INS helps to tackle half-trillion dollar counterfeit menace
The INS platform doesn’t just offer better value and greater convenience to consumers — it’s also helping to tackle the half-trillion dollar menace of counterfeit retail goods. Here, we look at how the trust fostered by smart contracts and encryption makes blockchain-based grocery shopping more secure from fraud, while providing consumers with confidence in the authenticity of premium goods.
In an already beleaguered retail sector, the grocery industry faces more economic challenges than most. Customers demand higher quality at lower prices, with authenticity, fair trade practices, and organic farming as baseline expectations. From the other direction, retailers face pressure from rising transaction fees imposed by third party payment processors. Globalized competition and online shopping, meanwhile, represent a constant threat. Constant modernization is the only way to adapt and survive.
One of the most pressing microeconomic challenges in food retail is fraud. Consumers are constantly menaced by everything from fake ‘no hormone’ claims to ‘field grown’ tomatoes that are essentially gas-painted red. Counterfeiters undermine luxury brand legitimacy and steal sales by flooding the market with bogus alternatives. Shoppers naturally suspect a certain amount of collusion between retailers and manufacturers.
Fighting food fraud is one of the biggest advantages of moving to a blockchain based grocery economy. By linking consumers directly with manufacturers through the blockchain, platforms like INS can provide shoppers with indisputable provenance for every single product, assuring authenticity at every stage of the supply chain, from product design to transactional information. The technology can help prevent brand damage and sales losses by weeding out counterfeit and contaminated products before grocery shopping begins.
The Cost of Counterfeiting
According to the OECD, counterfeit goods account for around 2.5% of global imports, worth a total value of up to $461 billion annually. This translates into lost sales and the slow erosion of consumer trust. The effects are felt most acutely by luxury brands, knock-off versions of which represent the most lucrative opportunities for counterfeiters. Continuous proof of authenticity and reinforcement of brand trust is the most effective response — proof and reinforcement that only the blockchain can offer.
Even when outright counterfeiting is not in play, consumers today have a heightened sensitivity to claims of quality made by food brands. They are willing to pay a premium for gluten-free, non-GM, organic foods — but are losing faith in the credibility of labels making such claims. Scandals relating to false claims abound, and recent research showed that 40% of shoppers under 50 believe the term ‘organic’ is nothing more than a marketing buzzword.
The blockchain has the capacity to change consumer attitudes and restore faith in quality claims made by specialized food manufacturers regarding purity, origin, and ingredient accuracy. In the long term, the information recorded in a blockchain could potentially cover everything from farm to fork, such as soil data and even animal DNA.
For now, connecting manufacturers with consumers in a secure, counterfeit-proof way is a major step forward for the food marketplace. The INS concept has gained support from major brands (with memoranda signed between the platform and Unilever and MARS, among others) and is validated by strong consumer interest. As ever with blockchain-based ventures, early movers will have the advantage in this vital and overdue restructuring of the grocery industry.
The token sale for INS, the first global decentralized ecosystem directly connecting manufacturers and consumers, will end on December 25th.