Counterfeiting has become a massive logistics issue that affects even startups and small businesses. At such a critical period for your company, you don’t want to worry about fake products entering your supply chain. If you leverage anti-counterfeit technology, you can safeguard consumers’ perception of your brand.
The Efforts to Stop the Rise of Counterfeiting
As e-commerce, dropshipping and global sourcing increase in popularity, counterfeiting becomes more common. According to the U.S. Chamber of Commerce, counterfeit products are responsible for $500 billion in losses for the global economy. Unfortunately, even startups and small businesses like yours will feel the effects.
As you might already know, the complexity of the logistics process makes it difficult to pinpoint where fake products enter the supply chain. Anti-counterfeit technology has emerged as one of the most effective solutions because it enhances remote visibility and is more reliable than existing approaches.
How Anti-Counterfeit Technology Protects Your Brand
Anti-counterfeit technology protects your company in multiple ways, with one of the most noticeable revolving around brand reputation. Since nearly 40% of consumers say they would only buy genuine products, you risk your credibility when you unknowingly sell them fakes.
If enough customers receive counterfeits, rising dissatisfaction and declining brand loyalty could become serious issues. Even if you catch fake products before they reach the storefront, you still experience financial losses.
Deploying technologies to catch counterfeits simultaneously safeguards your company’s reputation and customer loyalty — two of the main factors affecting the long-term success of startups and small businesses.
Longstanding Anti-Counterfeit Technologies
While dozens of anti-counterfeit technologies exist, only a select few have multi-industry applications. Here are some of the most common.
- Weatherproof Adhesive Labels
A weatherproof adhesive label is simplistic yet effective. It uses synthetic films and laminates to protect the sticker and ink from moisture, ensuring they remain intact throughout the supply chain. A custom design isn’t easily replicable, making it a cost-effective solution.
- Radio Frequency Identification Tags
Radiofrequency identification (RFID) tags use electromagnetic fields to enable wireless communications. They often appear as small, shiny stickers on packaging or hand tags but can also be hidden under labels for security reasons. You use a “reader” to authenticate it.
- Near-Field Communication
Near-field communication (NFC) tags use radio waves to wirelessly transmit data over short distances. Much like RFID tags, they look like small stickers. You can scan them with your smartphone to pull up product data.
Emerging Anti-Counterfeit Technologies
Unfortunately, criminals have found ways to circumvent many longstanding solutions. As a result, the development of modern anti-counterfeit technology has seen tremendous growth.
- Decentralized Ledger Technology
Since the Blockchain is decentralized and immutable — meaning you can’t change records after you’ve entered them — it shows promise as an anti-counterfeit solution. You, your suppliers and your distributors can use it as an accurate, traceable recordkeeping system.
- Physical Unclonable Functions
Physical unclonable functions (PUFs) rely on randomness to prevent counterfeits. While the typically two-dimensional versions are easily copyable and take ages to be authenticated, the newly created three-dimensional alternative is far more reliable — and not replicable.
Three-dimensional PFUs use artificial intelligence authentication and fluorescent laser technology to extract a tag’s information layer by layer and store it in a secure database. This way, you can compare product tags to your records to weed out counterfeits.
- Copy Detection Patterns
Copy detection patterns (CDP) are randomized digital images that resemble QR codes. Every time they’re scanned or printed, they lose some embedded information. By measuring this loss, you can determine whether the products you receive are genuine or counterfeit.
- Cryptographic Signatures
This anti-counterfeit technology uses AI to develop an invisible cryptographic signature — a unique identifier — for you to embed in any size packaging. It is only detectable to its manufacturers and the merchants receiving the shipment, making counterfeiting impossible.
Industry-Specific Solutions to Counterfeits
The kind of anti-counterfeit technology you can deploy varies depending on numerous factors. Fortunately, there are many industry-specific solutions available.
Food and Beverage
Food counterfeits most often appear as intentionally mislabeled products. Fish, oils, cheeses and beef are common targets because the difference isn’t visually distinct. Experts estimate this issue affects 1% of the global food industry, accounting for $10-$15 billion in losses annually.
Anti-counterfeiting technologies in the food and beverage industry must withstand the cold chain and be rapidly produced to accommodate short shelf lives. One such solution is the edible QR code developed by a research group in South Korea.
This silk-based QR code is embedded with a pattern invisible to the human eye but scannable with a mobile phone. For now, this emerging technology only authenticates alcohol. The research group reported it was consistently successful when tested on various whiskey brands.
Clothing Retailers
Clothing retailers — even those who cater to niche demographics — must have extensive inventories to accommodate various apparel types and sizes. Consequently, slipping counterfeit goods into this complex supply chain is usually relatively easy.
Internet of Things (IoT) sensors are one anti-counterfeit technology you could use to protect such shipments. You can attach these devices to packaging or place them on freight carriers. Since they passively collect data on their surroundings, you can get a better idea of when fakes are entering your supply chain.
Automotive
Fake components can enter the automotive industry at any point in the supply chain. The counterfeiting of high-value machinery parts used in manufacturing causes $509 billion in losses annually, representing a 3.3% loss for the global economy.
RFID tags are small enough to be difficult to spot when placed on large automobile components, making counterfeiting less likely. They’re also capable of long-range wireless communications, so you don’t have to worry about holding your reader in a precise spot during authentication.
Pharmaceutical
Fake pharmaceutical products pose a severe health risk. Unfortunately, it is becoming more common. In 2022, there were 2,121 reported medication counterfeit cases in the U.S., a 17% increase from 2021.
While every prescription medication sale must be tracked, criminals can easily counterfeit those records. For this reason, anti-counterfeit technology made for the pharmaceutical industry must be traceable, highly visible and reliable.
Custom Holo-Blister packs — which are much more cost-effective than typical holographic technologies — rely on existing heat-seal packaging equipment. In other words, you could theoretically integrate them into your current process today.
How to Decide Which Solution Is Right for You
When you decide which anti-counterfeit technology is right for your company, you must factor in your products, packaging and supply chain. You must consider where you’ll place the technology, what conditions it will have to withstand during shipment and how you’ll source it. While emerging solutions may be more effective, they may also be more expensive.