Fighting Fakes with Intelligent Labeling

Smart labels provide two layers of protection, a serialized QR code combined with three-dimensional holographic stars embedded in a random pattern make it impossible to replicate. (Image Courtesy of Covectra)

Smart labels are a sustainable way to combat counterfeiters and knock-offs sold online

By Ron Ducharme, Vice President of Business Development, Covectra

The global pandemic has radically changed our world and how we conduct business. Stay-at-home orders, social distancing, and working from home resulted in an explosion in online shopping.

FinTech Magazine reported that in 2020 alone, e-Commerce exceeded $4.3 trillion, a volume originally forecasted for 2025.  And a recent report by Statista revealed that online commerce will grow at an alarming pace of 50% for the next four years, from $4.9 trillion in 2021 to $7.4 trillion by 2025. This transformation is so profound that another term has recently been introduced.  M-commerce now describes online purchasing using a mobile device.

Influencers on e- and m-Commerce

A survey by Uswitch.com of over 4,000 frequent online buyers found that TikTok has the greatest influence on online buyers’ purchasing habits, followed by Instagram and then Pinterest. In addition, they discovered that 61% of shoppers admit current trends influence their purchasing, seven of 10 respondents prefer to purchase from a small business, and, on average, people will spend about $140 monthly on impulse purchases.

The Global Sustainability Study 2021 uncovered that sustainability is becoming increasingly important in consumers’ purchasing decisions. Also, today’s younger online consumers look to sustainable alternatives for the packaging of materials.

Intelligent labels on a recyclable container provide a sustainable solution. (Image courtesy of Covectra)

The dark side of growth

The increase in e-Commerce and M-commerce has exacerbated the selling of knock-off products. Moreover, counterfeiting is no longer an issue for just the high-end niche markets. Now everyday items, including cosmetics, consumer goods, tobacco, aerospace components, pharmaceuticals, automotive parts, and just about everything manufactured, are at risk.

Counterfeiting is expected to exceed $3 trillion by the end of 2022. And on top of the loss of revenue for businesses, fake products can also be dangerous. For example, bacteria and human waste have been found in counterfeit cosmetics.

Combating counterfeiting

The first step to combating counterfeiting is recognizing that you have a problem as a company. Unfortunately, many companies either will not admit they have an issue and dismiss the idea. Or, do a quick investigation and find there is a cost to anti-counterfeiting and are unwilling to pay the price.

Sometimes senior management and brand owners do not want to acknowledge counterfeiting because they do not want to “explain” the problem. Regrettably, by not taking action to prevent counterfeiting, they are losing reinvestment dollars and profits, and are actually rewarding counterfeiters.

Confronting converging trends

Intelligent labeling solutions allow consumers to authenticate products using their mobile devices. (Image courtesy of Covectra)

Sustainability, recycling, reuse, protecting our brand, and preventing counterfeiting are all part of the packaging conversation. So, the question becomes; how to protect my brand and follow sustainability trends?

There are several conventional ways to protect your product, from simple tamper-evident products to more sophisticated technology like radio frequency identification (RFID) and near field communication (NFC) technology. The one thing most brand managers agree upon is that no one single technology is sufficient to protect against today’s malicious counterfeiters.

A tamper-evident label can be made of paper, film, or something similar to the container to which it is attached, so recycling becomes much easier.  But because this method can only confirm if a product or the contents has been tampered with, it only provides a single level of security which is not enough to deter counterfeiters.

On the other hand, although traditional RFID aluminum and NFC antennae are effective security and inventory devices, they are not recyclable products. Plus, both these products contain metals that must be dealt with outside a standard process, making the product much less environmentally friendly.

Labeling provides intelligent and sustainable protection

Advances in technology have resulted in a sustainable and highly effective solution to fight fake products. Smart labeling for security allows the brand owner to combine a label with a serialized bar code that follows the global system of supply chain barcode standards (GS1). A bar code can be assigned to a specific product, allowing the product to be traceable throughout the entire supply chain, from production to end consumers. As a result, manufacturers can easily identify a products’ location, which can significantly reduce counterfeiting. Intelligent labeling combines overt/covert technology into the package decoration label so that it is nearly impossible to counterfeit. In addition, the innovative labeling technology allows the consumer to authenticate a product using a mobile device.

An intelligent label made of films that match the base product provides sustainability as the container can be recycled without an issue. These labels can be used as tamper-evident edge seals to scan the labels. Furthermore, combining smart labeling technology with a dashboard delivers valuable insight into market and sales trends.

Protecting your brand with intelligent labeling is a significant step forward. It checks the boxes for adding sustainability, track and trace, and actionable market information. The demand for sustainability and the need to protect against counterfeiting is growing. Those who proactively address these sustainability issues will be ahead of their competition and future regulatory requirements.

About the Author

Ron Ducharme serves as vice president of business development at Covectra, a leader in track-and-trace solutions. He has a broad background in pressure sensitive adhesive products in durables, industrial and prime label decoration and is skilled in polymers, plastics, adhesives, coatings, and manufacturing. Ron can be reached at rducharme@covectra.com. Learn more at www.covectra.com.

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