Fake online fragrance sales in the US could be costing companies $1 billion a year

By Simon Pitman contact

- Last updated on GMT

Fake online fragrance sales in the US could be costing companies $1 billion a year

Related tags: Counterfeit goods, Counterfeit

Online retail can be a major opportunity for peddlers of counterfeit goods, and new research underlines how fake big brand fragrances are widely available to US online consumers.

Luxury brands such as Coco Chanel, Paco Rabanne, and Ralph Lauren, appear to be amongst the primary fragrance brands being targeted by counterfeiters using some of the biggest names in e-tail to target the US market, according to NetNames, a company that specializes in online brand protection and anti-counterfeiting.

“China is responsible for manufacturing approximately 70% of counterfeit goods seized worldwide,”​ said Andrew Brodsky, commercial director at NetNames.

“That said, developing countries that combine a strong manufacturing base and low wages tend to be the leading producers of counterfeit goods which means that much of Asia, Eastern Europe and Latin America are problem territories.“

Counterfeit offerings for the do-it-yourself enthusiast

Its research shows that these brands are being sold in every form, from finished products, that include the bottles, boxes and cello wrap, to empty bottles, labels and packaging sold as separates for do-it-yourself fragrances.

The company’s report highlights some of the leading online China–e-tail sites, including Gumtree and Alibaba, as well as US-based E-bay, and even a dedicated site presumably targeting do-it-yourself fraudsters called Make Polo.

“When it comes to selling these goods, many are found on the sites of independent merchants setting up shop on TaoBao or Alibaba. But marketplaces like eBay and Amazon, which are nominally based in the U.S., have also been known to host vendors selling fraudulent products,”​ said Brodsky.

“However, the process of removing those merchants from the web is somewhat less arduous than taking a fraudulent retailer off TaoBao or Alibaba. “

Widespread evidence of fraud

Andrew Brodsky
Andrew Brodskly, commercial director at NetNames

The analysis found widespread  evidence of counterfeit fragrances on sale, including adverts by retailers dedicated to selling multiple brands, and those selling individual sites.

Evidence of fake online fragrance sales in the US is widespread and examples of both multiple and dedicated fragrance brands offered by online retailers were identified by NetNames and shown to the Cosmetics Design team. They cannot be revealed in this article for legal reasons.

So just how much is this impacting the fragrance industry? Brodsky points to evidence from an NPD reports​, which suggests that in 2015 the US prestige beauty industry did an estimated $16bn in total sales; fragrance accounts for about a third of that total​.

Costing the industry up to $1bn a year

“We estimate that U.S. companies lose 15-20% of their sales to counterfeit goods. So, doing the math, that’s roughly $800 million to $1 billion in counterfeit losses last year,”​ he stated.

But the means to avoid this kind of fraudulent online sales is achievable if companies take the right approach, which sometimes has to stretch to the often complicated process of requesting that the  fraudulent retailers from the big marketplaces sites.

“To do this, the first step they need to take is putting an online brand protection strategy in place,”​ said Brodskly.

“Ongoing detection and removal of counterfeit goods is the only way to reduce the quantity of available fake products, and it’s necessary to maximize actions against sites and sellers offering them.”

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