Beware! Fakes, grey market imports of reputed brands flourishing in India’s booming online retail market

Before you click on the 'buy' button on a great online deal, make sure the product is genuine, because it turns out that fakes and grey market imports of reputed brands are flourishing in India's booming online retail market.

Brands such as Lacoste, Puma, Benetton, Canon and Nikon have initiated moves ranging from taking legal actions and warning customers to negotiating with top retail portals to deal with the menace.

 

 Besides the loss of potential sales for marketers, online listing of fake and refurbished products impacts their brand equity as well as the overall credibility of online retail industry. "While there is certain proportion of loss of sales due to such fraudulent listing, it also jeopardises the brand name that matters to us," Rajesh Jain, director & CEO at Lacoste India, says.

Lacoste doesn't sell its wares online at all, but fakes of its polo T-shirt is available anywhere between Rs 600 and Rs 1,200 online against the original ones priced about Rs 3,000 a piece in the stores.

Sanjeev Mohanty, MD, Benetton India, says, "Most of these online websites tend to be run by fly-by-night operators without even proper offices. But we still take legal action against those who try to erode our brand equity." The Italian fashion brand sends at least one legal notice every month, while shoe and apparel maker Woodland sends out 5-6 legal notices every month, according to its MD Harkirat Singh.

While fashion brands are worried about fakes, consumer electronics and gadgets makers are concerned about parallel imports and refurbished products sold as new. Not every online shopping site is involved in such activities even though some of the bigger ones have been sent notices in recent past. Darshan Mehta, CEO of Reliance Brands, which represents several international brands in the country, says the company has received complaints from consumers who have bought, say, a fake Diesel jeans or a Quiksilver shirt. "But we have never faced such a scenario in the big online shopping sites," he says.

Big online retailers are as much worried about such fake sales as the impacted brands are. "Fakes are more relevant in the apparel category and do pose a danger towards the image of online retail," Saurabh Malik, business head at Indiatimes Shopping, says.

A recent report by Google said that building consumer trust will be the key to sustained growth of the e-commerce market, which is estimated at Rs 62,967 crore in India after growing 128 per cent in 2012.

To ensure that fakes are not sold through its platform, Indiatimes Shopping has forged direct relationships with almost all known brands in the country and every product that has risk of fakes comes with a certificate of authentication from the brand, Malik says. Some other big online shopping sites such as Flipkart, Myntra and Snapdeal, too, say they have started extensive screening of products sold as well as sellers using their platform, to ensure they are not illegal.

Myntra chief operating officer Ganesh Subramanian says the website has developed a fool-proof system to ensure that only authentic products are sold and hence does not sell categories like perfumes, which are more prone to fakes, and sell products at full price.

But experts say it's not easy to make a fool-proof system because several online websites have their back-end servers located outside the country in places such as China where cyber laws and IPR regulations are not strong. "Hence the onus, primarily, to put such products or content is on person or entity who shall be liable for placing counterfeits of copyrighted works," Advait Sethna, an advocate and counsel specialising in IP Laws, says.

Some firms such as smartphone brand BlackBerry and camera brand Canon have, meanwhile, initiated talks with leading retail portals to bring them under authorised online partner programme. "We have developed a digitally signed authorisation certificate for the products sold through online sellers to ensure the products are not refurbished or grey import," Alok Bharadwaj, executive vice-president at Canon India, says. "This also became necessary since the online sellers were not strictly following our trade terms, running their own promotions or schemes, which were not as per our norms," he adds.

Most marketers say online pricing is a headache for them. Japanese camera brand Nikon has issued an advisory for customers on its website that Flipkart and Snapdeal are not its authorised partners or dealers in India. Nikon India VP Sajjan Kumar says this was because these sites were selling at price points not fair for the market. While a Snapdeal spokesperson said pricing depends on the sellers who are licensed dealers, a Flipkart spokesperson said all Nikon products sold at the site are genuine.

German sports and lifestyle brand Puma, too, has voiced concern about pricing. Rajiv Mehta, managing director (South Asia) at Puma, says the brand monitors online pricing of its current season products. "If they blatantly discount it, we ask them to remove it. Since we are the biggest brand for leading online retailers in terms of sportswear, they listen to us," he says.