Luxury goods manufacturers have long agonized over the profits and prestige lost to counterfeiting and gray market distribution of the brands they pump so much money into building. Although no one is talking too freely about it, radio frequency identification technology may be the next new weapon for tackling this bad boy.
Openly discussing anticounterfeiting strategies and technology is akin to thumbing one’s nose at computer hackers: Call attention to yourself and you’re a bigger target than before. However, several companies are quietly testing RFID to determine how it might be deployed to protect their brands.
“We are very interested in it,” said an executive at a major high-end brand empire, who spoke on condition of anonymity. He said his company is considering RFID, along with other technologies, to determine its potential role in fighting counterfeiting and unauthorized distribution of goods. He did caution, however, that RFID testing is in its very early stages today. “I think there will be a lot more news in six months’ time. When you work with technology, it is almost like building contractors: It always takes longer than you think.”
Genuine, branded merchandise tagged with RFID chips, which contain an antenna and unique serial number, can be authenticated at various stages of the legitimate supply chain. Counterfeit and diverted product, lacking such a tag, would be flagged, the source identified and the culprit cut off.
Goldwin Sportswear tested RFID for that very purpose a few years ago and successfully shut down a gray market channel, said Raghu Das, business development director for IDTechEx, a U.K. company that provides consulting services on the topic. The yearlong test involved a half-million RFID tags from Texas Instruments, sewn into apparel manufactured in China destined to be sold in Italy.
Test results suggested a 12-month return on investment. “The downside is they never went further with it,” Das said of Goldwin’s RFID test in 2001. A lack of technical standards, rather than prohibitive costs, may have stalled larger-scale deployment at that time. Those standard issues are being addressed by EPCglobal, an industry group, which could encourage more RFID testing to combat counterfeiting and gray market distribution.
Related Articles
You May Also Like
“Counterfeiting is at a whole new level now. The quality of counterfeit [goods] is unbelievable these days,” said Jeffrey Unger, chief executive officer of GenuOne, which provides product tracking and authentication solutions. A supply chain that is increasingly complex, and outsourced, is more vulnerable than ever, he said. “Now the supply chain is all over the world. By sheer nature of this fluidity, you are seeing a very porous supply chain in need of protection.”
According to a Gallup poll conducted in January, 13 percent of Americans have purchased counterfeit products, and 53 percent of those were aware their purchases were counterfeit.