The rise of ecommerce and social media as an affordable medium to market and sell products has led to the enormous growth for the cosmetics industry. According to a report, the global cosmetics industry was valued at around USD 532 billion in 2017, and it is expected to reach approximately USD 863 billion in 2024; growing above 7% CAGP between 2018 and 2024. 

With an increasingly profitable of cosmetics market comes the vices and activities of counterfeiters who want a share of the pie. Counterfeiting in the cosmetics industry is at an all-time high; according to a report from the Organization for Economic Cooperation and Development (OECD), the cosmetics industry loses more money to counterfeit products each year than any other industry – the annual loss attributable to cosmetic counterfeits is estimated to be about $5.4 billion. 

The Changing Phase of Product Marketing

The bulk of marketing moving from TV and radio commercials, and billboards to Facebook, Instagram and YouTube also plays an important role. According to a 2018 research, social media contributes to over 50% of counterfeit cosmetic sales. It is easier than ever for an Instagrammer with few hundred thousand followers to sell L’Oreal replicas at a discount. 

While large cosmetics corporation have enormous sales figures for counterfeits to make a dent, smaller upcoming brands are at a larger risk. Kylie Cosmetics is a small cosmetics house endorsed by Kylie Jenner, mostly to her vast following of two hundred million on Instagram. Between April 2018 and January 2020, the Los Angeles Police Department (LAPD) confiscated replicas of Kylie Cosmetics’ make-up line worth $1 million. An amount approaching the celeb-endorsed brand’s annual revenue. 

Counterfeiting Affects all Cosmetics Brands

Despite the best efforts of governments and independent bodies, counterfeits are the sad reality of cosmetics industry that affects brands on every side of the spectrum. 

Counterfeit cosmetics of premium brands like Chanel, Christian Dior, L’Oreal SA’s Lancome, and Estée Lauder making it to unregulated markets of major cities is no longer news. Nowadays, it is common to come across Instagram accounts attempting to sell fake goods of these fashion brands as genuine products. 

When the Local Government Association in London confiscated replicas carrying MAC, Chanel, and Benefit labels, the concerns were beyond trade losses. Since counterfeits are not subject to quality testing unlike the actual products, carcinogenic and poisonous compounds are common ingredients found in them. 

Weeding out counterfeiting in the cosmetics industry will take concentrated efforts of cosmetics brands, customers, and platforms that facilitate their interaction – In all of these, technology will have to take centre-stage.  

The Role of Brands in Preventing Counterfeiting of their Products

In the battle of keeping counterfeiters out of their business share, brands are on the losing side, the counterfeiters are getting smarter than the original brands owners; they are making use of latest technologies to keep their imitation business sustainable. 

On the other hand, it appears as though the real brand owners trying to protect their interests are not so keen on technology to mitigate their counterfeiting nemesis. They mostly believe that online marketplaces and retailers will do that for them. If online marketplaces cannot protect their own line of products from being hijacked by dubious sellers, they certainly cannot yours. Counterfeits or not, marketplaces and retailers receive commission for every product they sell, thus they have little to no motivation to exclude counterfeit products from selling counterfeits on their platforms. As such, the buck primarily stops with the brand owners to protect their own interests from counterfeiters. This fight against counterfeiters goes beyond salvaging products, it is also a fight for customers and their loyalty to your brand. 

The Current state of Anti-counterfeit Technology

A piece of technology that allows customers to verify the authenticity of a product would be appreciated by customers and brands alike. A brand may put a unique identifier on each product it is shipping, the enables a buyer to independently verify the identifier over a web portal or mobile app to tell the real ones from fakes. It could be an NFC tag or QR encoded with information that a digital device can read. 

The problem arises when a shrewd counterfeiter is successful in copying your NFC tags and QR codes, leaving your customers no way to know that they are buying a fake product with your branding, and that those counterfeits of your products are in circulation.  

Any highschooler can copy NFC tags and QR codes with utmost precision, let alone an accomplished counterfeiter. The technology is supposed to depreciate counterfeiting of your products, not the other way around. 

Indeed, brands need a more approachable and efficient anti-counterfeit tech than these obsolete pieces of technology provide. Something that not only makes it difficult for counterfeiters to grab a piece of your market share, but also makes copying the anti-counterfeiting technology an absolute nightmare. 

Cypheme’s Artificial Intelligence (AI) backed Anti-counterfeit Tech

To counter this, Cypheme employs the use of Artificial Intelligence (AI) backed anti-counterfeit technology as a more effective solution to the counterfeiting problem facing the cosmetics industry. Cypheme’s flagship anti-counterfeit product, Noise Print is at the center of brands’ efforts to nip the counterfeiting menace in the bud.

Cypheme Fingerprint AI Label

A fingerprint label, Noise Print does not rely on inconvenient technologies like NFC or QR codes to work. It makes use of an advanced anti-counterfeit algorithm which takes these parameters into account: 

Parameter  Description Benefit 
Unique Signature Each Noise Print label is infused with a special ink such that a ‘Unique Chemical Signature’ which can be related to a fingerprint is created. All unique signatures are then backed up in a secure cloud as an added layer of security. This property ensures that Noise Print labels do not get to be successfully copied or reproduced by counterfeiters. 
Tag Addition A sophisticated tag is added to the packaging of products that makes use of Cypheme’s Noise Print. It serves as a visible guardian of authenticity.  
Tag Size Noise Print AI labels or tags are generally small (12mm). Small tag size helps manufacturers to save cost even as they make use of a very secure solution to protect their product and brands. 
Colour Recognition An orange coloured circle is placed around the sticker to make it recognizable. It gives the consumer some amount of confidence in the goods they are purchasing, thereby increasing a product’s brand value. 

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