The luxury goods industry faces a persistent challenge in combating counterfeit products and brands are AI to identify and shut down fraudulent online retailers, authenticate products, and enhance customer experiences. Counterfeiters have become increasingly sophisticated in their methods, making it difficult for brands to protect their reputation and maintain the quality associated with their name.
To address this issue, Artificial intelligence has emerged as a powerful tool in the fight against counterfeit luxury goods. AI and machine learning (ML) algorithms have been employed to analyze vast amounts of data, such as product images and packaging, to identify unique patterns and characteristics of authentic products. This technology enables brands to detect and identify counterfeit products more efficiently than ever before. Here are some examples of how AI is being used to combat fakes in the luxury retail industry:
1. AI-Powered Authentication
Companies like Goat and Entrupy have developed AI algorithms that analyze massive databases of information on top luxury goods to detect even the smallest anomalies.
These algorithms help ensure that customers receive authentic products and protect the reputation of luxury brands. Goat, an online platform for luxury sneaker resellers, has experienced a surge in counterfeit sneakers as they surpass luxury handbags in popularity. To tackle this issue, Goat resellers submit photos of their shoes for human experts to analyze before shipping the shoes to Goat for AI authentication.
The company’s AI solution verifies the expert review and builds a use case database to improve its accuracy over time. Entrupy, on the other hand, focuses on luxury handbags and uses a “convolutional neural network” supported by a large database of photographs of genuine bags, some dating back as far as 80 years. This technology allows Entrupy to identify microscopic details that are difficult for counterfeiters to reproduce, ensuring the authenticity of the products they evaluate.
These AI algorithms are not only effective in detecting counterfeit goods but also provide valuable insights into customer preferences and buying behaviors. By analyzing vast amounts of data, luxury brands can offer deep personalization when marketing up-sells, cross-sells, or customized rewards for loyal customers.
2. Digital Brand Protection
Chinese e-commerce giant Alibaba, along with 20 other international brands, created the ‘Big Data Anti-Counterfeiting Alliance’ in 2017. This initiative aimed to foster industry collaboration and promote the use of analytics and technology in the global fight against counterfeiters.
Among the members of this alliance are renowned brands such as Louis Vuitton, Samsung, Swarovski, Mars, and Huawei. The creation of the Big Data Anti-Counterfeiting Alliance was a response to the growing issue of counterfeit merchandise on Alibaba’s platforms. In fact, the United States Trade Representative (USTR) had added Alibaba’s Taobao marketplace back to its list of Notorious Markets for 2016, prompting the company to take action.
With over a billion product listings across Alibaba’s platforms at any given time, the company’s system scans more than 10 million product listings per day. In the 12 months ending August 2016, Alibaba removed more than 380 million product listings and closed down 180,000 third-party seller stores. Early results showed a 25% decline in take-down requests and the closure of 230,000 IP-infringing stores on its sister website, Taobao.
The alliance also receives support from government bodies and law enforcement agencies in China, further strengthening its efforts to combat counterfeiting. According to Jessie Zheng, Alibaba Group Chief Platform Governance Officer, “the most powerful weapon against counterfeiting today is data and analytics, and the only way we can win this war is to unite.”
By launching the Big Data Anti-Counterfeiting Alliance, Alibaba and its partners demonstrate their commitment to addressing the issue of counterfeit goods and protecting intellectual property rights. Through collaboration and the use of advanced technology, the alliance aims to create a safer and more trustworthy e-commerce environment for both consumers and brands.
3. AI-Enhanced Customer Experience
Louis Vuitton‘s Digital Assistant chatbot leverages AI technology to provide customers with a sophisticated, personalized, visual, and conversational online shopping experience. Its a prime example of how luxury brands are leveraging AI technology to enhance customer experience and engagement. The chatbot, which operates on Facebook Messenger, uses artificial intelligence (AI) and natural language processing (NLP) to understand customer queries and provide automated responses in a conversational manner.
Developed in partnership with Silicon Valley startup Mode.ai, the Louis Vuitton chatbot aims to offer a sophisticated, personalized, visual, and conversational online shopping experience for each client. With over 23 million followers on Facebook, the luxury brand has successfully tapped into a vast audience by integrating AI technology into its digital platform.
The chatbot addresses a wide range of questions, from product recommendations to logistical concerns such as store locations and product care instructions. It can also suggest ideal items from the brand’s online catalog, provide users with more information about the world of Louis Vuitton, and allow users to share products with their Facebook friends to get votes on what to buy.
In addition to NLP, the chatbot incorporates machine learning algorithms to improve its understanding of customer behavior patterns and make real-time decisions. This enables the chatbot to deliver highly personalized and relevant recommendations to each individual shopper, enhancing the overall customer experience.
Other luxury brands, such as Dior, Burberry, Tommy Hilfiger, and Estée Lauder, have also implemented their own chatbots, demonstrating the growing trend of AI integration in the luxury retail industry. However, it is crucial for these brands to adopt chatbot technology subtly to preserve the service quality that affluent consumers expect.
4. Resale Market Authentication
Resale platforms like The RealReal have introduced AI systems such as Vision, which complements another program called Shield that uses AI for spotting high-risk products and sellers. Vision is used on more than half of the handbags the company receives, and The RealReal plans to scale it across other categories.
The RealReal, an online and brick-and-mortar marketplace for staff-authenticated luxury consignment, has been at the forefront of leveraging AI technology to improve its authentication process. Vision, the company’s AI system, is already being used on more than half of the handbags the company receives, according to Chris Brossman, the company’s vice president of machine learning. Although Brossman did not share specific details on Vision’s accuracy, he mentioned that The RealReal plans to continue scaling the system across other categories.
Another example is Authentique, a new tool created by Ordre, an online wholesale platform. Authentique uses AI algorithms to analyze product images on a microscopic level, translating the data into a numeric code and creating a digital ID for the product. This digital ID is stored as a non-fungible token (NFT) to ensure it cannot be altered. Customers can then use the Authentique app to verify the authenticity of a product by snapping a photo of the designated area on the item and comparing the generated code with the one on file.
5. AI-Embedded Products
Some luxury brands, like Patou, are taking the next step by embedding AI-powered protections into their products from the start, making it even more difficult for counterfeiters to replicate them. Patou’s decision to incorporate AI technology into its product design process is a testament to the growing recognition of AI’s potential in combating counterfeiting.
By integrating AI-powered protections at the manufacturing stage, Patou aims to make it increasingly difficult for counterfeiters to replicate their products accurately. This approach not only helps protect the brand’s reputation but also ensures that customers receive genuine, high-quality items when they purchase Patou products.
One example of Patou’s use of AI technology is its collaboration with Authentique, an AI-based authentication system designed for average consumers rather than businesses. Authentique’s technology allows for the authentication of clothing, shoes, and small leather goods, with an accuracy rate of over 99 percent. The system is expected to expand its capabilities to include watches and jewelry within the next year.
The integration of AI-powered protections into Patou’s products is part of a broader trend within the luxury fashion industry, as more brands recognize the potential of AI in their fight against counterfeiting. Other luxury brands, such as Burberry and Louis Vuitton, have also adopted AI technologies to identify fakes and counterfeit products, while e-commerce giants like Alibaba have formed alliances to combat counterfeiting using big data and AI.
6. Collaborative Efforts
Researchers at Case Western Reserve University have demonstrated the potential of AI in attributing similar paintings to the correct artists with high accuracy, suggesting that a combination of technology and trained humans could be the most effective approach in combating counterfeits.
This innovative method combines data from precise, three-dimensional mapping of a painting’s surface with AI analysis, utilizing a computer system modeled after the human brain and nervous system. This system is capable of learning to identify and compare patterns in the brushstrokes, effectively distinguishing one painter’s unique “fingerprint” from another’s. In a recent study, the researchers’ computer system was able to differentiate between the work of four art students with over 95% accuracy.
The potential applications of this technology extend beyond mere authentication. It could also aid conservators in restoring paintings, help identify forgeries, and even shed light on which portions of a Renaissance artwork were created by the master artist and which were completed by workshop assistants. Furthermore, the researchers are collaborating with the Factum Foundation in Madrid, Spain, and conservators from the Cleveland Museum of Art to analyze paintings in various museums.
Despite the advancements in AI technology, counterfeiters continue to adapt and find ways to create goods that can deceive counterfeit detection systems. As a result, luxury brands must remain vigilant and invest in ongoing research and development to stay ahead of counterfeiters. By embracing AI and other cutting-edge technologies, luxury brands can protect their reputation, ensure the quality of their products, and provide a superior shopping experience for their customers.
Jeanel has 15 years of retail, marketing and brand management experience. She has started an ecommerce business in 2019, after working in corporate retail and real estate as a senior managing director and former consultant. She's traveled all over the world, speaks at world renowned trade shows and events, holds a Bachelor’s of Commerce (B.Comm) and a Certificate in Commercial Real Estate. You can connect with her on Linkedin.