Is blockchain the key to battling counterfeit goods & improving supply chain traceability?


It seems like every day, there is a greater need for consumers to tighten the purse strings. The cost-of-living crisis combined with fears around the ongoing war in Ukraine has meant that consumers are paring back their spending and preparing for a recession. With luxury items, big or small, scratched off the shopping list.

For example, in recent weeks, we’ve seen Netflix lose almost a million subscribers, while another subscription service, Amazon Prime, has felt the need to increase prices for the first time in eight years. Clearly then, businesses looking to get consumers to spend their money on luxuries will have more of a struggle than ever before.

But with customers feeling the pinch, some will be naturally drawn to counterfeit goods. And it’s not all Prada handbags and Gucci sunglasses. Household brands like Nike, Fila and Puma all make the list. The counterfeit market is a huge one and will only grow in the face of the rising cost of living. Some estimates even suggest that a tenth of all branded goods sold could be counterfeit, while figures from the UK government show that the annual loss to the economy through counterfeiting and piracy is £9 billion per year, resulting in approximately 80,500 job losses.

When looking at the broader European picture, it’s even bleaker, with a cost to the EU estimated at €60 billion, and 434,000 job losses each year. The growth of the counterfeiting sector is on the rise, in part due to the lack of customer awareness who find it difficult to spot the difference between an authentic product and a counterfeit one, especially when shopping online.

But how can DLT help?

Through DLT like blockchain, after the authenticity of a product is verified by an expert, it is tagged with a unique identity tag. These unique tags are far less prone to basic cloning and counterfeiting security attacks, which are unfortunately becoming more common with RFID tags – and are becoming a popular option for brands looking to connect the physical and digital aspects of their global supply chains

The record of this unique tag is stored on the Distributed Ledger creating an immutable, customer-friendly, and tamper-resistant link between the physical product and its digital representation. Customers can then verify product authenticity with a standard smartphone application.

It’s hoped that brands will use this type of solution to protect their reputation and build trust with customers when buying goods. The solution perfectly complements existing efforts to combat counterfeiting. In effect, the system serves as an effective instrument to increase trust in the secondary market for a large variety of markets – from luxury handbags, apparel and footwear to pharmaceuticals, art, and memorabilia.

A light at the end of the tunnel

Despite the best efforts of regulators and brands, across a huge number of sectors, counterfeiting is becoming a billion dollar plus sector, causing thousands of people to lose their jobs.

At a time where people are suffering the worst cost-of-living crisis in a generation and cutting luxuries out of their everyday lives, the issue is being intensified as they turn to counterfeit goods.

It’s hoped that technologies – like DLT – can be used to track the entire supply chain, create a clear production history, and provide transparency and accountability, thereby helping to rebuild the waning trust between brands and consumers.