4. Trade in fakes and e-commerce: Focus on the EU
This chapter presents a deep-dive view of the online trade in counterfeit goods based on EU data. Seizure data provided by the enforcement authorities in the EU indicates if a seizure referred to a good that was ordered online. Such information permits carrying out a detailed assessment of types of fake products ordered on-line, specific transport modes abused and the provenance economies of these goods to the EU.
Some seizures registered by custom offices of the EU Member States contain information that they were related to online sales of goods. The link with online sale of goods is determined by custom officers on a case by case basis, considering documentation accompanying the shipped goods.
In practice there is wide heterogeneity between EU Member States as regards provision of this information. Whereas in some countries the majority of the detentions are associated with online sale, in other countries no single seizure has been associated with online sales of goods in the entire period of 2017-2019. To reduce the impact of this heterogeneity on the analysis, data from countries which do not report any detentions related to online sales or where the share of detentions related to online sales is lower than 5% have been eliminated from further analysis.
As could be seen on Figure 4.1 the detentions related to online sales constitute majority of all the seizure observations registered between 2017 and 2019.
Source: OECD/EUIPO
However, as shown on Figure 4.2, value of counterfeit goods, not related to online sales is still much higher than value of seized counterfeit goods, for which the link with internet sale could be established.
Source: OECD/EUIPO
As could be expected, there is a large difference in the modes of transport being used to ship counterfeit products purchased online and products not related with online sale.
Source: OECD/EUIPO
Mail/post transport mode dominates in terms of number of detention cases, irrespective whether the sale of counterfeit goods has been performed online. In the case of online sales however, mail is associated with over 90% of detentions. All other modes of transport play by far less important role in the online sale of counterfeit goods than in case of shipment of counterfeit goods not related to online sale. Air transport is the second most important transport mode associated with online sale of counterfeit goods. Its share in detentions of goods related to online sales amounts to 6.6%. Share of all other transport modes in total number of detentions related to online sales is slightly higher than 2%.
As seen in Figure 4.4 mail/post is the only transport mode of counterfeit goods where the number of detentions related with online sale is higher than the number of cases not related to online sale. The share of seizures identified as related to online sales by custom officers is as high as 72%. In the case of any other transport mode, the share of cases related with online sale is much lower and does not exceed 30%, with the share as low as 1.5% in case of maritime transport.
Source: OECD/EUIPO
Statistics on the transport modes and value of the counterfeit goods shown in Figure 4.5 suggest similar dominant role of mail in transnational shipment of counterfeit goods purchased online. Unlike in cases of seizure not related to online sales of counterfeit goods, where the maritime transport plays a dominant role, in case of online sales, over 80% of value of seized goods is related to transport by mail. Comparison of Figure 4.3 and Figure 4.5 shows that air transport and, in particular, express courier shipments’ shares in total value of seized goods related to online sales are bigger than their respective shares in total number of detentions. It may indicate that counterfeit items of higher value purchased online outside of the EU tend to be shipped more frequently by air and express courier in comparison to less expensive counterfeit goods, which tend to be shipped by post.
Source: OECD/EUIPO.
Overall dominance of the maritime transport for shipments not related to online sales of goods and relatively low value of goods related with online transactions and seized on the EU borders may indicate that the direct customer online purchase of counterfeit goods from distributors with seat outside of the EU still plays the minor role in the import of counterfeit goods into the EU. Prevalent modus operandi seems to be the wholesale purchase of counterfeit goods or components necessary to their assembly by distributors located inside the EU and their subsequent retail distribution on the physical or online marketplaces. Shipment of goods ordered via ecommerce platforms from third countries and transported to fulfillment centers in the EU in packages stacked in containers is a relatively new phenomenon detected by custom officers. This may lead to the underestimation of the role of ecommerce in the delivery of counterfeit goods to final consumers in the EU, as it is very difficult for custom officers to detect counterfeits in containers packed in this manner.
As shown in Figure 4.6 and Figure 4.7 the ranking of provenance countries of the counterfeit goods for purchases not related to Internet and those with a link to online sale are similar. However, the role of China is even more pronounced in case of transactions performed online. China was a provenance country for over 75% of detentions with a link to online sale, whereas in case of transactions not indicated as related to Internet sale, its share in detentions is below 50%. Singapore, US, Malaysia and India play also more important role as provenance countries for counterfeit goods purchased online than those not related to online transactions.
Source: OECD/EUIPO.
Source: OECD/EUIPO.
China is also a dominant provenance country in terms of value of counterfeit goods purchased online. The share of value of counterfeit goods shipped from China is slightly below 70% of total value of counterfeit goods purchased online.
Source: OECD/EUIPO.
Source: OECD/EUIPO.
Many types of fake products tend to be ordered on-line including footwear, clothes, toys, leather goods, electrical equipment and watches and cosmetics.
Source: OECD/EUIPO.
Source: OECD/EUIPO.
Figure 4.11 present the distribution of the detentions between product categories, in the context of online and non-online purchases. Two rankings are quite similar, with footwear and clothing being product categories on top of the list of products with highest shares of detentions. However, some changes in the composition of rankings indicates that the share of shipments related to online sales differs depending on the product category. This intuition is confirmed in the Figure 4.12 which shows the ranking of counterfeit products sorted by the share of detentions related to online purchase. As could be seen in that Figure, for three categories of products: Perfumery and cosmetics, Pharmaceutical products and optical products (glasses) the share of detentions related to online purchases exceeded 70%. In case of vehicle parts, footwear and watches the share of detentions related to online sale of goods is also higher than the average for the entire dataset of detentions.
As could be expected, the share of detentions related to online sales in almost every product category is lower when measured by value then when measured by number of detentions. It is a result of the negative correlation between the share of detentions related to online sale of goods and the mean number of items transported using given mode of transport. It is reflected in Figure 4.13 which shows the share of value of seized products related to online transactions within each product category. Still, for three product categories: vehicles parts, pharmaceutical products and watches the value of seized counterfeit products purchased online exceeded 20% of value of all products seized within their respective categories. The value of counterfeit products related to online purchase is also higher than average for jewellery and articles of leather.
