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The global fashion industry is finally recovering its footing after being hit by major disruptions emanating from the COVID pandemic of the last two years. The industry that spent decades turning design, aspiration, and high-quality goods into a $3 trillion global behemoth went for a toss when COVID came knocking.

Fashion today is one of the globe’s leading industries – be it clothing line, accessories, cosmetics, its horizons stretches far and wide. Digital innovation, rising globalisation, changes in the consumers behaviour, spending habits, the rapid shift from brick-and-mortar stores to e-commerce platforms, have been some of the key elements to propel this expansion of the industry, bringing in a host of newcomers. The industry was hit with a massive overhaul when COVID 19 hit.

According to a 2022 report by Mckinsey, the fashion industry posted a 20 per cent decline in revenues in 2019–20, as earnings before interest, taxes, and amortization (EBITA) margins declined by 3.4 percentage points to 6.8 per cent. COVID hit the fashion industry real hard, and after two years, the industry is finally recovering and springing back into action, opening new vistas for more companies and startups. As much as the pandemic affected business, it also opened up new opportunities. In the case of the fashion industry, it ushered in a paradigm shift with the industry’s mode of operation, and made digitisation a lynchpin to growth and development. This has helped catalyse the entry of more and more startups into the domain. As changing landscapes, new digital frontiers, and focus on sustainability continue to present opportunities, the fashion industry can return to growth and recover from the pandemic-related losses.

Brand cachet and corresponding product demands have aided fashion startups to rapidly expand into new territories worldwide, owing to the increasing advancements of the Internet-based sales, as well as social commerce. These new opportunities for brand growth by startups have unfortunately paved the path for counterfeiters to come in and profit from the value these new brands have created.

Rise of Counterfeiting in Fashion Start-ups

Akin to fashion, even technology is under constant evolution. In this age of the internet and social media, traditional geographic boundaries for marketing, distribution, and sales have become redundant for the world of fashion startups who are trying new and innovative ways of branding to reach out to new and bigger markets. Just like fashion startups are making the best use of digital media, so are counterfeiters out there. The fostering of a truly global economy by the advent of the digital world has allowed tech-savvy counterfeiters to strive and thrive. These counterfeiters operate in countries that have the technological infrastructure to support an e-commerce business but have little to no legal framework for protecting intellectual property rights. In the face of this, it becomes increasingly difficult for fashion startups to compete with counterfeiters and prevent the sale of fake products of their brands in the market.

Why Counterfeiting Matters to Fashion Start-ups more

Startups are usually small businesses with a limited budget. As opposed to established brands, they are relatively new and thus put in concerted effort to develop the brand, earn the trust and loyalty of customers. The presence of counterfeiters faking the products of such brands can be highly inimical to the brand image and affect it in ways more than one. Moreso, counterfeiting fashion products is a lot easier than the other industries.

Counterfeiting affects fashion startups in the following ways:

– Decrease sale of original products, which can be detrimental to enterprise survival

– The prevalence of fake product

– Difficulty in garnering customers

– Losing the trust of current customers

– Marring of brand image

At a World Trademark Review event held in New York in 2019, senior representatives from some of the world’s largest brands had assembled to brainstorm effective ways to enforce their Intellectual Property rights against the threats of counterfeiters. The group identified the following:

– High-tech tools for detecting and addressing the source of counterfeits

– A movement towards liabilities that allow the marketplace to flourish

– Strategies to combat the rising problem of rip-offs

The group further went on to even suggest options of tackling the problem like:

– Expanding the arsenal of rights to use against counterfeits and rip-offs

– Obtaining and leveraging better data from both offline and online brand enforcement platforms, and

– Sharing thoughts on returns on investment (ROI)

For startups, especially ones dealing in fashion products, counterfeiting can be the worst nightmare to exist and hence the need for strategies to protect the brand requires urgent attention. Here are some strategies fashion startups can implement to protect against the misuse and abuse of their brand.

Identifying their IP – Originality and creativity have always been the competitive advantages especially for the fashion industry. The fashion business has a wide range of IP rights. Brand, sub-brands used commonly for new collections, copyrights and design being paramount. Hence, it is pivotal to explicitly map out a plan for keeping track of IP assets that define their business significance, as well as strategize on how to safeguard and use such assets through the intellectual property (IP) system. Since most businesses build relationships with their customers based on their brand name, a clear plan for protecting brands and diverse branding elements must be established. Plans must be chalked out to protect copyright in fabric prints, weaves, and patterns, etc. Dispensing on their budget, fashion startups can seek the help of professionals to identify their IP that will make them more worthy and can also be protected as per budget.

Timely registration of designs- As mentioned earlier, fashion products are the easiest to be counterfeited. A substantial amount of time and money is spent in the creation of unique and original designs and products every season; hence the protection of these products is of utmost importance. However, most often than not, fashion start-ups are oblivious to the protection of these designs and thus it becomes easy for counterfeiters to swarm the market with copies of their designs that are sold at much cheaper rates. Timely registration remains a key element of the fashion business. The owner of a design can prevent others from exploiting its new or unique decorative or aesthetic aspects by registering it before disclosing it to anyone.

Monitoring IP Portfolio- IP audit is a crucial element in brand protection, especially for relatively new brands and startups. Such audits aid in identifying the impediments and reduce the risk of stepping over the IP rights of others. The protection of intellectual capital in the form of IP assets channels an increase in income through the sale, licensing, and commercialization of products. Thus, regular monitoring of IP helps in strengthening the brand and in identifying the IP development needs, opportunities, and risks.

Design registration despite seasonal change- Most startups in the fashion domain would argue that since their designs are applicable only for a season, they do not require protection. Fashion startups must understand that even though their designs or products are not meant to be long term, the failure to protect their intellectual property from counterfeiters and illegal manufacturers can in the long-term damage the brand’s goodwill and image in the eyes of customers. This can inadvertently lead to lost sales and loss of brand value, which for a startup is extremely crucial – the registration of all products is thus of great importance.

Technological Intervention – In this era of technological advancement, using technology to one’s aid can be one of the best practices for a fashion startup to protect itself from counterfeiters and the illegal trade of their product. And talking of technological growth, we cannot ignore the role of Artificial Intelligence (AI) which is revolutionising the world like never before. Fashion Startups need to start using AI technology to safeguard their brand. Labels, QR codes etc. are the easiest services which are accessible and can go a long way in countering counterfeiting.

Why Your Fashion Start-up Needs Cypheme

Powered by Artificial Intelligence, Cypheme has developed labels which are as unique as human fingerprints. These unique fingerprint labels can neither be copied nor reproduced, and they are some of the most affordable anti-counterfeit/brand protection products on the market, thus making it fit right into any business’ budget. The Cypheme fingerprint anti-counterfeit technology label are the only ISO 12931 qualified labels anywhere. The technology has helped in the elimination of over 10 million counterfeited products, and recovered revenues over 150 million euros for companies of various sizes. It is one of the few technologies that deomcratises the anti-counterfeit fight because anyone (including retail customers) can verify product authenticity simply with the camera of their smartphones even without having to first make a purchase.

Fashion Startups are highly susceptible to brand abuse and counterfeiting and thus need to prioritize brand protection as much as they for the marketing and sales of their products.

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