The world of luxury counterfeits just a click away

I have a soft corner for watches and I had apparently almost twisted the arm of my former boss Mr Sanjiv Goenka, Chairman of RP-SG group, to see his brand new Breguet (It is a story that he loves to narrate). Mr Goenka knows I am crazy for watches so he is sweet enough to forgive me and let me indulge, even with his IWC. Similarly, Mr TV Narendran , MD, India and SE Asia, Tata Steel, very kindly also lets me admire his black Chopard while I narrate to him the details of the making. However, I broke the heart of a close friend with this habit. 

Very recently, a close friend of mine was sporting a Rolex day date white gold. I did the same thing with her and to my shock realised it was a fake. It was lighter than even my steel Rolex, the identification number was missing, among other details. She very confidently told me it isnt as there was a certification of authenticity given by the company and the portal that she bought it from. The price she had shelled out was a fraction of the original price, but significantly more than of a first copy. The news that she has been duped by an e-commerce firm broke her heart. 

On Facebook you might encounter a page where they are selling luxury products at a tempting discount all round the year. The product ranges from shoes to watches to handbags of the luxury brands like Rolex, Louis Vuitton, Gucci, Mont Blanc and what have you. Tempting! So I decided to check them out and to my dismay found they were counterfeits. And some were not even on the catalogues. But to an untrained eye, it will lure you and you will fall in its trap just like my friend. I was happy when I came to know that LV and Mont Blanc have noticed as well and have filed a lawsuit against Chandigarh-based ecommerce firm Digaaz in Delhi High Court.

The counterfeit market statistics
Let me give you a sense of the size of the market with some statistics. Growing at a compounded annual growth rate of almost 40-45 per cent, the counterfeit luxury products market in India is likely to more than double to Rs 5,600 crore from the current level of about Rs 2,500 crore. 

A reason why the fakes luxury market is growing at such a fast pace is the advent of e-commerce platforms selling them at lucrative prices. An Assocham report says that the web shopping portals account for over 25 per cent of the fake luxury goods market in India. For instance, first copies of these premium brands are easily available on c2coffer.com, an online portal, within a week of official launch of the original collection. Even other platforms like Quikr and OLX offer replicas. While Quikr has a replica Hermes belt for Rs 350, Watchlo.com or the Facebook page watchmaniaforyou stocks first copies of around 20 brands, including TAG Heuer, Omega, Rado, Patek Phillipe, Chopard and Bvlgari. These are just a few of the numerous options from which you may choose from and all from the comfort of your home with a doorstep delivery and cash on delivery provision.

The size of counterfeit luxury industry in India is currently about five per cent of the overall market size of Indias luxury industry which currently is worth over $8 billion. With a share of about seven per cent, fake luxury products account for over $22 billion of the global luxury industry worth about $320 billion.

Luxury counterfeits are not a new phenomenon, but with technological advances and sophisticated new ways to reach consumers, the business is increasing rapidly. 

In the past, luxury counterfeits were often shipped in large cargo containers and passed through numerous middlemen before reaching consumers on the streets. Now counterfeit sellers set up online presences on auction or marketplace sites and ship luxury counterfeits directly to consumers. They also use the Internet and social media tools to generate web traffic and to divert consumers to rogue e-commerce websites selling their goods which often have the same look and feel as the brand owners site. Compared to the purchase of a fake handbag on the street, the purchase of a bag online makes it harder for a consumer to tell whether the product is genuine. An online ad for a Gucci bag could show a photo of a genuine Gucci bag, but the purchaser would actually receive a fake one. The counterfeit seller may create pseudo product reviews, blog entries and rogue social media profiles to enhance its legitimacy. Susceptible consumers may fall for this fake content. 

According to a report by Anna Maria Lagerqvist and Hanna Bruck in Valea International, in 2009 Eurobarometer statistics, 22% of EU citizens have unknowingly bought counterfeit goods. As shopping online is considered entirely legitimate, online counterfeit products may attract consumers who would never purchase a Louis Vuitton handbag in a dark alley. The Internet creates a situation where the marketplaces for counterfeit products and for the genuine article are suddenly the same.

Further, online shops give the buyer a sense of anonymity and impunity. Given the seemingly boundless scope of the Internet, luxury brand owners come across anonymous online counterfeit sellers every day.

Over 80% of the imitation luxury products being sold in India comes from China, says D S Rawat, Secretary General of Assocham in the report, adding, Most of these comprise of handbags, watches, shoes, clothes, hats, sunglasses, perfumes and jewellery.
According to a 2012 report on the luxury retail market by Cognizant, brands such as Kate Spade and LV typically hire private investigators to find where counterfeits are sold. On the other hand, Indian stores like Kitsch, offering high-end labels inform the head offices of brands when they come to know about an individual or a store selling copies.

Quality difference among fakes
There is a world of difference between replica, first copy and fake. There are huge qualitative differences between counterfeits. In my recent visit to Bangkok, I was exploring the counterfeit market. The two brands that dominate the world of replicas are Rolex and LV.
Take for example a Rolex watch. I was checking out a Rolex all gold Day Date counterfeit across quality standards. The difference in prices between a first copy and a fake is 75%. The first copy was heavier, the steel quality was superior, the plating was much neat and there was even an identification number! While the fakes even had models that never made it to the catalogues of Rolex, the first copies were sold with the original catalogue by their side. Very impressive indeed.

Similarly, was with the replicas of LV. Even to a trained eye the monogram or damier ebene will be hard to decipher. 

On the online platform however, the fakes dominate. The first copies and replicas (in the true sense) cant make a mark as on the online platform, no customer will be ready to give the premium. While a Rolex fake may be available at Rs 5,999, a first copy will cost at least double that, for difference that are not visible to untrained eyes, especially while comparing online.

In defence of counterfeits 
Sometimes I tend to question whether these brands have a legitimate justification for charging such a prohibitive premium for their brands. 

A few counterfeit watch dealers have showed me copies of complicated watches and how their watchmen were able to replicate to the very details of the original. The cost of their labour? Well, just a fraction of the cost of the labour of a legitimate watchmaker with a luxury brand. When I see the detailing my heart goes out to them, but not to the dealers. 

The counterfeit market is eating into not only the pie of the luxury brands but also into pie of the premium brands. Say if someone can afford a Tissot and aspires to wear an Omega Seamaster, gets a Rolex first copy at Rs 5999 online. Tissot and Omega both lost in the battle, for no fault of theirs.

From the buyers perspective, understand this, the difference between the cost of making a Gucci or LV handbag and the MRP is significant and that is the brand value. The buyer is getting a cheap quality leather handbag but along with that perceived brand quotient in a fake at an affordable price and at their door steps.

It is just a click away.  

To conclude, let me quote the bard: A fake is a fake is a fake is a fake. 

Let your quest for luxury continue. 
http://retail.economictimes.indiatimes.com/re-tales/The-world-of-luxury-counterfeits-just-a-click-away/184