Retail products travel from suppliers to distributors to store shelves. Along the way, counterfeit products slip in. These counterfeits can be found throughout the retail supply chain, in big box stores, online marketplaces, and flea markets. Every time this happens, and it happens often, companies have to pay the costs of shipping and disposing of the counterfeit goods, and they lose potential sales.
Counterfeit goods are a big problem for retailers, and these days, factors like online shopping have only made the situation worse. Retailers need the ability to track shipments, detect counterfeits, and verify product authenticity in real time. Is the Internet of Things (IoT) the solution retailers have been looking for?
1. Embedded IoT Devices
Online shopping is a huge source of counterfeit retail goods across the supply chain, and according to the Office of the United States Trade Representative, incompetence by e-commerce companies selling foreign products to American consumers is the largest counterfeiting risk facing the United States today.
Widely regarded as a major e-commerce company, Amazon has spent more than $1.2 billion and hired more than 15,000 people to combat counterfeiting and fraud in 2023 alone. Despite these efforts and huge investments, critics say the problem persists. The large number of brands like “SHSTFD” and “ZGGCD” on the platform highlights the severity of the problem.
Fortunately, e-commerce companies can embed IoT devices in trucks to track how long they are parked, where they are going, and how often the rear doors are opened, potentially tracking the source of counterfeit goods and putting a stop to this wave of fraudulent fronts forever.
2. IoT Sensors
IoT sensors can sense vibration, speed, humidity, pressure, tilt, proximity, and more. Companies can place these sensors inside pallets or boxes to let them know if items have been moved, swapped, or tampered with. These remote sensing devices provide real-time updates, so they can catch fraudsters in the act.
There are many ways IoT sensors can be used in the retail supply chain to subtly catch counterfeit goods. For example, companies can mark genuine products with ultraviolet (UV) light, which is invisible to the human eye, and equip conveyor belts with UV sensors, catching counterfeit goods before shipments reach their destination.
3. IoT-enabled Blockchain
Retailers’ general acceptance of disreputable vendors encourages counterfeiters. Retailers’ reliance on unreliable third-party suppliers is one of the main causes of today’s supply chain issues. When retailers do business with unreliable companies, whether to cut costs or because they didn’t do their due diligence, counterfeit products are more likely to be produced.
IoT-enabled blockchain is a distributed ledger that records all data generated by sensors. Each node it creates is tamper-proof and follows a consensus mechanism so it can be accessed and verified by all parties. The technology can handle large volumes of transactions and scales to meet the needs of retailers.
4. LoRaWan IoT Technology
Long Range Wide Area Network (LoRaWAN) technology is a low-power, long-range networking protocol designed for the IoT, enabling internet-connected devices to communicate over long distances, helping to track products outside the immediate vicinity of a store or distribution center.
LoRaWAN-enabled IoT devices can track assets while monitoring their condition. The technology’s long transmission range makes it easy to receive updates, allowing retailers to know the location of shipments as they move from suppliers to store shelves. This helps regional or national networks with large numbers of internet-connected devices detect counterfeit products throughout the retail supply chain.
5. AI-based IoT monitoring
Internet-connected cameras are edge devices. They collect and process data locally, reducing latency and exchanging data in real time. Built-in sensors can supplement recordings and add useful context to video files. This wealth of information becomes invaluable when integrated with machine learning models.
IoT surveillance systems powered by artificial intelligence can detect small variations and subtle defects in retail products at every stage of the supply chain. One supply chain study found that AI reduces fulfillment errors by 25% and shortens deliveries by an average of 6.7 days. When integrated into cameras, they can detect counterfeit goods through video, audio, infrared, and motion analysis.
Radio Frequency Identification (RFID) tags use electromagnetic fields to track the people or products they are affixed to. A reader wirelessly connects to the tag’s small antenna to read the data, which is encrypted and cannot be understood or copied. These tags are typically only about the size of a fingernail.
Embedding RFID technology in IoT devices can help companies know exactly who is doing what and when. Management can track employee movements, pinpointing when counterfeit goods entered the supply chain. Products can also be tagged and weight sensors can be used to track tampering.
Can retailers stop counterfeiting forever?
Counterfeit goods have been a problem in the retail industry for decades. As the retail industry evolves from independent shops to international chains that ship goods from overseas, it has become increasingly difficult to detect and track counterfeit goods. If companies don’t find an effective solution now, they may be fighting a losing battle.
Moreover, counterfeit goods only benefit the counterfeiters. The problem hurts sales for retailers and tax revenue for governments, and tricks consumers into spending their hard-earned money on inferior products. Fortunately, IoT offers a solution for all those who have been waiting for one.
While it’s impossible to predict with any certainty how counterfeiting will evolve over the next few decades, it’s entirely possible that IoT asset tracking solutions can help curb the problem today. Having real-time, contextual updates as shipments move across the country could be a game changer for retailers.
