- Article
Gray Market: The Rise of Luxury Goods
The luxury gray market of authentic goods is growing fast thanks to steep discounts. It’s a lucrative practice, yet original brands don’t usually take part in the game....
We all love sales.
Whether it’s on special dates such as Valentine’s Day, Black Friday or the holiday season, we look for attractive prices. Cosmetics lovers look for discounts in stores, on websites and on social media.
You browse and see a great price, much lower than what you normally pay. The goods look so beautiful and tempting and they’re very affordable – but beware: they may be unsafe counterfeits. Or maybe you’re not a victim.
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Often consumers know they are not buying the authentic product, but choose to be “partners in crime”, knowing they will most likely not be punished for purchasing fakes.
Counterfeit products are not limited to luxury goods like handbags and watches. Fakes are also part of the makeup, cosmetics and fragrances markets. Counterfeits by MAC, Estee Lauder, Kylie Cosmetics, and other luxury brands find their way to marketplaces, websites, social media, and retail stores.
Cosmetics rank high among fake items produced worldwide. eCommerce and social media have given counterfeiters access to consumers, who are sometimes not aware that what they buy is not the real product.
Sellers can set up their own unique website where they can sell fake cosmetics and makeup without the regulations of marketplaces like AliExpress or Amazon. There they can have more detailed photographs of the product, without risking takedown by the marketplace due to copyright or trademark infringement.
In addition to websites, the online counterfeit market relies mainly on marketplaces and social media.
A large percentage of those who buy fake cosmetics do it on the big online marketplaces such as eBay, Amazon, Alibaba or AliExpress. In spite of efforts and tools, you can still find counterfeit makeup on Amazon and other marketplaces. A 2018 report by GAO, United States Government Accountability Office, found that products purchased from third-party sellers on five major marketplaces (including Amazon, Walmart and eBay) could be counterfeit.
Out of the products purchased, they found that the Urban Decay makeup items were fake. This means that consumers paid for fakes that could be harmful. According to the report, counterfeit cosmetics contain substances such as cyanide, mercury, and rat droppings.
Fakes can be found on other online platforms. Social media started as a platform for sharing, but it soon evolved to allow direct purchases. Today buyers go to social media sites where sellers openly advertise fakes. In China, sales can take place on the messaging app itself without redirecting buyers to online marketplaces, making it easier for consumers to buy fake makeup.
Counterfeiters can offer their products on social media platforms, for example by sharing links to product pages. Then, they connect and take orders and payments through private messaging networks like WeChat and sell to consumers directly.
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Unlike a fake Louis Vuitton handbag or Adidas Yeezy sneakers, once you are wearing the makeup, no one knows what you’re wearing. So if the brand and packaging are not visible anyway, why not wear safe drugstore makeup instead of fake brand name makeup?
There’s no clear answer, but it seems that for makeup lovers, packaging does matter and the name on the package has become increasingly important. This may also be partly due to social media, where you can share your new lipstick or eye shadow with others. The fact remains that fake cosmetics and fake makeup are very common, even when consumers know that the product is fake.
The fact is that many fakes are manufactured in illegal warehouses. They are manufactured with no regulation in terms of hygiene, ingredients, unsafe temperatures and other conditions. No one really wants to put heavy metals, paint thinners and other toxic chemicals on their face.
The enormous beauty market is very attractive for counterfeiters. Remember, counterfeiters are not looking to make a quality safe product that will earn them consumer satisfaction. They are looking for a product they may pass off as an authentic product for as cheaply as possible. Therefore, the possibility of experiencing an adverse reaction is very real.
According to the report by GAO, “infringement of IPR through the illegal importation and distribution of counterfeit goods harms the U.S. economy and can threaten the health and safety of U.S. consumers.” Indeed, counterfeiting presents a challenge to consumer protection as well as brand protection.
A large percentage of consumers believe in their ability to judge whether a product is genuine or not, even when presented online. This may be true for low quality fakes, but not for all. Counterfeiters are becoming better at creating fake products that look like the real ones online. This is how counterfeit makeup on Amazon is still common, in spite of Amazon’s anti-counterfeiting policy.
When the packaging and bottle look the same, it’s almost impossible to detect a fake, and when shopping online, very hard to know what’s fake and what’s real. Sellers advertise fake products as new from the brand you want and love, fake products are shipped from the US, and the sellers have high ratings.
This instills confidence and trust. This is especially true with marketplaces such as Amazon. Amazon has policies to combat counterfeits so consumers trust Amazon and are more likely to purchase counterfeit makeup on Amazon. Everything may look beautiful and trustworthy, but on the inside the products often contain substances that are not helpful and even potentially dangerous. For example, hyaluronic acid may be exchanged for rubbing alcohol, and retinol for glue.
Here are common indicators of counterfeit cosmetics and makeup:
It seems that a growing percentage of consumers are concerned about counterfeits in the cosmetics industry. It’s important that consumers realize the problems they are facing by counterfeiters. For consumers safety, consumer awareness is essential.
The question remains how many believe they can spot a fake, and how many are tempted by low prices.
Counterfeits affect brands in various ways, lost revenue being the most obvious one. But counterfeits damage brands in other ways as well.
Fakes and expired products undermine consumers’ confidence in your brand’s safety and effectiveness. In the U.S., expiration dates are not mandated on most cosmetics, although they do go bad and can even cause skin or health problems.
In addition to lost revenue, consumer trust is damaged, as well as brand reputation. About half of consumers believe it is the brand’s responsibility to remove fake items from online platforms. Customers who have bad experiences with a counterfeit product are likely to form a negative opinion about the real brand.
Brands should let their customers know that they are concerned about counterfeits and taking action to protect them. Educating customers is another way to show them you do not want them to be tricked into buying a counterfeit, together with communicating your brand’s commitment to quality and performance.
Understanding online risks, cosmetic brands should get intellectual property protection, such as registered trademarks in all regions where they market or have plans to market their products in.
IP offers a path to takedown actions and IP protection on the big online platforms as well as in courts.
Online marketing and sales of counterfeits become more and more prevalent. Understanding online channels for promoting fakes is key, but the online space is vast and ever changing.
Self-monitoring for cases of counterfeiting is both time consuming and discouraging, yet monitoring and taking proactive measures is crucial.
Wiser Market is an anti-counterfeiting agency. We have developed an advanced online system to monitor eCommerce and social media channels 24/7, in different languages and around the world. Together with our anti-counterfeiting experts, we detect, analyze and enforce takedown actions.
Wiser Market’s solution is designed to combat online counterfeiting and abuse on a large scale, while achieving an exceptionally high success rate. Wiser Market’s dedicated team protects brands online wherever protection is needed.
Is Your Brand protected? Contact us for a FREE brand review.
Is there counterfeit makeup on Amazon?
Unfortunately, in spite of Amazon’s policies and efforts, there is still counterfeit makeup on Amazon.
How to spot counterfeit makeup?
There are common indicators of counterfeit makeup and cosmetics, such as differences in packaging, unusually low prices, unauthorized retailers and more.
Why fake makeup may pose health risks?
Fake makeup and fake cosmetics may contain harmful or banned ingredients, bacteria and even feces. Dangerous ingredients are not measured by the reaction, and some very dangerous ingredients may cause no skin reaction, but will be absorbed into the body.
What kind of skin reactions are the result of counterfeit cosmetics?
Counterfeit cosmetics may result in adverse skin reactions such as infections, and counterfeit makeup is more likely to result in eye infections. Another common reaction is acne-like rash, as well as dermatitis. This happens due to harmful ingredients or wrong concentrations. Other adverse results include swollen lips and chemical burns.
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