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Simon Whitehouse looks at the increasingly alarming number of risks that businesses face online from counterfeiting to cybersquatting to brandjacking

The growth in the number of consumers shopping online is showing no signs of slowing down. In fact, the latest figures from the IMRG Capgemini e-Retail Sales Index, published in mid-January revealed that £104bn was spent online in 2014, an increase of 14% from 2013. The figures also revealed the first time annual spending has broken through the £100bn barrier, and is expected to continue to increase further in 2015, as IMRG and Capgemini forecast that total e-retail sales could be worth £116bn by the end of the year.

This is extremely positive news for the nation’s brands, who rely on their online presence to showcase and sell their goods and services. However, together with all of the outstanding advantages of ecommerce – there is still an alarming number of online risks facing today’s businesses. Therefore, while companies should celebrate their internet sales success, it is more important than ever that they also recognise the urgent need for an appropriate and effective online brand protection strategy.

The potential risk to brands in the online space has grown alongside the evolution of the internet itself. Whether it is counterfeiting, cybersquatting or brandjacking, regardless of the threat or the method used, the common outcome for the targeted victims can lead to loss of revenue, damaged reputations and diminished customer trust.

One of the biggest threats to brands is the scale of counterfeit goods online, with both consumers and the retail companies themselves falling prey to this growing practice. Counterfeit sales are estimated to represent five to seven per cent of international merchandise trade, and to put this into perspective we carried out our own MarkMonitor Shopping Report during 2014 which showed a marked increase in the number of shoppers seeking online fakes.

We released the results of the Shopping Report at the end of last year, looking at consumer purchase intent and the demographics of those who acquire counterfeit goods online. It surveyed almost nine million shopping sessions in the apparel and luxury goods sector during a nine month period, focusing on the search terms employed by consumers in order to understand what they were looking to purchase. Terms such as “cheap,” “discount” or “outlet” were classed as bargain-hunting terms, whereas terms like “counterfeit,” “fake” or “replica” were dubbed fake-seeking terms. The aggregated traffic for shoppers was then looked at using both sets of terms, to see if shoppers visited sites selling legitimate merchandise or rogue sites.

The study found that the number of bargain-hunters has reached a ratio of 28 deal-seekers to every one fake-seeker in the U.S. and Europe, a substantial increase from an earlier study which found a ratio of 20 deal-seekers to every one seeker of fakes. Whether we like it or not, counterfeiters are clever, and it is clear that an entire supply chain, parallel to legitimate distribution channels, is flourishing around fake goods. As a continuing testament to the increasing professionalism of rogue sites, the findings revealed that 1 in 6 bargain hunters were actually duped by the perceived “quality” of the rogue sites and 1 in 10 online deal seekers land on rogue sites.

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