Blockchain + smart packaging can tackle ‘heightened’ risk of counterfeit beauty: GlobalData

By Kacey Culliney contact

- Last updated on GMT

COVID-19 has created a spike in e-commerce and social commerce engagement across beauty and therefore a 'captive audience' for counterfeiters to target (Getty Images)
COVID-19 has created a spike in e-commerce and social commerce engagement across beauty and therefore a 'captive audience' for counterfeiters to target (Getty Images)

Related tags: GlobalData, blockchain, Smart packaging, transparency, safety, COVID-19

Investments in blockchain technology and smart packaging will help beauty brands and retailers overcome the rising problem of counterfeits on e-commerce and social platforms, says GlobalData.

By 2024, online will account for 15.3% of UK health and beauty spend, according to GlobalData, but with this e-commerce boom would come a rise in counterfeits – a problem that stretched far beyond the UK, given the globalised nature of online shopping.

COVID-19 has created a ‘captive’ online audience

“Counterfeit beauty is not new,”​ said Yamina Tsalamlal, associate analyst at GlobalData – e-commerce and social commerce just made it “easier to deceive consumers”.

“Add in COVID-19, with consumers spending more time shopping online and scrolling social media, you’ve got a case where the risk is heightened,”​ Tsalamlal told CosmeticsDesign-Europe.

And this was especially true for younger consumer generations – Gen Z and millennials – who spent much more time shopping online and were influenced by trends and social media, she said.

“This is a perfect time for counterfeit brands to take advantage of a captive audience and with supply chains disrupted and retailers struggling to keep up, the conditions make it easier for these brands to slip through the cracks.”

‘Innovation is key’ – blockchain plus smart packaging  

Tsalamlal said: “This is where innovation is key”​ and the power of blockchain technology and smart packaging truly came into play.

“Blockchain allows for the tracking of the product’s provenance to ensure transparency. This can be used at the consumer level as well as by brands and retailers through something as simple as QR code or specialised labelling that can easily track each step of the supply chain,” ​she said.

If this was then coupled with one-of-a-kind packaging that was “impossible to replicate” ​and a way that consumers could easily scan, trace and read a product’s story on their smartphones, ​brands protected themselves from counterfeiters.

London-based start-up Everledger was working on this for diamonds, wine and luxury goods, she said, with a range of tamper tags and seals that carried unique identify chips, some of which could be scanned.

Asked where the main responsibility lied – with brands or retailers – Tsalamlal said: “The liable party is more of a legal question that would depend on the country. But what I can say is that both legitimate brands and retailers lose out in terms of revenue and trust and transparency. This is why unique package design and scan and trace technologies are vital, particularly with FMCG goods which, if not authentic, could present a health risk.”

Blockchain remains ‘experimental’ in beauty

Ryan Whittaker, consumer analyst at GlobalData, previously told CosmeticsDesign-Europe blockchain remained an emerging technology in beauty​, largely because of cost.

However, trend experts have suggested blockchain will rise in importance following COVID-19 and the increased consumer need for safety and transparency.  “Who has touched [a product], how contaminated it is by the time it reaches you – that’s going to be really important to consumers,”​ said Jenni Middleton, director of beauty at trend forecasting firm WGSN.

“Product safety and hygiene and their own personal security trumps every other concern. …It’s this that beauty brands really need to focus on in order to meet the needs of the consumer,”​ Middleton said. Blockchain, therefore, had a real opportunity in the post-COVID-19 beauty world​, she said.

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