How Traceability Data Combined with Serialization Can Enable Product Authentication, Anti-Counterfeiting & Gray Market Prevention
The issue of counterfeiting and spread of gray market channels today cannot be downplayed. In fact, the struggles of brands combating counterfeiters have only increased in recent times and it continues to be a problem not just impacting revenue but also causing irreparable damage to trust between the consumer and the brand.
Technology around anti-counterfeit measures and product authentication has evolved significantly too over the past few years with various solution providers offering innovative solutions, smart packaging, watermarks, holograms, special ink markers and technology based options for brands to take the fight to counterfeiters. Each of these approaches have their pros and cons and there isn’t a perfect one size fits all answer which addresses every type of product at a perfect price point.
One of the most robust product authentication technologies we have encountered at Qliktag revolves around the use of highly specialized NFC Tags like the NXP 424 DNA NFC Tags and HID Global Trusted NFC Tag which generate a random unique key each time they are tapped with a smartphone much like banking FOBs or “One Time Passwords” or OTPs. When combined with serialization and registration of these tags within a platform like the Qliktag Platform, it enables an unbreakable, robust method for authenticating a product which is near impossible to replicate by counterfeiters. However, there is a cost to the tags which needs to be absorbed into the cost of the product and although it maybe tens of cents per item, for many product categories where the margins are razor thin, that additional cost may still be prohibitive. It may be the right solution for luxury items, cosmetics, pharmaceuticals, consumer durables and higher margin products but not for food and beverage, fresh produce and lower price / lower margin products.
In comparison, the marginal cost of printing QR codes is negligible but QR codes (essentially encoded with a web link or identifier) on their own don’t offer much in terms of anti-counterfeiting and they’re very easy for counterfeiters to replicate.
That said, serialization of item combined with traceability data, supply chain information and being able to deliver that level of information to the consumer at the exact point of consideration / sale via a serialized QR code on the packaging CAN enable consumers with an effective way to authenticate a product and avoid counterfeit or gray market items.
Most brands have access to information on their supply chain internally and know what points their products traverse through to get to the consumer. They also know the authorized retailers, channel partners and retail locations through which their product is sold. Through a platform like the Qliktag Platform, that information can be recorded against or digitally carried with a batch, pallet, shipment or individual serial item and made available to the consumer on pack via a serialized QR code. The consumer can then look at that information, learn where the brand intended that particular item to be sold and which authorized retail location it was intended for. They can compare it against where they have found the product and then make an informed decision to either purchase knowing it’s in the right place or suspect it as a counterfeit or being resold through an unauthorized channel.
For example, if I picked up a pair of shoes in Walmart in Bellevue, Washington State and could confirm from the brand this specific pair of shoes was authorized for sale through Walmart in Bellevue, then I can trust it came from the brand and is most likely genuine. If I purchased a pair of shoes from Amazon and learned it was intended for sale in Ecco Footwear Store, Hoan Kiem, Hanoi, Vietnam, then as a consumer, I know this pair of shoes is outside the brand authorized channel and is either gray market or counterfeit.
Within the Qliktag Platform you can go a few steps further and enable the interaction to gather data about the location of the scan, prompt the consumer to report suspected counterfeit, trigger notifications on certain events and more. However, the key is combining traceability data, brand authorized retail location data and making this information accessible to the consumer on pack via serialized QR codes can be effective.
The QR codes can still be replicated by a counterfeiter but they would have to then copy every single serialized QR code (which could be millions) and also know where every specific individual pack is destined for. This is highly unlikely and creates a level of difficulty challenging for counterfeiters to replicate. The target location can be updated in the system dynamically soon after manufacturing or they can be updated dynamically through a traceability log as the item moves through scan points through the authorized supply chain network when the final authorized sale point is known and updated against that item.
While counterfeiting remains a massive challenge for brands globally, as the technology push around serialization, item traceability and supply chain information systems continues to gain momentum, it offers the means for brands and consumers to unite in the battle against counterfeits and gray market players.
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