from a consumer perspective. If a new designer bag is sold for $50, the consumer is more likely to be aware of the fraud. However, when the price of the same fake designer bag does not differ from the retail price, the consumer is more likely to be misled. Your brand reputation can thus be seriously damaged.
The location of the trader must be taken into account, bearing in mind your IP rights coverage and local legislation. A strategy focusing on online stores that are hosted in the United States is likely to be more effective than one focusing on Russian-hosted online stores. Is the host country a priority market for the business? How easy is it to organise a raid in cooperation with local authorities? Is a brick-and-mortar store connected to the trader? Can reimbursements be collected from the infringer and what are the chances of success? The relevant questions (and their answers) will differ depending on the brand.
A trader offering a single or used counterfeit item is not worth pursuing: a simple takedown will suffice. However, everything changes if there are indications of a continuous flow of products or if a high volume of stock is involved. If the shipping time is longer than five days, you are probably looking at a drop shipper that is collating single orders. If the trader is offering multiple items in different sizes and colours which can be collected in person, the chances are high that a considerable volume of stock is involved. This may also be indicated by wholesale discounts and pictures featuring multiple items or with self-storage facilities in the background. Indications that the trader has lots of stock means that it has invested in the business. Thus, simply shutting down a listing will not make it throw away the goods: the trader wants a return on its investment and will try to find other ways to get this.
Although estimating the number of sales can sometimes involve guesswork, it is a key factor for consideration. Some marketplaces (eg, eBay, AliExpress and Taobao) make it easy: they simply publish the number of sales on their site. If that metric is unavailable, a calculation can be made based on the total number of products posted on the site. To support this, information from the trader, feedback and ratings can be used. Not everyone will leave a rating, but a certain proportion will do so – this is therefore a good indicator. On social media, the number of followers, likes or views can be used. Measure traffic towards online stores and check the keywords under which the sites have been indexed by search engines; the number of sales can then be calculated using a conversion ratio.
Resources for brand protection are often too limited to address the full online picture. Thousands of marketplaces, social media sites, online stores and other online platforms exist where your brand could be at risk. Without categorisation and prioritisation, it becomes very difficult to spend those resources efficiently.
The key takeaway is that when looking at online brand protection, a sector and trader-orientated strategy is essential. Learning which traders are offering high volumes of sales or connected to brick-and-mortar stores, and how the supply chains of those traders work, is essential to an effective brand protection strategy. Without insight into these metrics, enforcement efforts cannot be allocated efficiently.
A trader-orientated approach will provide insight into the complete sales channels of infringers. The higher the visibility of the trader, the higher the priority should be. Creating and following a prioritisation chart is key to such an approach. With this tool, you can allocate resources strategically and focus those infringements which are most damaging. Shutting down high-volume targets and frustrating their sales channels will demonstrate that you have a winning online brand protection strategy in place, which in turn will discourage counterfeiting and encourage customers to return. Make sure that the service providers which are monitoring the Internet for you can fit this strategy into their online monitoring solutions.
Jan Maarten Laurijssen
This article first appeared in World Trademark Review. For further information please visit www.worldtrademarkreview.com.