B2B and the Rise of Online Counterfeits

When we think about online counterfeits, we usually think about B2C businesses. But what about business-to-business? Businesses buy a stunning variety of products and services. Some industries still rely on off-line sales, with a contact person and close relationships.

But the world is changing.

Why B2B eCommerce?

eCommerce is growing, and so is the B2B eCommerce segment.

eCommerce includes different types of electronic sales channels: marketplaces, eCommerce websites, social media networks, online B2B exchanges, e-procurement systems and other networks.

As businesses turn to eCommerce, online marketplaces can scale easily and offer even more choices and better prices. The growth in online B2B has been a part of global technological and consumer shift towards online trade.

And then came COVID-19.

 

The effect of COVID-19 on B2B counterfeits

With the global pandemic, eCommerce became even more appealing and useful for manufacturers, wholesalers, distributors, and buyers.

Why businesses find eCommerce appealing is clear. eCommerce enables sellers to reach many new buyers around the world, and it gives buyers many choices, the ability to manage their information needs, and easier comparison options.

Today, most business-to-business buyers prefer to purchase online. Buyers look for an intuitive and friendly platform in which they feel more like they do in their B2C experiences, with the addition of useful business analytics tools. They can find it in different online channels that provide solutions to this need.

Counterfeiters use the same platforms and marketing tools as legitimate businesses: paid search ads, search engine optimization, emails, branded terms, and even social media. Counterfeiters in the B2B segment may imitate your legitimate brand, or they may be free-riding on your intellectual property rights.

Savvy counterfeiters have a competitive advantage because they do not incur R&D costs, do not adhere to regulations, and have no quality standards and brand-building expenses.

 

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Business needs

In business-to-business transactions, buyers procure products and services that go into two main categories: business manufacturing or business maintenance, repair, and operations (MRO).

MROs are more general items: paper, computers, printer toner cartridges, accounting services, and more. Businesses usually buy MROs from suppliers that serve businesses in almost every industry.

Products that go into manufacturing, on the other hand, are more industry-specific and require more specialized knowledge, logistics, and fulfillment. Chemical companies, for example, cannot send most of their raw materials with regular carriers. So the companies sold directly to customers or used B2B industrial distributors only now B2B eCommerce marketplaces offer to fulfill orders, often using third parties.

When a business needs to buy certain products (such as raw materials) or services (such as cleaning), they often negotiate contracts and develop a long term relationship with the provider. Even so, a variety of counterfeited raw materials is available for sale, in addition to fake products. When such transactions take place through online commodity exchanges, such as oil and gas, purchase decisions are based on price and B2B is not personal anymore.

For other needs, such as printer cartridge toners or office desks, eCommerce is highly convenient. Businesses most likely view such deals as purchases that do not inherently require a relationship with the seller. In these cases, they are likely to buy without even meeting the business they buy from or its sales representative.

Marketplaces and Amazon Business

SAP Ariba, for example, helps buyers and suppliers collaborate, control, and simplify their sales and procurement processes. There are also industry-specific websites such as PlasticsNet: digital marketplace for the plastics industry, or broader chemical industry marketplaces such as buyersguidechem.com, lookchem.com, and globalchemmade.com.

Amazon Business is Amazon’s B2B eCommerce marketplace. It offers businesses access to a network of suppliers. Amazon’s broad selection comes with easy ordering and value. Amazon Business Prime offers even more features and benefits. Businesses across industries can enjoy the variety, compare sellers and prices, and then manage payment, shipping, reporting, and more.

Using Amazon Business for purchases like office supplies is very convenient, especially for the percent of business supplies that are not planned and negotiated with your long-term B2B suppliers. The service also allows bulk pricing for sales to businesses that need greater quantities of a product.

However, counterfeiters also have listings on Amazon. They take advantage of the broad selection on the marketplace to offer their products next to legitimate brands, or even on the same listing.

B2B counterfeits

Ultimately, there is a continuous trend of moving online. In many ways, B2B companies suffer from the same challenges as B2C companies when it comes to fighting counterfeits. And much like B2C, B2B counterfeits do not only belong to the physical world, such as raw materials, they are also part of digital B2B, such as pirated software.

The ease of selling inferior quality counterfeits online is evident in B2B transactions. Online, it is easier for counterfeiters to make their products look like the real thing and feel legitimate.

The agrochemical industry is a good example. This industry, which includes products like pesticides, is a target for counterfeiters. Not only can counterfeits be of substandard quality, but they can also be contaminated or expired products.

Counterfeit agrochemicals of legitimate brands are a threat to the genuine brand, and they may also be a threat to farmers, consumers, and the environment. Automotive parts are also known to have a counterfeit problem. Automotive counterfeits can be airbags, brake pads, wheels, and any other automotive part. Every counterfeit is potentially dangerous, as you can see in a video by the Automotive Anti-Counterfeit Council: https://a2c2.com/counterfeit-testing-video.

The effects of counterfeits on B2B

It may not seem that B2B is badly affected by counterfeits, but the scale of B2B counterfeits is staggering due to the sheer scale of the B2B segment.

The sale of fakes amounts to lost revenue. Not only the bottom line suffers from B2B counterfeits, but there are additional damages. Counterfeits can also cause market dilution, which happens when genuine products and counterfeits compete on the buyer.

The availability of counterfeits creates increased supply compared to demand, damaging the value of your products, and driving prices down. Also, clients’ trust may suffer as well.

The damage is even more likely when buyers do not realize that they are buying counterfeit products and remember the consequences of these lower quality products, such as a machine breakdown, or a faulty charger. They may connect your company with the quality issue and approach your brand for compensation.

Taking down B2B Counterfeits

No manufacturer and no industry are immune to having their products counterfeited.

B2B companies may still have a perception that counterfeits do not affect them due to their personal connection with buyers. But B2B does not always mean that buyers care about who they are buying from, or even that they are buying the original.

Technological advances, globalization, and challenges like COVID-19 promote online commerce. Wholesale marketplaces are used in B2B, connecting businesses with products that are easy to compare before deciding on the purchase. Counterfeiters, on their end, are savvy and understand how eCommerce makes it easier for them to sell their illicit materials, products, and services.

As a leading online brand protection agency, Wiser Market offers a 360° automatic solution, protecting your B2B business from IP infringements and combating online counterfeits.

Combining innovative technology, advanced tools, actionable data and expert analysis, our eCommerce experts provide customized services that optimize our clients’ online presence across all channels.

 

Is Your Brand protected? Contact us for a FREE brand review:

 

 

FAQ

Do counterfeits affect B2B?
Yes, in the current economy, counterfeits affect B2B as well as B2C.

What can B2B companies do to fight counterfeits?

1. Register your company name and your company logo as trademarks to build your brand and protect it. Consider a unique name that may not be descriptive (Apple vs. Best eCommerce Solutions).

2. Be aware of the effect of counterfeits on your B2B brand and work to eliminate it.

3. Educate your buyers and create awareness regarding counterfeits.

4. Use the professional services of an online brand protection agency like Wiser Market.

What do B2B customers look for?

B2B customers invest in resources, inventory, or services for the business, and they are looking for value for their money. Most business spending is planned, and buyers often look to compare and make an informed decision.