Chinese e-commerce giant Alibaba has a fake goods problem. The company knows it, and the Chinese government has made abundantly clear it knows, too. Now, to combat counterfeits, the company has come up with a solution: Slap unique QR code-like tags on every product.
Today, in conjunction with the Israeli startup Visualead, Alibaba debuted what it's calling dotless visual codes. The codes resemble traditional QR codes with patterns of dots in all four corners. Unlike QR codes, Alibaba's version can include images in the middle of the code, which can help with more visual branding efforts, says Nevo Alva, cofounder and CEO of Visualead.
When customers receive their orders, they scan the codes on the products using Alibaba’s Taobao app---the mobile app for one of its most popular marketplaces---to confirm the product is authentic. In the process, Alibaba gets another chance to show promotions for the brand, including information on points, loyalty programs, and other rewards. Each code is unique to each product, and scanning the code “burns” it so it cannot be used more than once, Alva says.
Alibaba is launching the platform in partnership with certain brands, including cosmetics maker L’Oreal and chocolatier Ferrero, creating millions of packages with the code. Eventually, Alva says, the plan is for the code to appear on billions of products.
The dotless codes require the use of a secure scanner, which comes integrated with Visualead’s software development kit. In other words, as Alva explains it, counterfeiters won't be able to create apps that falsely confirm their goods as real. The system makes use of computer vision techniques to recognize each code that Alva says could ultimately be used not just on product packaging, but for social networks, website authentication, mobile payments, coupons, and ticketing.
For now, however, Visualead is focused on getting its standard into the hands of as many users as possible, which makes Alibaba---whose retail platforms account for more than half of all parcel deliveries in China---an ideal partner, Alva says. (Alibaba also is an investor in Visualead.) Visualead says it hopes that Alibaba’s growing global reach will help its new visual code gain traction overseas, too.
Alibaba, for its part, also needs Visualead’s help. Just last Friday, Paris-based Kering, which owns Gucci and other luxury brands, sued Alibaba in the US, alleging the shopping giant had conspired to manufacture and sell counterfeit products bearing their trademarks without their permission. It’s not the only party that has had problems with Alibaba. For years, complaints over fake products on Alibaba’s platforms have never been fully quelled, even after a noteworthy event in 2012 during which US authorities removed the Chinese e-commerce company from its “notorious markets” blacklist because of its supposed progress on the problem. Though Alibaba enjoyed a massive IPO last year, the company has seen shares slide 19 percent for the year to date, with analysts citing counterfeiting as one of the primary concerns.
Alibaba needs to prove it's taking counterfeiting seriously. It would be funny if something as retro as QR codes did the trick.
