Cybercrime against retail brands is up 41% during pandemic

A dramatic uptick in scams, counterfeiting, and hacking plague retail and e-commerce industries during the coronavirus crisis, as businesses try to define their new normal.

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COVID-19 sent people rushing to shelter, work, and school at home. Stores and services shut down. Tourism and leisure industries suffered the deepest drop of any business, down 90% (the same percentage of schools worldwide that closed because of the coronavirus). A result of isolation is an additional three hours daily online. And all that time online has introduced many to shopping online, while also being a boon for cybercriminals, according to a recent report from Red Points, a brand intelligence company.

The data from the report revealed that 41% of retail executives surveyed cited a dramatic shift in retail and e-commerce, and a higher rate of cybercrime against their brands since the beginning of the pandemic. The crimes include scams, counterfeiting and hacking. Counterfeiting rose 39%.

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There was an increase in counterfeits detections in major markets, over the last three months March, April and May, compared to January and February:

  • 58% in the US 

  • 63% in Spain 

  • 40% in China

There was an increase in counterfeits in the hottest industries over the last three months March, April and May, compared to January and February:

  • 74% in sporting goods

  • 43% in accessories

  • 123% in toys/children's products

To address the growing global scope of counterfeiting, survey taker/report writer Red Points is extending its reach into the world. Red Points, which has offices in Barcelona, New York and Salt Lake City,  just announced a new satellite office in Beijing, and plan another office next year in Shanghai. They hope that Red Points' growing  international footprint will combat the online piracy and counterfeiting plaguing e-commerce.

"China is home to some of the biggest players in e-commerce and social media, where retailers and counterfeiters are constantly finding new, innovative ways to interact with customers,"said Laura Urquizu, Red Points CEO. She said that counterfeiters are exploiting social channels like WeChat and Weibo to prey on unsuspecting customers. 

Key takeaways

Respondents of the report represented 10 product categories and the state. Redpoint cites the key takeaways from the Red Points report, "The Day After COVID-19: Preparing for the Future of e-Commerce:"

Online revenue increased in March 2020 over March 2019, according to 58% of respondents and

  • 72% are pushing sales promotions and incentives to protecting online revenue 

  • An increase in cybercrime was reported by 41% 

  • 68% said fighting cybercrime is very important to their business

  • As a result of  COVID-19, 59% are looking to invest more in ecommerce channels as a result of COVID-19

  • 75% of baby care product companies saw an increase in revenue (the report speculated this is due to panic buying)

  • 73% of companies in packaged food delivery experienced growth

  • 69% of consumer electronics companies saw an increase in revenue

  • 65% of cosmetic and personal care product companies have seen growth

    • 18% have seen cosmetic and personal care products' revenue growth by more than 51% (higher than any category) 

Brand protection is most valued by medical suppliers/companies (80%), consumer electronics (78%), and toys/board games (73%), and baby care (70%).

Online revenue

Despite sales boost for specific products, 48% respondents saw a decrease in consumer spending, likely due to supply chain delays (48%) and cybercrime (46%).
To combat this, an overwhelming majority (72%) said they are pushing more sales and incentives during this time. Eighty-eight percent of editorial and entertainment companies are doing this, followed by consumer electronics (86%), medical (84%), personal care (82%), and household product companies (80%). 

Preventing cybercrime

Since the pandemic, cybercrime has rapidly increased, more than any other crime, and 68% of respondents said fighting cybercrime is important.
These industries placed the most importance in fighting cybercrime:

  • Medical (88%)

  • Baby care products (86%)

  • Packaged food and beverage (86%)

  • Consumer electronics (82%)

  • Toys and board games (80%) 

Respondents believe:

  • Cybercrime damages their reputation (78%)

  • Counterfeiters are stealing sales (71%)

  • Market share is reduced because of unlawful players (64%)

E-commerce and the future

Because of COVID-19, 59% of respondents replied positively to further investment in e-commerce.
Most likely to invest more: 

  • Consumer electronics (78%)

  • Packaged food and beverage (77%)

  • Baby care products (75%)

  • Personal care products (74%)

Respondents realized that as a direct result of the coronavirus, consumers are purchasing items online that they would previously buy in a store. Some retailers, the Red Points' report reminded, are aware that new habits form in two months, and given the time frame of the current quarantine period, consumers had more than enough time to form new shopping habits. 

Smart companies know that if they connect with shoppers during the pandemic, will give them a leg up over competitors when the country fully embarks on an economic recovery, and here's how they plan to spend marketing money:

  • Social ads (59%)

  • Brand protection (54%)

  • SEO and organic content (35%)

  • Offline marketing (33%)

According to the survey, if a company relies more heavily on e-commerce, it will continue to put more focus on protecting their brand.

COVID-19 may be the cause of some businesses shuttering for good, and yet there are companies that could see "huge growth." A balance of cost management combined with progressive growth tactics will be how brands plan for the future of e-commerce. Progressive growth tactics include "investing in anti-counterfeiting solutions to prevent sales and brand erosion."

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