Securing Supply Chains

By connecting businesses with verified trading partners and leveraging AI and other advanced technologies, Open Commerce significantly contributes to reducing the presence of counterfeit goods in the market, protecting brand reputation and intellectual property.
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Open Commerce is a Robust Solution to Fight Counterfeit Goods

By Justin Floyd, Founder and CEO, RedCloud Technologies

The scale of the global counterfeit goods trade is projected to reach a staggering $1.79 trillion by 2030, marking a 75% increase from 2023 levels. Just a couple of days ago federal authorities announced the discovery of a vast cache of counterfeit handbags, shoes, and other luxury items in New York City storage facilities, consider to be the largest bust in US History and valued at over $1 billion.

E-commerce platforms are particularly susceptible to this epidemic. According to the U.S. Customs and Border Protection, more than 90 percent of all counterfeit seizures occur in international mail and express environments, channels commonly used by small e-commerce packages destined for U.S. addresses. Research from Michigan State University reveals that nearly seven in 10 consumers were deceived into purchasing counterfeit products online at least once in the past year. E-commerce websites were the most common source of these counterfeit purchases, accounting for 39% of the cases.

This widespread deception leads to substantial financial losses for brands, especially those selling products online. As counterfeit goods flood e-commerce channels, brands are experiencing a significant hit to their sales and reputation. The need for a robust solution to combat this growing problem has never been more urgent.

Real-Life Threats

Beyond economic concerns, counterfeiting represents a life-threatening issue in critical sectors such as pharmaceuticals. According to the World Health Organization, the drug diversion and counterfeiting industry generates nearly €400 billion annually ($436 billion USD). This poses a significant danger to patient safety as individuals may not receive the life-saving medicines they need. Data from the Pharmaceutical Security Institute suggests that the total number of counterfeit pharmaceutical incidents worldwide has surged from 196 in 2002 to over 6,600 in 2022.

In a report published last January, the Office of the United States Trade Representative acknowledge this issue and highlighted that while the U.S. Food and Drug Administration (FDA) strives to maintain the safety of the domestic drug supply, counterfeit pharmaceuticals remain a significant source of illegal activity. The document explains that, although some counterfeit medications may be inert and ineffective, many have been found to contain dangerous substances such as fentanyl and methamphetamine. Without proper oversight by regulatory agencies, consumers cannot be assured of the quality of the pharmaceuticals they rely on for their health and well-being.

In the realm of Fast-Moving Consumer Goods (FMCG), counterfeit products also pose significant risks. The Office of the United States Trade Representative also pointed out that the market for cosmetics, apparel and footwear is particularly vulnerable due to high consumer demand driven by social media trends. Counterfeit cosmetics have been found to contain dangerous chemicals, bacteria, and even animal waste, leading to risks of skin rashes, chemical burns, and long-term health issues such as cancer. Similarly, a study by the American Apparel and Footwear Association in 2022 found that 36% of tested counterfeit clothing and footwear failed to meet U.S. safety standards, containing hazardous substances like arsenic, cadmium, and lead.

Open Commerce: A Robust Solution to Counterfeit Epidemic:  The fight against counterfeit goods requires a comprehensive approach, and Open Commerce offers a powerful solution by building strong networks among sellers, buyers, and all parties involved in the supply chain, providing:

Traceability and Authentication: Open Commerce platforms can utilize AI technology to trace and pinpoint business relationships, reviews and payment data. This deep-tech solution can help examine different key aspects related to counterfeiting, rather than just its symptoms, providing a robust defence against future occurrences. Every trade partner within the supply chain is vetted for authenticity, guaranteeing the integrity of transactions from manufacturer to retailer.

Enhanced Supply Chain Transparency: When enabled with AI, vast amounts of data can be analyzed, identifying inconsistencies and potential risks within the supply chain. This transparency helps prevent the entry of counterfeit goods and ensures that only verified products reach consumers.

Cost Efficiency: These platforms facilitate emerging peer-to-peer payment options with reduced transaction fees. This cost-saving measure enables businesses to offer products at more competitive prices, benefiting both retailers and consumers. Lower prices for genuine products through legitimate channels can reduce the appeal of counterfeit alternatives, thereby contributing to the fight against counterfeit goods by promoting transparency and authenticity in the marketplace.

Inventory Management:  Open Commerce addresses inventory distortion by accurately tracking product locations and demand. This prevents costly out-of-stock and overstock situations. By maintaining accurate records and verifying product authenticity, businesses can minimize the risk of counterfeit goods infiltrating their supply chains. This proactive approach supports the article’s focus on leveraging technology to safeguard against counterfeit products and uphold transparency.

Open Commerce revolutionizes the fight against counterfeit products, creating a secure and efficient trading environment that benefits all stakeholders. By connecting businesses with verified trading partners and leveraging AI and other advanced technologies, this groundbreaking model significantly contributes to reducing the presence of counterfeit goods in the market, protecting brand reputation and intellectual property.

About the Author

Justin Floyd, a British, award-winning entrepreneur, has 30 years of founding and investing in tech companies solving global economic challenges. RedCloud Technology, founded in 2012, stands as a “Rebel Alliance,” leading a bold, second-generation e-commerce transformation. Rejecting the high fees of tech giants, RedCloud leverages AI-driven supply chain solutions to empower smaller businesses, giving them the tools to compete with major corporations. Learn more at https://redcloudtechnology.com/.