The phenomenon of counterfeiting in the cosmetics industry is a problem which is refusing to go away; Beyond its negative impact on the bottom-line of companies in the sector, it also poses a health risk for consumers.
As at 2017, the global cosmetics industry was estimated to be worth about $523 billion, and it is projected to be valued at $805 billion by the end of year 2022, growing at a CAGR of 7% per annum. The accelerated growth in the industry has been catalysed by the online purchase options now available for consumers, thus easily connecting buyers to third party vendors at an unprecedented scale. The convenience that online shopping gives also comes with the infiltration of counterfeit makeup and cosmetic products.
The reach of counterfeiters in the cosmetics industry has been growing unabated, it is therefore important that stakeholders take the bull by the horn to quicky address the situation.
Law Enforcement Action against Counterfeited Cosmetics and Makeup
There has been a proportionate increase in the number of counterfeit-related arrests and seizures across global markets; In April 2018 alone, the Los Angeles Police Department (LAPD) seized as much as $700,000 worth of counterfeit cosmetics products in the Santee Alley fashion district. There was also an interesting cosmetics raid case by the same LAPD in January of 2020, where as much as $300,000 worth of counterfeit makeup products copying Kylie Jenner’s company, Kylie Cosmetics, were confiscated.
In China in the city of Taizhou, the Police in 2017 raided and seized fake cosmetics and makeups worth northwards of $120 million from several underground hubs. These were low to high quality fakes of prime cosmetic brands like Chanel, Christian Dior, Estée Lauder and L’Oreal.
These huge cosmetics and makeup bursts go to show how much revenue companies are losing to counterfeiters and thus the need to speed up the implementation of effective anti-counterfeit measures. Beyond the monetary factor, there are also acute health implications for consumers due to the highly toxic chemical components of these fake products. Unsuspecting users of these fake makeups and cosmetics have reported skin burns and rashes among other related skin complications.
Effects of Counterfeits on the Makeup and Cosmetics Industry
Despite what appears to be an increase in seizures of fake cosmetics and makeup products by law enforcers, counterfeiting in the industry continues to grow at a much faster pace. According to the Organization for Economic Cooperation (OECD), between 2013 and 2016, trade in fake makeup products was estimated to be worth $5.4 billion; This is a trend that has been growing year-on-year unabated.
For consumers, the use of counterfeit makeup and cosmetics can have deadly health implications. Investigations by the United States’ Federal Bureau of Investigations (FBI) have revealed that fake cosmetic products contain known carcinogenic substances like arsenic, beryllium, and cadmium. Many of these fake products also contain highly toxic elements like lead and mercury. Consequently, the U.S. Food and Drugs Administration received as much as 12,000 complaints of adverse effects of cosmetics use by consumers between January 2018 and March 2020.
In addition to the afore-mentioned detrimental effects of counterfeits on the cosmetics industry, there is also the issue of the negative impact this has on the reputation of brands because of the supply of inferior goods. This usually leads to significant reductions in company revenues because of the diversion of potential customers from buying the products directly from the original brand and authorized resellers. According to data from Statista, the makeup and cosmetics industry lost as much as $5.5 billion to counterfeiters in 2020 alone.
Detecting Fake Makeup and Cosmetics
When trying to figure out if a product is a counterfeit or original, there are number of quick factors that can serve as pointers:The Packaging – Fakes more often than not show subtle variations from the genuine product with respect to the lettering (in terms of font types, letter spacing differences and even sometimes presence of spelling mistakes) and colouring (most times, they come with off-colour packages).
Pricing – Look out for products that are significantly priced below the going market rates of the original product. Most times, counterfeiters price their goods very low so as to bait buyers.
Product Quality – Counterfeited cosmetics product usually have low consistency or off-texture when compared with the original products.
Unauthorized Sale Points – Counterfeit cosmetics and makeups are mostly found in shops owned and run by unauthorized retailers, and some online marketplaces. Buyers would need to go the extra mile to ascertain the authenticity of the seller so as not to fall victim to the makeup counterfeit syndicate.
Using Technology to Stop Counterfeit Products
Some counterfeit cosmetics can be easily detected by the human eye, and as such can be avoided by buyers. However, some counterfeiters have mastered the art of “the counterfeit” so much that their products look and feel almost as exact as the original, and it becomes almost impossible to detect with the human eye. This is a reason why more advanced and efficient measures need to be deployed to combat the menace.
Advancement in technology has made it possible for cosmetics and makeup manufacturers to employ the use of technology to weed out fake products and reclaim their market share. The use of QR codes, RFID, labels, hologram or holographic stickers and others is increasingly becoming the norm; the majority of these solutions however have inherent drawbacks which makes their effectiveness in the counterfeit fight limited. On the other hand, Artificial Intelligence (AI) backed anti-counterfeit tech like those created by Cypheme provides an even more potent solution to the counterfeiting menace. One of the company’s flagship products, Noise Print, is a fingerprint label which helps buyers to detect the genuineness of a product within seconds just by simply taking a picture with the camera of their smart phones. With this, manufacturers of cosmetics and makeup products are able to recover lost market share and revenue, and even go on to locate points across the globe where counterfeits of their products are being manufactured and sold.