Advancements in communication, transportation and technology enable retailers worldwide to connect and supply products to customers outside their geographical reach. The rise in the E-Commerce sector has led to a surge in the implementation of optimal supply chain strategies. However, these technological developments have also led to the growth of counterfeit products in the market.
As of 2017, the counterfeit market was valued at $1.2 trillion globally and will increase to $1.82 trillion by 2020. According to experts, the existence of counterfeit goods negatively impacts the growth and survival of the businesses in the market.
Companies currently operate in a highly dynamic and competitive market, and for sustainable growth rates, firms keep their customers satisfied. According to a recent survey, over 50 percent of the customers now use online channels to conduct purchase decisions conveniently. However, around 35 percent of these customers have come across receiving counterfeit products at least once, in their lifetime. As a result, the retail industry witnessed a rapid fall in customer loyalty rates by 54 percent in 2017.
Product returns are currently a significant threat that exists in the market. In other words, if consumers are not satisfied by the product offerings received, they can return it free of charges. As a result, consumer returns have led the retailers in incurring a lot of losses. In a recent survey conducted, 90 percent of the customers who faced with counterfeit products have immediately returned the products. Corporations incur expenses in the form of transportation and packaging costs, which causes companies to lose over $350 billion annually. In addition, these expenses will increase more than $550 billion by the year 2020.
The counterfeit products have prevented many significant companies in gaining insights on the purchase and the use of the products. Therefore, the retailers experience gaps in the knowledge of the popularity of the products and its usage rates. The data loss caused due to the presence of counterfeit products generated firms an overall loss of $18 billion annually.
Technological Developments in Counterfeit Products
The rise in technological developments has also provided a boost to the counterfeit products market. Retailers who supply counterfeit products can use 3D printers and artificial intelligence to create perfect replicas of products and sell them to consumers worldwide. Currently loses incurred by firms due to the use of 3D printing generating counterfeit products is more than $100 billion.
In order to successfully tackle counterfeit products retailers have now installed RFID tags in their products, which helps them keep track of their products and helps them to prevent any tamper or loss of the product. Companies can also introduce mobile applications that will enable customers to scan RFID tags to ensure the authenticity of the product. Therefore, reducing the number of product returns and increasing customer satisfaction and retention rates.
The RFID market is worth $11.2 billion currently and will rise to around $40.5 billion by the year 2025. Businesses spend a lot of time and resources to protect their brand name, goodwill and trademark. Therefore, the implementation of RFID (Radio Frequency Identification) technology will help them to eliminate wastage of resources effectively and efficiently.
Written By: Arshad Kazi