Online shopping portals account for 25% of counterfeit goods sales: Study

Love shopping online given the irresistible deals on offer on premium brands? Beware, you may be spending your hard-earned money on fake products. With online shopping portals accounting for more than 25 per cent of the fake luxury goods market in India, premium brands are warning customers about the surge of counterfeit products being sold at throwaway prices on the Internet.

Lacoste, for instance, says it does not sell any of its products online. But its polo T-shirts costing more than Rs3,000 are being sold for as less as Rs1,000 on some e-commerce websites. "Potential customers looking for genuine products need to be vary of such online offers," said Rajesh Jain, director and CEO, Lacoste India. The French bridge-to-luxury brand says a host of other Lacoste-branded fake products are also available online at a fraction of the original cost. "Except for our perfumes and sunglasses, every other product branded as Lacoste and sold on any third-party website is a fake," Jain told dna.

Apart from Lacoste, a host of other premium and luxury brands, including Louis Vuitton and Mont Blanc, are also fighting the menace of counterfeit products being sold online in their name in India. Mont Blanc pens being sold for Rs1,000 and Gucci perfumes for Rs1,200 are a steal for shopaholics. Little do they know that some are fake.

Most fake products are being sold on low-rated online websites that are based abroad. Leading online retailers in India such as Flipkart and Jabong, however, deny that counterfeit products are sold on their sites. In a recent interaction with dna, leading Indian e-commerce retailers, including Arun Chandra Mohan, founder and CEO, Jabong.com, and Ankit Nagori, vice-president – retail (marketplace), Flipkart, said both companies have zero tolerance for fakes/counterfeits and that they have put in place stringent procedures for sellers. "You will never find a fake product on our platform as all brands, including premium/luxury, are either sourced directly from the brand owners or their authorised distributors in the country. Selling authentic products is the key for our business and we pursue it very seriously," said Mohan.

According to a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the online luxury market for counterfeiters is worth Rs17,000 crore, growing at more than 20 per cent (compound annual growth rate). "Many aspiring consumers who cannot afford originals deliberately purchase counterfeits as global websites selling fake products ship them once the transaction is complete," said DS Rawat, secretary general of ASSOCHAM.

Amit Bagaria, founder chairman, Asipac Group (Bangalore-based shopping centre planning, development, leasing consultant and mall manager), says certain retail chains in Bangalore are doing brisk business by selling fakes. "Online shopping is helping the sales of fake products though it is largely done through e-retailers operating from international locations. You will rarely see an established Indian e-commerce platform selling a fake," he told dna.

Dinesh Anand, leader - forensic services, PwC, feels there are multiple reasons for people buying fakes of branded luxury goods such as handbags, watches, writing instruments, shoes, clothes, hats, sunglasses, perfumes and jewellery. "There are people who purchase counterfeit luxury products as a status symbol. For them it is an opportunity to improve their social status," he said. Also, manufacturers have become experts in producing near-identical fakes. "It is very difficult to differentiate between originals and fakes. For example, very few people would be able to differentiate a counterfeit single malt whiskey from the original," Anand said.

Brands are now initiating measures with e-commerce portals, customs and vigilance departments to curtail the flow of fakes in the market. Last year, Lacoste's India unit initiated a raid on manufacturing units - one each in Chandigarh and Gujarat - that were producing fakes and various other international brands. "The Gujarat factory was much bigger in size compared to our manufacturing unit in Noida," said Jain. "It indicates the magnitude of fakes being circulated in the market."

A study by ASSOCHAM-Yes Bank conducted last year estimated the size of the counterfeit luxury industry in India at 5 per cent of the over $8 billion market size of India's luxury industry. In a recent analysis of the trade in counterfeit luxury goods, ASSOCHAM pegged the industry to be around Rs2,500 crore. Growing at a compounded annual growth rate (CAGR) of almost 40-45%, it is set to more than double to Rs 5,600 crore in the next 3 years.