OpSec Study Exposes Counterfeiting and Grey Market Diversion in Recent Smartphone Product Launches

Monitoring of e-commerce and social media platforms provide intelligence on unauthorized online sales, distribution, and circumvention

BOSTON (September 22, 2010) - OpSec Security, Inc., the global leader in anti-counterfeiting and brand protection, identified notable occurrences of counterfeiting and grey market diversion in the online marketplace for recent highly-anticipated smartphone product launches.  By monitoring auction sites, trade boards, blogs, and web forums immediately before and after the launches, significant intelligence was garnered on when counterfeit postings appear, where product diversion occurs, and how social media is used to buy, sell, and circumvent manufacturer restrictions.

Key Findings on Counterfeiting, Grey Market Diversion & Social Media Interaction

The study focused on the market launch of four smartphones introduced this summer between June 24th to August 24th, and distributed in the US and other regions around the world on a planned release schedule.  The new smartphones were amongst the popular models launched by the big six manufacturers, namely Nokia, RIM, Apple, HTC, Samsung, and Motorola.  The study revealed salient examples of product counterfeiting, grey market operations, and use of social media to drive market interaction.

Ten top key findings include:

1)    Weeks and days before official launch dates, suspicious listings of each of the four new smartphones were available for purchase on B2B trade boards.

2)    For one smartphone, 10 days prior to launch, a sampling of 33 trade board listings were found from sellers located almost all from China.

3)    Suspect offers of new smartphone models were listed on trade boards at deeply discounted prices and large quantities, including one seller offering 1,000 units per week at 65% below list price.

4)    Dubious new smartphones were found for sale on trade boards and auctions with features announced, but not yet released by the manufacturer, such as new colors and unlocked features.

5)    For a new smartphone which was initially released only in 5 countries, and was soon stocked-out by the manufacturer, over 5,000 eBay listings were posted in the first 2 weeks at markups ranging from 30-100% above list price.

6)    One eBay seller of a stocked-out smartphone listed 90 available units, had sold 47, and offered to ship worldwide to circumvent manufacturer restrictions.

7)    New smartphones, available from eBay sellers located in 24 countries where the model had not yet been introduced, raised questions about product diversion.

8)    New smartphones were listed for sale by users on social media platforms, including Craigslist, Facebook, and Twitter, as alternative distribution channels.

9)    Consumers generated online discussions on ways to obtain a new smartphone in regions where they were not yet released by the manufacturer.

10)    Consumers used social media sites to follow and anxiously await the release of jailbreaking software to unlock a new smartphone model.

Recommendations for Monitoring Online Market Dynamics in Product Launches

The launch of highly-anticipated products is significantly impacted by the marketplace dynamics of e-commerce platforms and social media sites.  Fueled by widely available mechanisms to buy and sell products, and networks for users to share consumer insights, product launches are found to be accompanied by the rapid emergence of counterfeiting and product diversion.  Suggested strategies to respond to emerging threats of counterfeit and grey market goods in the global supply chain include:

•    Monitor trade boards and auctions to analyze the availability and sources of counterfeit and grey market products

•    Investigate online mechanisms deployed to exploit consumer demand for new products via unauthorized distribution of grey market and counterfeit goods

•    Survey social media to identify online consumer buzz and address issues concerning product availability, new features, release schedules, etc.


About OpSec Security, Inc.
OpSec Security, Inc. is a wholly-owned division of OpSec Security Group plc (London AIM: OSG). OpSec Security is the global leader in providing anti-counterfeiting technologies, as well as solutions and services for physical and online brand protection, to over 300 brand owners and over 50 governments worldwide. The Group operates manufacturing facilities and laboratories in the USA and the UK, and has sales operations in the Americas, Europe, and Asia. For more information, please see www.opsecsecurity.com, or contact Terri Mock, +1-617-226-3000, or tmock@opsecsecurity.com.