The final tally for China’s Double 11 (or Singles’ Day) shopping frenzy invented by Chinese e-commerce giant Alibaba came in at 213.5 billion yuan ($42.46 billion), shattering last year’s record of USD 25 billion.
This year around 180,000 both local and international brands signed up for this biggest online shopping festival ever. But there are just enough counterfeiters who hijack money and equity from rightful brand owners.
E-commerce – Counterfeit Takes Its Toll
E-Commerce platforms, brands, third party agents have been trying to fight against counterfeits, but counterfeiters still abound. For example this year Alibaba’s ‘fake hunters’ spent 1 millionyuan ($145,000)on average to identify counterfeits, it’s still not hard to find them on Taobao app.
Leading luxury brand Gucci is reluctant to partner with Alibaba and another China e-commerce giant JD.com due to the widespread counterfeiting on those platforms – for a good reason.
According to the Global Brand Counterfeiting Report 2018, counterfeiting was estimated to have been responsible for losses of $98 billion in the high-end consumer goods sector, with online counterfeiting making up $30.3 billion of the total. The total losses across all industries because of counterfeiting in 2017 were estimated around $1.2 trillion and are expected to reach $1.82 trillion by 2020, while online counterfeitingis estimated to have caused $323 billion worth of losses in 2107.
Counterfeiting not only has presented serious economic challenges but also caused social and environmental harms.
“The effects of counterfeiting manifest in many ways including the loss of sales revenue and profit margin, fraudulent product warranty claims, product liability claims, as well as brand and product reputation damage. There are also environmental and social challenges as most of the counterfeiters run sweatshops that rarely abide by environmental protection and labor laws.” says Ronnie Ng, CMO of simplyBrand, an e-commerce verification platform powered by blockchain, AI and decentralized verification to fight counterfeiting.
A New Approach to Blockchain Against Counterfeiting
In early November, IBM has announced an initiative to fight counterfeit hard drives using its blockchain platform to help manufacturers, integrators, and business partners better authenticate the provenance of hard disk drives.
Walmart has also sent letters earlier in Augustto its suppliers of farmed goods urging them to track their produce using blockchain technology.
From electronics to farm products, as well as medicines and luxury goods, a lot of efforts have been made to trace manufacturing of the products using blockchain so that consumers can get info about the whole process of production, thus improving transparency and trust. This can create a much more effective control on the supply chain for brands.
But simplyBrand utilizes blockchain with a different approach.
Instead of tracking the manufacturing process, simplyBrand is trying to create a platform on which the brands can seek services to detect sellers and online merchants involved in selling fake products with the help of crowd-sourced participants who can directly report the counterfeit products.
There are three steps involved:
Step 1: simplyBrand will detect all the public data from e-commerce platforms in and out of China including pictures, prices, location, product description, etc.
Step 2: These data will go through their AI model, which is developed and trained based on its accumulated experience over the past 5 years. The data then will be analyzed through AI, Natural Language Processing, semantic analysis, image recognition technology combined with the human layer to verify if a product is genuine or counterfeit.
Step 3: The data of the confirmed counterfeits will form an immutable blacklist on blockchain, which will be accessible to brands and consumers and third parties. Third-party then will remove offending product pages and report the status of their work to the platform and claim their rewards.
SBA token plays a key role in the system. Crowdsourcing participants who report the fake products will receive tokens as rewards and can either use them to purchase brand privileged items on simplyBrand platform or sell them on exchange. While brands can buy tokens from exchange, and purchase brand-protection services on simplyBrand platform.
“With blockchain technology combined with AI and decentralized verificationwe hope to create an ecosystems where all stakeholders can work together to end counterfeiting once and for all,” Kaufman Chang, CEO of simplyBrand says.
simplyBrand was founded in 2013 by Kaufman Chang and Ronnie Ng as a data intelligence company that helped brands track counterfeiting. Kaufman Chang holds an MBA from University of Chicago Booth School of Business. He has been a successful serial entrepreneur with ventures in cloud computing software, big data security software and biotech. Ronnie Ng, the co-founder and CMO, is an alumnus of the University of Chicago Booth School of Business and has worked across Asia for over 15 years, successfully starting ventures and selling them.