Dealing with retail theft and the proliferation of counterfeit products is a reality for brick-and-mortar and e-commerce businesses alike.
Recent data reveals a stark reality:
- 85 percent of small businesses report falling victim to theft at least once per year. This alarming statistic reflects not only the foundational financial losses businesses suffer but also hints at broader implications for consumer trust and market integrity.
- Nearly 70 percent of consumers have been deceived into buying a counterfeit product—an unsettling stat for e-commerce businesses trying to remain competitive in the online marketplace.
Recent data on retail trends and fears digs deeper into retailers’ concerns, shedding light on their fears and plans for the current year. It offers insights into the degree to which our nation’s retailers are dealing with retail theft—and the types of businesses it’s impacting the most.
This phenomenon is one of several reasons why many business owners feel it’s easier and more profitable to run an e-commerce business. However, it’s crucial to acknowledge that alternative business models carry their own inherent risks.
The same report unveils that nearly 70 percent of brick-and-mortar retailers polled identified theft as a major concern in 2024 and plan to take action against it. A surprisingly small number (10%) expressed no concern at all over theft, signaling a widespread recognition of the gravity of the situation. Among those taking action against theft, 20 percent are clothing or shoe stores, and 19 percent are superstores.
This data reinforces what we’ve seen play out in the retail landscape, with businesses like Nordstrom, Old Navy, and Macy’s not renewing leases and shuttering stores, at least in part due to retail theft—especially in locations such as San Francisco, California.
The impact of retail theft extends beyond individual businesses, contributing to broader economic challenges and public safety concerns.
In response to the escalating crisis, lawmakers in California introduced Assembly Bill (AB) 1990, also known as the Secured Transactions and Organized Theft Prevention (STOP) Act. This legislation aims to prioritize public safety, enhance enforcement measures, and safeguard local economies by deterring organized theft. AB 1990 would introduce tougher penalties for suspected shoplifters as it seeks to improve safety for both employees and customers.
While brick-and-mortar’s battle with theft is well-documented, it’s crucial to recognize that e-commerce presents its own challenges, particularly in the areas of inventory management and product authenticity. Package theft and employee theft are among the primary concerns for online retailers, but perhaps the most pressing issue is the abundance of counterfeit goods on online marketplaces.
Online marketplaces such as Amazon and Temu boast vast ecosystems of third-party sellers, offering consumers an array of products from various brands. However, these can be prime venues for counterfeiters to exploit unsuspecting buyers.
Despite stringent seller qualifications and legal standards from sites like Walmart and Amazon, counterfeit products can still find their way onto these platforms, deceiving consumers and damaging brand reputations. As consumers, it’s essential to exercise caution when shopping online, especially on third-party marketplaces.
Take this Olay night cream as an example.
Amazon will often display the price of the seller willing to deliver the unit at the cheapest cost, including price—this is called “winning the buy box.” However, it’s possible that the item in question could be from a third party with goods gained through unofficial channels.
The winning buy box in this case is a third party and not Amazon selling the product from the manufacturer.
This is not to say the third party is doing anything unscrupulous, but for peace of mind, it’s good to know who the “sold by” is. Often, marketplaces will do their due diligence in verifying authenticity of the seller, and upon further investigation, the third party in question in the example above is a reputable distributor that “manages retail and distribution solutions for health, beauty, wellness, and CPG brands in global marketplaces like Amazon, Walmart, and Target.”
Marketplaces like eBay and StockX have implemented authenticity guarantee programs for high-end goods such as handbags, watches, streetwear, and jewelry. This provides reassurance to consumers concerned about counterfeit products. Because sellers ship goods to these platforms for authentication before they reach the end consumer, buyers can rest easy knowing they’re not purchasing counterfeit items.
To minimize the risk of falling victim to counterfeit scams, I’d advise consumers to consider the following tips:
- Marketplaces often allow you to check who is selling the product by clicking on the seller and looking at their reviews. If they have no or conspicuously few reviews, find another seller for peace of mind.
- Always use the authenticity guarantee channels when buying high-end goods.
- Be wary of prices that seem too good to be true. A price that seems too low given the product or brand of the product should raise your suspicions.
- Read reputable online forums where people share tips for spotting telltale signs of real vs. counterfeit products.
- When in doubt, shop on marketplaces with payment systems that provide extra protection against the sale of counterfeit goods. For example, PayPal offers extra purchase protection on goods you buy.
- Products “shipped and sold by” the marketplace in question will generally give you the best, highest-quality products, especially for cosmetics. Purchase through direct marketplace listings, when possible, even if it means you pay a few extra cents.
As we reflect on the challenges that face today’s brick-and-mortar and e-commerce businesses, it’s hard to predict whether procedures and laws put into place will solve retailers’ issues for good. However, safeguards like authenticity guarantee programs and legislative pushes like California’s STOP Act aim to protect the best interests of both businesses and consumers—preventing financial losses and fostering safe, reliable shopping experiences.
