Social Media’s New Role: Tracking Fake Products

Social media buzz abounds, but there’s another role it can play: counterfeit watchdog.

By monitoring popular business-to-consumer (B2C) auctions, business-to-business (B2B) trade boards, blogs and forums, significant intelligence can be culled about the emergence of counterfeit markets that spring up when a new product enters the global marketplace, according to a study out today by OpSec Security, a brand protection firm.

OpSec Security conducted a study to identify the impact of Internet trading platforms and social media Web forums on the market launch and distribution of consumer electronics products, focusing on the release of Amazon’s Kindle DX. The large-screen e-reader debuted June 10.

While bogus knockoffs of popular devices are nothing new, the study does highlight how social media plays a role in keeping tabs on the activity.

The idea is that by combining market intelligence from e-commerce platforms and social media, companies can more effectively respond to emerging threats of fake goods in the global supply chain, according to OpSec.

The company’s findings show that consumers used social media forums to share tips on circumventing Amazon’s U.S.-only shipping restrictions, including the use of package-forwarding companies, according to OpSec.

For instance, even on the day of launch, Kindle DXs were offered for sale on a B2B trading board, raising questions on how sellers acquired the products.

“Thousands of Kindle e-readers were available on trade boards from sellers, many offering significant quantities at deeply discounted prices,” according to the OpSec study. “One seller offered 2,500 Kindle 2 e-readers per week at a unit price of $65, well below the list price of $299. Of 33 B2B listings offering Kindles when the DX launched, 75 percent of the sellers were located in Indonesia and China.”

Additionally, a gray market quickly grew up with auction sellers offering high-priced Kindle DXs to customers in areas where the devices were not being sold by Amazon. Until the launch of the international Kindle 2 version, Amazon did not offer Kindles for sale beyond the U.S.

In addition, the OpSec said it uncovered Japanese-language Kindle knockoffs, which were not offered by Amazon at the time.

To study how social media impacted the counterfeit supply chain, the company said it examined social media blogs and forums for information on how buyers and sellers circumvent Amazon’s shipping restrictions for the Kindle.

Consumers shared information about online sellers, recommended vendors, and ways of obtaining Kindles in countries where they were not intended to be sold.

Other than the obvious method of ordering through family and friends, a popular strategy was to find an e-Bay seller that shipped internationally, OpSec said.

Another popular approach was the use of a forwarding company that can send Kindles internationally after receiving them from Amazon, which believed it was shipping to a U.S. address.

eBay, meanwhile, does have policies in place to address the sales of counterfeit items, but has been struggling with the charges of harboring bogus goods for some time.

In May, the online auction site won a lawsuit filed by L’Oreal in several European courts, claiming that eBay had been aiding the sales of bogus goods.

Following its court victory, eBay fired back and said that 99 percent of all items listed on its site were not suspected of being counterfeit.

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