Online shopping sales are rapidly growing, especially via Asian eCommerce platforms. With this rapid growth in sales, comes a rise in scams and counterfeit goods, threatening brand's reputations, their bottom line, and the trust that their consumers have for them. But do you know the best ways to protect your brand from counterfeits and IP violations on these regional-specific marketplaces?
Asian eCommerce platforms: Opportunities and risks
Customers in the APAC (Asia Pacific) region represent a tremendous market opportunity.
Practical eCommerce projected the region’s 2022 eCommerce sales growth at 20.6%, which is the highest in the world. In line with this, eCommerce sales are expected to reach a staggering $89.67 billion by the end of this year with some 67% of eCommerce purchases in Asia made via online marketplaces.
But while these marketplaces can serve as a valuable tool for brands to offer their products to new markets, they also come with a set of unique challenges, especially when it comes to marketplace brand protection. Brands need to be aware of the following issues:
- Trademark infringement
- Copyright infringement
- Gray market and unauthorized sales
- Shadow products
- MAP (Minimum advertised price) policy violations
- Fake marketplaces
That’s not to mention that a very high percentage of the world’s counterfeits are made in China, with an estimated 75% of counterfeit goods found globally. So it is not surprising that China’s marketplaces remain the largest and most serious IP problems for IP owners. Add to the mix that trade in counterfeit goods is believed to make up a massive 2.5% of global trade (equivalent to $461 billion), and over 80% of those counterfeits are manufactured or sold in the APAC region.
Online marketplaces have provided a quick and easy way for cyber criminals to hawk their counterfeit wares with minimal risk. In 2019, the United Nations Office on Drugs and Crime revealed that “the distribution of counterfeit goods through the internet and e-commerce is rendering what was once a low-risk, high-profit cross-border crime into an even lower-risk and higher-profit borderless one.”
The report notes that online marketplaces are “providing counterfeiters (as well as digital pirates) with a powerful global platform to market and distribute their goods to greater numbers of potential consumers at minimal expense.”
Consumers blame brands for scams and counterfeits
Consumers who fall victim to online scammers typically hold brands and marketplaces responsible for their disappointing experience. Trust is broken when consumers realize they have bought a counterfeit item, and 88% of Americans believe that eCommerce marketplaces should be responsible for counterfeits sold on their platforms.
“If consumers cannot make their purchasing decisions free from doubt about the quality and safety of these products and services, trade in the region will be stuck in the last century,” warns Seth Hays, the Chief Representative of the International Trademark Association in the Asia Pacific.
This loss in trust with the brand causes huge reputational loss. When an item or service doesn’t work as advertised by the authentic brand, consumers are prone to blame the real brand. This is then followed by their experience spreading via word of mouth or a slew of bad reviews online. It is extremely difficult to combat this. With 66% of consumers much less likely to purchase from a brand that has been linked to counterfeit goods on the market, understanding the implications of reputational loss is key.
The obvious implication of both of these risks is the effect on your bottom line. The financial loss relating to counterfeit goods is massive. In 2021 in the US alone, there was an estimated $29.2 billion in lost revenue due to counterfeit items in online marketplaces.
The risks posed by counterfeit products are unsustainable. From irreparable damage to brand reputation to financial losses incurred from fraudulent sales, it’s clear that marketplace brand protection must be a high priority for brands.
Which Asian marketplaces should my brand monitor?
There are a number of emerging, regional-specific platforms that brands need to actively watch, it’s not all about Amazon and Alibaba. These platforms have the potential to become major eCommerce marketplaces, and therefore targets for counterfeiters.
Shopee
This platform, which is the largest eCommerce site in southeast Asia, enjoyed some $4.5 billion in sales in 2021 alone. The site is especially popular with users in Indonesia, the Philippines, Vietnam and Taiwan, and the marketplace boasts about 343 million monthly visitors.
The popularity of the site has made it an appealing target for scammers. According to research, almost one out of three (30%) of Shopee customers have been scammed by third-party sellers on the platform.
Tokopedia
An Indonesian eCommerce company, Tokopedia is one of the largest e-commerce platforms in Indonesia, cited in the Counterfeit and Piracy Watch List by the European Commission. In 2020, Tokopedia reported a revenue of $28.6 billion. In 2022, the site reports that it has over 137 million monthly visitors.
But according to a report from the European Commission on protection and enforcement of intellectual property (IP) rights, Tokopedia is a hotbed of counterfeit items and fraudulent listings. Tokopedia was specifically named on the Counterfeit and Piracy Watch List by the European Commission, due to its lax policies around combating IP violations and counterfeits.
Lazada
Lazada, a subsidiary of the Alibaba Group, is an industry-leading eCommerce platform operating in southeast Asia. It serves shoppers in Singapore, Malaysia, Indonesia, Thailand, Vietnam, and the Philippines, with an estimated annual revenue of $3.5 billion.
Cyber criminals have recently been leveraging Lazada as the basis for an advanced employment scam. Cyber criminals pretending to be working on behalf of Lazada target unsuspecting job seekers. They used spoofed SMS messages that appeared to be coming from Lazada and requested bank details from the victims, which they used to steal money. According to local police, as of May 2022, around 50 people had fallen victim to the scam and the cyber criminals netted approximately $430,000.
Your Asian marketplace brand protection strategy
There are too many avenues online for cyber criminals to leverage your brand’s hard-earned reputation and dupe your consumers. Which means your company needs to be vigilant. BrandShield offers you a marketplace brand protection platform that leverages the best of both worlds: advanced technology and an experienced team of professionals. Our team includes IP experts who have years of first-hand knowledge into the most effective ways to handle counterfeit takedowns.
Our IP professionals work with clients who prioritize protecting their intellectual properties and combating IP violations, such as counterfeits, trademark, copyright, and patent infringements. We have unparalleled insights into marketplaces all over the globe, including the challenges that come along with Asian marketplaces.
Our team has put together an eBook on online marketplaces covering other Asian marketplaces and up-and-coming worldwide marketplaces you need to be aware of. For example, online marketplaces such as Walmart and Target are fast becoming the go-to marketplace for merchants. It’s not just items you’ll find in their brick-and-mortar stores anymore. These companies have adopted the Amazon-esque approach to an online marketplace allowing third parties access to sell and ship from their site.
Check out our eBook which covers what you need to know about retail brand protection on online marketplaces and eCommerce sites, and the best practices for protecting your bottom line and brand reputation.
