Bad impersonations: How consumer brands can win in a virtual world
For decades, fast-moving consumer goods (FMCG) companies have been the choice for investors looking for moderate but constant growth and high profitability. Since December 2000, the FMCG industry outperformed the market by an average of 2.4% per year, returned 0.6 points more dividend and delivered these returns with a significantly lower risk1.
And now, despite (or because of?) the pandemic, FMCG online sales are surging. The significant shift toward online shopping as a result of COVID-19 lockdowns will not reverse as quickly as it developed. Permanently higher levels of online consumer buying of a vast array of products will be a feature of the marketplace for some time to come. This opportunity also presents a challenge: FMCG organizations must be aware of the risks that digital channels and technologies pose to a valuable brand and take steps to protect it. In this post, we’ll talk about fighting digital and physical product/brand impersonators.
Counterfeiting and brand/product impersonation are not new concepts to the FMCG industry. However, with the move to digital channels comes the increased challenge of protecting your brand in an era where reality and illusion are often hard to distinguish.
Artificial intelligence (AI) is one critical tool that FMCG organizations can adopt to combat the rise of product impersonation that is now prevalent on websites, social media channels and e-commerce stores. In the same way that AI-enabled bots can be used to gather competitor intelligence, bots can be used to scrape popular marketplaces and online sites to assess, analyze and identify potential copyright and brand infringements that undermine your brand image.
Image recognition and analysis
Image recognition and analysis tools are now sufficiently mature so that images of counterfeit goods being incorrectly or maliciously marketed as original products can be identified to enable appropriate legal actions to be initiated. Combined with other techniques such as digital watermarking, AI can act as a powerful tool to detect and enforce product authenticity and intellectual property issues on a scale that is unachievable with human resources alone.
Paid and fake reviews
AI can also be used effectively in what is increasingly becoming a “review based” purchasing economy. Recent research by the Spiegel Research Center suggests that a product with five reviews is 270% more likely to be purchased than one with no reviews, making it imperative that FMCG organizations pay attention to the reviews posted online about their products3.
Online reviews are big business. An analysis by the Financial Times showed that nine out of the ten top-ranked Amazon reviewers in the UK were likely to be engaged in some form of “reviews for cash” scheme4.
While many organizations have woken up to the online industry of purchasing positive reviews in bulk to artificially improve product perception, a battlefront is emerging around fake reviews. In this scheme, fake reviews are posted to undermine consumer confidence — in an attempt to switch customers to similar competitive products that are often cheaper and inferior in nature5.
AI can provide a significant advantage to FMCG organizations attempting to combat these types of malicious activity using bot technology. Bots are effective in the constant monitoring of Google search results and popular e-commerce sites to identify suspicious review activity so that appropriate actions can be taken.
Blockchain for supply chain
Technology is not just helping protect authenticity and intellectual property in the virtual world. Physical product authenticity is still a major concern for FMCG organizations to ensure that the health, well-being and trust of their customers is maintained. In a world threatened by industrial-scale fraud, confirming the authenticity and lifecycle of products through a complex global supply chain before it reaches the customer is of paramount importance.
FMCG organizations must be aware of the risks that digital channels and technologies pose to a valuable brand and take steps to protect it.
Protecting distribution networks and supply chains from counterfeit substitution, product tampering and theft is an area where blockchain (or distributed ledger) technologies combined with digital twins can bring significant benefits to FMCG organizations. Combining such technologies with more established tools for track and trace — such as barcoding and image recognition — can give FMCG organizations a more detailed and transparent view of not only where their products are in the supply chain, but also a digital replica that identifies and reacts to issues such as tampering, damage and counterfeit replacement.
Where to begin
Before embarking on any technology journey, FMCG organizations should carefully consider how digital solutions will contribute to their overall business strategy and direction. In a fiercely competitive business climate, technology investments should be considered and tested in a way that demonstrates a genuine step-change in business performance.
The best way to accomplish this is to develop your own digital transformation playbook that:
- Sets the context for digital investments
- Identifies the way in which a roadmap of digital interventions will be constructed
This will maximize the anticipated benefits that new technology adoption can deliver.
For a deeper look at the potential growth prospects of the FMCG industry in today’s dynamic business environment, please download the Atos white paper, “How FMCG can win in a virtual world: Grappling with the new retail reality.”
1. Measured by the MSCI World Consumer Staples Index (Nestle, P&G, Coca-Cola, Pepsico, Walmart, Costco, PMI, Unilever, Diageo, L‘Oreal and others) compared to the MCSI World Index. Annualized average growth of 7.44% (5.28%); sharpe ration of 0.56 (0.36); maximum drawback of 24.00% (34.03%).Source: https://www.msci.com/documents/10199/04d4c23a-f633-4bf6-b20d-735e9fb13538 2. The MSCI Global Retail is comprised of traditional giants like Walmart, Home Depot and Target, but also internet retailers like Amazon, Booking Group, and eBay. 3. https://spiegel.medill.northwestern.edu/online-reviews/4. Amazon deletes 20,000 reviews after evidence of profits for posts. 5. https://www.bbc.co.uk/news/technology-54063039