How Much Money Is Makeup Companies Loosing Each Year From Counterfeit Makeup

The cosmetics manufacture is under attack daily from counterfeiters selling fake products in lookalike containers. Unfortunately, the contents of these imitation products can be far from the original. And the dangers are real, from the loss of brand investment to the run a risk of the counterfeit production that could cause impairment to the consumer.

The cosmetics manufacture worldwide was almost $380.2 billion dollars in 2019 and is expected to grow to $463.5 billion by 2024. In the US, the industry reached about $90 billion dollars in 2020 and is expected to grow nearly vii% a year for the next v years.

The counterfeit marketplace in the US for fake cosmetics is about $75 million dollars, or roughly virtually 8% of total sales.

What does this mean? Counterfeit products crusade a directly loss of revenue for cosmetics companies. As a result, jobs are lost across the manufacture, and there is less upper-case letter available to reinvest in new products for the future. If whatsoever legal action is necessary, additional fiscal investment is required.

Analysis past the Federal Bureau of Investigation (FBI) found bacteria, animal waste material, human waste, as well equally very unsafe chemicals in these products—testing positive for lead, mercury, arsenic, E. coli, and more than. According to research from Clarkston Consulting, if these chancy chemicals aren't enough to scare away deal-hungry consumers, the conditions in which most of these products are manufactured are alarming. Information technology is difficult to believe an informed consumer would voluntarily put these "ingredients" on their body. Numerous accounts particular coveted cosmetic products (that are later establish to be counterfeit) accept sealed close consumers' optics, acquired chemical burns and, at times, caused permanent damage.

Knock-off cosmetics can exist so harmful that the FDA has a website specifically for reporting a "cosmetic related complaint." This website includes everything from tattoos and shaving products to makeup and perfumes. In an FDA study, it is noted that over 12,000 complaints were filed from January 2018 to March 2020. The complaints range from pocket-sized burns to permanent scarring.

With the increase in e-commerce sales, the opportunities for counterfeiting have increased proportionally. According to contempo information from Statista information, e-commerce sales will account for 8.6% of all cosmetics sales by 2024.

Social media plays a massive role in cosmetic sales. Influencers overflowing Instagram, TikTok, and YouTube with makeup advice and tutorials. With all this beauty knowledge easily available online, consumers find information technology unnecessary to visit brick and mortar stores for the personal communication they may accept relied on in the past. When everyone shopped in stores, any negative impressions could be easily handled in face-to-face discussions.

Unfortunately, social media also has a dark side for brands. Since "news" travels faster than it always did, bad product reviews are readily available for consumers to read on the web. So, how do you protect your make?

The world is changing rapidly. As a brand owner, getting in front end of, and staying alee of, positive and negative brand reviews is essential. This is especially pertinent with the rise of counterfeit cosmetics. Therefore, smart labeling technology is now more disquisitional than ever.

The least expensive and nearly effective way to help prevent counterfeiting is labeling. A serialized bar lawmaking following GS1 standards can be assigned to a specific product, which can exist traced throughout the supply chain. Since all products are labeled, calculation an intelligent labeling solution to the existing characterization tin forestall counterfeiting. However, the most effective labeling technologies are multi-faceted and are exceedingly difficult to replicate. Smart labeling combines overt/covert technology into the packet decoration.

Overt engineering science may be a hologram or a bones tamper-axiomatic label that is often used as a box seal. Covert technology may be a hologram with a hidden message, micro-text in the label, or an RFID flake. These methods require a job force and additional equipment to read and understand the messaging.

Consumers make up the virtually powerful enforcement squad. With today'due south mobile engineering, an App on the telephone volition enable the consumer and the make owner to be more than proactive and assistance police apocryphal products. Side by side-generation labeling combines overt and covert engineering into the label in such a way that the characterization is well-nigh impossible to counterfeit. With intelligent next-generation labeling, consumers tin can use their mobile device to scan the characterization's unique serialized barcode, which reveals subconscious information that is analyzed and validated to determine the product's authenticity. Inside an instant, a consumer volition know whether the product is false.

By using smart labeling technology, cosmetic brand owners can react speedily and proactively identify counterfeit products and gain marketplace information for future sales when combined with a dashboard. When a beauty product is scanned, its location is identified and stored in the deject. Brand managers tin leverage this information to build loyalty programs to heave sales potential and ensure products are in the appropriate identify to reduce the threat of counterfeiting.

The ascension of east-commerce has forever transformed the beauty industry. With that, more criminals have moved online to sell knock-off products. Appropriately, cosmetic companies must take proactive steps to protect their brands.

Ron Ducharme

Almost the Author
Ron Ducharme serves equally vice president of business development at Covectra , a leader in track and trace solutions. He can exist reached at rducharme@covectra.com.

Source: https://www.happi.com/contents/view_experts-opinion/2021-12-22/the-fight-against-fakes-in-the-cosmetics-industry-347223/

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