Nearly any brand can fall victim to counterfeiters, whether it’s the clothes and accessories we wear, the food and drinks we consume, or the electronics we use for work or entertainment. It’s a problem that costs brands worldwide a quarter-trillion dollars annually.
Fortunately, you can fight back. Security labels are your first and best line of defense against criminals who would deceive your customers and tarnish your image. Ongoing advancements in security label technology help brands like yours keep an eye on their supply chain and stay one step ahead of the counterfeiters.
When most of us think about brand counterfeiting, we think about knock-off handbags or shoddy electronic devices. But almost any brand can fall victim to counterfeiters, from food and beverage makers to pharmaceuticals.
It’s a major problem that causes brands to lose substantial revenue and goodwill. For some brands – such as healthcare companies – their entire business model depends on consumers’ perception of trustworthiness associated with their brand name.
In addition to the widespread challenges caused by counterfeit products traded in the so-called black market, many businesses find gray market activity to be equally vexing.
Gray market trading happens when legitimate products are traded in markets for which they were not intended. While it may not seem especially bad on its face to have more buyers and users of a product than expected, factors like distance, time zone differences, language, warranty claims, and varying regulatory requirements can lead to big challenges.
Widespread gray market activity typically begins with diversion. Diversion occurs when, unknown to the manufacturer, a product is “diverted” from its intended distribution channel.
For example, a diverter might create the appearance that they will send a shipment of jeans to South America but instead will redirect the shipment and sell the jeans in the U.S. Depending on the manufacturer’s pricing policies, the diverter may be in a position to undercut the prices of authorized distributors in the US market. Pricing arbitrage like this is a common motivation for diversion. But the reasons why and the methods used are limited only by the creativity of the diverters.
In all these scenarios, the right label can make all the difference. Security labels help brands verify the authenticity and uphold the integrity of their products throughout the supply chain, from the factory floor to the consumers’ hands. Distributors, retailers, and even ardent followers of a brand can learn to look for security features — some obvious and some barely perceptible — to confirm they have your true product in their hands.
Security labels also play a key role in assuring consumers that the genuine products they purchase have not been tampered with on their way from the maker to the consumer. Tamper evident labels are special types of labels designed to change in an obvious and irreversible way when a product is opened or if someone attempts to remove the label. Additionally, special features in certain types of security labels enable manufacturers to more easily see where each of their products ends up, helping them pinpoint where black or gray market activity is taking place, so they can put a stop to it.
A knowledgeable brand protection label provider should be able to advise you on the combinations of security features available to address your counterfeiting or product diversion challenges. They may introduce you to some of the following technologies:
Applications of these technologies typically fall into two categories: overt or covert:
For many years counterfeiters and the brands that comprise the counterfeiters’ favorite markets have been locked in an arms race. As brands introduce new overt features, counterfeiters learn how to duplicate them. So, the most effective security labels typically include multiple layers of security, the layers being created by mixing overt, covert, and tamper-evident elements in unique placements and combinations.
Anti-counterfeiting technology is advancing rapidly, with new solutions reaching the market frequently. The good news is you don’t have to jump immediately to the most cutting-edge label feature. A quality label vendor will discuss options with you and will ensure that you’re not paying for a technology you don’t need.
Your brand is everything. It’s the mark of quality your customers rely on and it’s the reputation your company has worked so hard to achieve and maintain. Counterfeiting and diversion risk all of that.
To keep your brand safe, start a conversation today with your label printer about which of the latest anti-counterfeiting, anti-diversion features might serve your needs. At The Label Printers, we’d be happy to walk you through your options.