Consumers Fall for Fakes Online, Says Brand Protection Watchdog

Press enter to search
Close search
Open Menu

Consumers Fall for Fakes Online, Says Brand Protection Watchdog

By Jordan Speer, Editor in Chief - 11/19/2012
With the 2012 holiday shopping season right around the corner, brand protection watchdog MarkMonitor released its latest study examining e-commerce and counterfeit goods. Focusing on the apparel and luxury goods segments, the MarkMonitor Shopping Report found that while looking for deals online, one in five bargain hunters in the U.S. and Europe mistakenly shopped on e-commerce sites selling counterfeit goods. Deal seekers outnumbered consumers seeking fakes at the rate of 20 to 1.

"With Cyber Monday right around the corner, consumers across all segments must be vigilant when shopping online," said Eric Solomon, senior vice president, global digital audience measurement, Nielsen.

Using its proprietary technology to examine online shopping patterns, MarkMonitor worked with Nielsen, a leading global provider of information and insights into what consumers watch and buy, to analyze anonymized data from Nielsen's permissioned online panelists in six countries over a nine-month period. Nearly five million shopping sessions were surveyed during the study period, focusing on the search terms the shoppers employed, such as "fake," "replica," "cheap" or "discount," to determine their motivation.

About one in five U.S. and European bargain hunters (e.g., those searching on terms such as cheap, discount, or outlet) landed on sites selling counterfeit rather than legitimate merchandise. Conversion rates — defined as putting something in the shopping cart — for those site visits were higher than conversion rates for visits to sites selling legitimate merchandise.

"Consumers are being waylaid by rogue e-commerce sites, causing brands to lose business. The findings from our Shopping Report underscore the importance of developing proactive brand protection strategies in the digital age," said Fredrick Felman, chief marketing officer of MarkMonitor.

Additionally, the MarkMonitor Shopping Report examined multiple demographic factors — including age, income, education levels, and household size — and found there were minimal demographic differences between online consumers who seek out counterfeit goods and those who are simply bargain hunters for legitimate goods. For example, among U.S. consumers, roughly a quarter of online shoppers for legitimate branded goods (26 percent) and those shopping for counterfeit goods (26 percent) have a four-year college degree or higher.

Some 37 percent of U.S. shoppers for legitimate goods have an annual income less than $50,000; among U.S. shoppers for counterfeit merchandise, 38 percent earn less than $50,000 annually. Among European Union countries, the percentage of consumers who earn more than €54K annually is the same for both shoppers of legitimate and counterfeit goods (17 percent.)

"These findings really challenge the common assumption that consumers who purchase counterfeit goods are distinctly different than those consumers buying genuine goods," said Solomon.

Many counterfeit goods are priced to appear as legitimate goods on sale, often discounted at 25 percent to 50 percent off the legitimate list prices, which is comparable to end-of-season or "blowout" sale prices. These plausible prices allow bargain hunters to feel they are getting a good deal on legitimate merchandise, especially when coupled with the increasing tendency for rogue sites to feature brands' recent marketing campaigns and photographs.

"As the holiday shopping season approaches, marketers are eager to maximize ROI and revenue. The unique methodology we developed with Nielsen will help brands by providing new insights into demand for their products and services," concluded Felman. "By integrating Nielsen's anonymized, permissioned-panel data with information about rogue sites and traffic, we can deliver unique perspectives on consumer shopping patterns in alternate e-commerce channels and help brands recoup the traffic and revenue that those consumers represent."

The study, conducted between July 2011 and March 2012, analyzed the relationship between online shoppers, the search terms they use and the sites that they visit when seeking apparel and luxury goods. Using anonymized panel data and keyword searches, MarkMonitor analysts scrutinized traffic to sites visited by the panelists, including 1,000 websites selling legitimate goods and 8,000 sites identified by MarkMonitor as selling counterfeit goods.

Analysts segmented consumers according to whether they visited sites selling counterfeits and also according to whether their keyword searches were bargain-related or counterfeit-related. Nielsen's permissioned panelists were drawn from France, Germany, Italy, Spain, Switzerland, the United Kingdom and the United States.

The MarkMonitor Shopping Report is available immediately for complimentary download here.