US Start-up Marqvision tackles counterfeiting on marketplaces

Counterfeiting is one of the biggest sources of dirty money on the planet. And it does not only affect the field of luxury goods. It also concerns the production and sale of medicines and even spare parts for aircraft! To discuss this, Visionary Marketing interviewed Emmanuel Alavoine, Head of Expansion at Marqvision, a US start-up that in just two years has managed to forge partnerships with the biggest brands. Its co-founder also told us that the start-up could well become one of the next American unicorns. Here is the transcript of our interview, recorded during the Tech for Retail exhibition in Paris, of which we were media partner.

Marqvision Tackles Counterfeiting on Marketplaces

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Emmanuel Alavoine at the Tech for Retail show on 28 November 2022. Counterfeiting would represent more than 3% of world trade according to the OECD, a figure that is constantly increasing.

Counterfeiting: “the world’s biggest economic blight”

It is the world’s biggest economic blight. Counterfeiting surpasses even the organised crime of prostitution, arms dealing and drugs,” Emmanuel told us.

The OECD, in its 2020 report, estimates that the value of counterfeiting is €300 billion per year. “When we cumulate in value for the consumer, the damage is estimated at 3 trillion euros per annum,” Emmanuel Alavoine said.

counterfeiting
When you think of organised crime, you immediately think of drugs and prostitution. But counterfeiting is worth much more: 300 billion euros, the equivalent of Belgium’s GDP.

Counterfeiting is therefore a real scourge of organised crime, often in the hands of the mafia

Counterfeiters use all the methods of modern commerce, to piggyback on the fame of a brand they don’t own

Counterfeiting doesn’t just affect the luxury goods industry

It affects a wide range of industries and brands of varying reputations.

Among the products affected is indeed luxury, with brands from the sector’s major groups, French, Italian, British and Spanish. “For this sector, it’s about traditional copying of iconic brands.”

But counterfeiting also affects pharmaceuticals, food, hygiene, beauty products, kids’ toys, clothing and sports goods.

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When counterfeiting affects public health, a new dimension of crime is reached.

This counterfeiting also affects more sophisticated sectors such as car parts, automotive equipment and lubricants, and even aircraft parts, tools and industrial components.

“In terms of value, luxury goods still represent the greatest loss in relation to counterfeit products,” says Emmanuel.

These products are worth several thousands, even tens of thousands of euros. Counterfeit products are worth, depending on the case, a few dozen euros.

The price difference is already very revealing in the luxury sector. Sometimes the buyer is aware of what they are doing when they buy these counterfeit products. But the vast majority of counterfeit customers are in good faith and unaware of the nature of these products.

Counterfeiting on Marketplaces

Counterfeiting is found on e-commerce sites hosted by marketplaces. But it is also found on standalone merchant sites with their own URLs and domain names.

They operate with impunity until brands spot them and implement legal solutions to remove them.

Counterfeiting: a potential danger to the public

There are different geographical sources of counterfeiting.

The OECD considers that 90% of counterfeit products today come from China,” explains Emmanuel. Counterfeiting from China is mostly transiting through Hong Kong.

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Counterfeiting in the world according to El Pais (OECD source) – 2017

India is another platform for counterfeit products when it comes to medicines. Also noteworthy are countries like Turkey, Thailand, the Philippines and Indonesia.

Finally, there are the logistics resale platforms around the world.

They allow these products to transit through lawless export hubs. And then reintroduce them into Europe, the US, Latin America or Africa.

According to El Pais, apart from Hong Kong, other platforms include Singapore, the United Arab Emirates, Iran, Ukraine and Albania.

The organised crime of counterfeiting

Counterfeiting is the work of organised crime, explains Emmanuel Alavoine. “That is to say, the industrial sites of counterfeiting are almost comparable to the industrial sites of brands”.

They have international production capacities, quality control, international standards and they all have logistical channels for transport, registration, customs clearance identical to the original brands.

Counterfeit industry sites are comparable to brand sites

A hundred sensitive marketplaces

“There are hierarchies of more or less sensitive sites. The majority of counterfeit production, as well as its consumption, is Asian,” adds the Marqvision representative.

But these products are very easily exported to Europe and the US as well.

No mistake on the final destinations of dangerous counterfeit goods… – Source OECD 2022

Marqvision has identified around one hundred marketplaces that are lax to varying degrees and are open to the resale of counterfeit goods. However, according to its press release, the Korean system tracks “more than 1,500 marketplaces worldwide”.

Some of these marketplaces are well known in Europe, such as Wish (note: an American platform).

Others are extremely sensitive in South-East Asia in particular, or in China. They are trying to collaborate more or less openly and dynamically to stop this movement.

Indeed, “it’s worthy of note that these marketplaces have an economic interest in constantly attracting traffic, whereas the interest of the brand is to control its channels and customer relations.

These are conflicting interests,” explains Emmanuel, “that’s what causes the issue with counterfeiting”.

What about big e-commerce platforms?

“Larger portals are doing some upstream control work, but they are not immune to hosting the resale of counterfeit products.”

Apart from Wish, there is Alibaba.

“The celebrated Chinese platform works in partnership with Interpol, Europol and all major brands to combat counterfeiting with varying degrees of success and results,” explains Emmanuel Alavoine.

“Alibaba has been somewhat stamped “counterfeit”, because they are a world leader in e-commerce, due to their mastery of the Chinese market. But their goal remains to attract more Western brands that won’t turn up if they don’t take a proactive stance against counterfeits,” adds Emmanuel Alavoine.

How Marqvision Is Fighting Counterfeiting

“We have developed a proprietary artificial intelligence system,” explains Emmanuel. “Our AI engineers are based in Seoul and work on our algorithm.”

This algorithm will use two methods of detection: a) visual detection that will use images that have the appropriate resolution to compare them to the originals and b) semantic detection that is based on the analysis of text, titles, descriptions and price.

We were able to attend the demonstration on the start-up’s stand. Unfortunately, for obvious reasons of confidentiality, it is not possible for us to show the video of this demo. Here is the simplified process as we can summarise it from memory.

The work of detecting, and especially of denouncing irregularities, is done with the intervention of a human person. This choice is voluntary and justified.

The process can be summarised as follows:

  1. The platform detects anomalies automatically as we described above, through image checking and semantic analysis,
  2. An operator will verify the results by performing a visual check,
  3. If the latter is satisfactory, the operator triggers the complaint procedure. It is voluntary that the machine doesn’t perform this operation,
  4. The system will thus automatically send a deletion request via the standard platform form. The form will autofill. All complaint features for documented platforms (the 1,500+ platforms mentioned above) are being directly integrated into the tool;
  5. The operator can proceed to the next check.

In conclusion, a future unicorn spotted by the LVMH group

Given the stakes involved in counterfeiting and the importance it holds for the big names in luxury goods, it is not surprising that Marqvision was spotted by LVMH.

The luxury group awarded them the innovative start-up prize out of 1,000 applicants (AI and data category). The Korean start-up is now hosted by Station F in Paris.

D. K. Lee, the co-founder of the barely two-year-old start-up that has raised $25 million, told Visionary Marketing that Marqvision would probably be a unicorn before long.

If one can judge the importance of a B2B solution by the size of the problem it solves, one will not be surprised by this prophecy.

Read the OECD report on counterfeiting

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