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Article | December 1, 2011
Turning the 'Channel' on counterfeiters
Wes Shepherd, CEO of Channel IQ, discusses monitoring Internet distribution so manufacturers, distributors, and retailers can better understand their markets while tracking gray market sales and potential counterfeiting.
What markets does Channel IQ serve and describe its customer base?
Channel IQ (www.channeliq.com) is in electronics, appliances, automotive parts, apparel, and is expanding in pharmaceuticals and nutraceuticals, working with many of the biggest brands in those markets. Our customers are principally manufacturers, although we are seeing more distribution and retail clients that want the same data for different reasons. Ultimately, everyone is trying to gain better visibility and control in order to gain pricing information and competitive advantages and channel control, especially with respect to online retail endpoints. For a distributor, they can spot gray market sales and learn where they may have sold to somebody to whom they weren’t supposed to sell a product. They can also maintain their competitive stature by adjusting their own sale prices if they are able to. They are able to acquire more customers because we can bring back all of those retailers and show them who is selling like products. On the other side, manufacturers are typically trying to keep pricing in line with the market and making sure that their genuine products are making it through the right dealers to the right customers.
Pharmaceutical products carry considerable value, yet based on the fact that electronics represent your largest market, pharmaceuticals would seem to lag behind in terms of tracing their product through distribution. Why might that be?
I don’t think it’s for lack of effort, but rather lack of good Internet monitoring technology. With our automation technology and targeted online data collection for a given pharmaceutical company, we can quickly examine the market and find legitimate and counterfeit activity. For example, we might look for drugs being sold below their cost in a given country when we know it’s difficult to get them below cost. In this case it’s highly likely the drug is counterfeit. Or in many cases, just finding drugs online is enough since the sale violates laws or distribution agreements. We also might look for counterfeiting in a specific region, or we might look for a seller with a specific parameter around them that would indicate that they are not a legitimate retailer. What might take somebody days or weeks or even months to get information about, we can sometimes get within seconds. To use a medical analogy, we have to break down the online distribution world like a genome project. We have to break down the DNA of these sellers and these products into a recognizable format for it to be actionable information where you can address the threat or even capitalize on an opportunity if one exists.
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In your opinion, what role can packaging play in addressing counterfeit pharmaceuticals?
Packaging has a very important role. It has to signify the authenticity of this product, and not just hold the product or explain the benefits of the product. There are some interesting technologies out there, such as holograms, but let’s be honest, industry will constantly be combating counterfeiting. It’s just going to keep escalating because pharmaceuticals represent an incredibly lucrative market. So packaging is great, but ultimately the industry will have to keep coming up with other technologies. The biggest problem I see is that packaging is no longer the key to ensuring product legitimacy for gray market and counterfeit concerns. With the Internet, people can represent a product as legitimate and there are few ways to guarantee its legitimacy. We now have a new product that does this called authorized dealer badging. We can instantly give any product page being viewed by a consumer immediate verification of its authenticity and warranty.
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