(Editor’s note: This story is part one of a two-part series looking at counterfeit products. The second story, which will be posted March 1, will focus on the legal side of things.)
Thinking about buying a high-quality down jacket? Think again. It could be filled with duckbills, goosefeet or any other scrap found on the floor.
At least that’s what Canada Goose discovered when testing a handful of shoddy counterfeit products bearing the company’s logo.
“It’s become a huge issue for us,” says Kevin Spreekmeester, Canada Goose’s vice president of global marketing.
And it’s not just Canada Goose being ripped off. According to a government study, $135 billion worth of counterfeit products were sold worldwide via the Internet. The study found that in 2007, the U.S. economy lost $58 billion due to product counterfeiting.
The bumpy ride may have just started.
“The outdoor industry is really just starting to see this change,” Spreekmeester says.
He and Ce-Ce Plunkett, Spyder Active Sports‘ human relations director, say counterfeiting has gotten worse since fall.
With the recession, people were looking for deals and turned to the Internet to find them. And many consumers didn’t know or didn’t care whether they bought legit products.
One of the biggest problems manufacturers face is that when they have one phony website shut down, another pops up in its place.
“It’s just a matter of constantly being diligent,” says Laura Wisner, Spyder’s marketing director.
The outwear company recently secured the right to shut down counterfeiters and seize inventories in China instead of just going after websites that sell the look-alikes. And about 77 percent of seized counterfeit products are made in China, the company says.
That’s no surprise considering many manufacturers, including Spyder, manufacture the real thing in China. At least for Spyder, there’s reportedly no correlation.
“Our internal sources say it’s not our factories,” Wisner says. “It’s difficult to say where it’s coming from.”
Fortunately, or unfortunately, Spyder and Canada Goose aren’t alone in the fight. To help bring manufacturers together and share best practices, the Outdoor Industry Association is organizing an advisory council comprised of about a dozen brands.
Alex Boian, the Outdoor Industry Association‘s trade policy director, says the advisory council will consist of brands in all outdoor markets and will ultimately help the OIA lobby lawmakers.
While the OIA hasn’t endorsed anything, Boian anticipates some sort of legislation to be in front of decision makers “soon.” Already, on Feb. 8, the Senate Judiciary Committee met on the topic.
“Counterfeiting is such a massive problem,” Boian says.
But the outdoor industry isn’t alone. Rolex, for one, is no rookie at this game.
“Rolex watches first began to be counterfeited sometime in the early 1980s,” says Brian Brokate, a partner with New York-based Gibney, Anthony and Flaherty that handles Rolex’s counterfeit issues.
Brokate says things have changed with the dawn of the Internet.
Gone are the days of launching an investigation, going to a store, buying counterfeit products and then, hopefully, shutting them down. Now, companies must find the phony goods, ID them and have them taken down within 24 hours.
Counterfeiting is a double-edged sword: The bigger the company and the better it’s doing, the more it’ll be targeted.
“I think companies are going to have to deal with it in one form or another for as long as their brand is very popular,” Brokate says. “If their product can be duplicated … in terms of appearance, and they have a strong demand … they’re likely to be victims of counterfeiting.”
How can companies protect themselves? “The advice that I would give is that they have to get an early start. They can’t let the problem build and then try to attack it,” Brokate says.
Factoring in time and money associated with fighting counterfeiting, weakened brand reputation, lost customers who thought they had a legit product, and anything else, it’s hard for companies to gauge how much money each loses from counterfeit products.
Brokate says companies should be prepared to spend quite a bit though – the attorneys aren’t cheap.
“The amount of money you’ll have to spend up front is going to seem mindboggling,” he says.
As for the time commitment, at Spyder, Plunkett spends about an hour per day dealing with counterfeiting. And at Canada Goose, Spreekmeester spends about 20 percent of his week.
While larger companies may have more resources to help fight the problem, Boian says the OIA is a good place to start for any business. And Brokate says companies should band together and share best practices to avoid reinventing the wheel.