Combating fakes with AI
Michael Stausholm of SproutWorld explains how his company has saved a huge amount of money and time using an AI based tool to fight fakes.
Fakes and counterfeits are a real issue for startup manufacturers. Mass-produced items that are passed off as handmade, intellectual property (IP) infringement and impersonation, domain threats, and online scams targeting both consumers and makers, combine into a huge industry that is a big threat to those of us starting up any product business. Five years ago, the global value of counterfeit products being sold already exceeded $1.8 trillion – and it will have grown substantially since then.
According to research by MarkMonitor, almost half of brands are now losing sales to counterfeit goods (47%). The impact is not just on those immediate sales that are taken by a fake – it has a ripple effect, on future sales and on reputation. Those damaged reputations then mean a loss of trust: the study revealed that when a customer had discovered they’d bought a fake online, 22% said their experience had spoiled their perception of the brand, 26% of them stopped buying the brand altogether, and 27% even warned their family and friends against the brand.
We noticed the problem at SproutWorld a few years ago, but we’ve turned it around and actually joined forces with some of our imitators, to clean up the market and ensure only genuine products are distributed.
SproutWorld makes the world’s only patented plantable pencils. Once your pencil is used, you pop the stub end into a planter, water, and then watch a tree, herb, flower, or vegetable grow. Great as gifts for crafters, children, artists, and gardeners, they are hugely popular thanks to the simple and effective way that they communicate sustainability.
A report from The Roundup last year revealed that 78% of consumers feel that sustainability is important, 62% of people say they “always or often” seek products to purchase because they are sustainable, 55% of consumers are willing to pay more for eco-friendly brands, and a whopping 84% of customers say that poor environmental practices will alienate them from a brand or company.
I started the business 14 years ago and we sell all over the world, with customers including Branson and Obama. We have spent time and money ensuring that we are all about authentic, genuine sustainability, throughout our business:
Environmental impact
Production and manufacturing involves a wide range of materials. It therefore naturally leads to waste, so choosing sustainable options that are recycled, natural, responsibly sourced, or low-waste, helps reduce pollution, landfill waste, and carbon footprint.
Supporting ethical production
Selecting eco-friendly suppliers or fair-trade materials helps ensure that workers, animals, and communities are treated fairly. Many consumers care deeply about the origin and story behind their products.
Health and safety
Sustainable materials often involve fewer toxic chemicals (e.g., low-VOC glues and paints, natural fibres, plant-based dyes). This benefits both the consumer and the environment.
Higher-quality
Eco-friendly materials are often durable and beautifully made. Sustainable manufacturing promotes quality over quantity.
Our own commitment to sustainability is central to our whole business, from using FSC-certified wood to maintaining our own forest in Poland. The entire ethos of SproutWorld is sustainability – creating something responsibly that then can be repurposed and turned into something else. We are dedicated to the circular economy.
However, over the last few years, counterfeit attempts from regions like China, India, and Turkey have threatened us. Despite patents and trademarks, manual monitoring was only uncovering a fraction of infringements. Counterfeits were using unsustainable materials that posed ecological risks, introducing non-native seeds that could damage biodiversity. This is literally the opposite of what we want to do.
It was imperative that we removed these harmful products from the market, ensuring that our innovations remained eco-friendly and trusted by consumers, and that the environment was protected – the whole point of our company! We needed a scalable, efficient solution to combat counterfeiters while safeguarding our reputation and sustainability mission.
To tackle these challenges, we partnered with a company called Red Points, deploying AI-powered technology to detect and remove counterfeit listings across platforms such as Amazon, Facebook, and Etsy. By automating monitoring and enforcement, Red Points eliminated the need for time-consuming manual processes.
Beyond enforcement, Red Points delivered actionable insights that SproutWorld’s sales team leveraged to actively engage with unauthorised sellers. This unique approach turned infringements into opportunities, converting counterfeit distributors into official partners and bolstering SproutWorld’s market reach.
Over 7,000 infringements were removed across 690 domains, significantly reducing the market presence of counterfeit products. We also identified and reported 1,982 infringers globally, gaining invaluable visibility into reseller networks.
These efforts streamlined enforcement, enhanced operational efficiency, and supported SproutWorld’s broader sustainability goals.
We operate in a world of e-commerce and new stores and sellers are constantly springing up, offering cheaper goods and faster delivery times. Their business models rely on creating and delivering on-trend products, imitated from others brands then promoted at an unprecedented rate through social media.
Temu is a classic example. With over 130 million app downloads – more than Amazon and Shein – Temu has quickly risen the ranks in the world of fast fashion-style retail. Connecting consumers directly to manufacturers, mainly in China, Temu cuts costs on a huge scale and uses social media and data driven advertising to target a wide demographic with huge output – according to Greenmatch, Temu despatches approximately 1.6 million parcels a day, which translates to around 16,000 tonnes of CO2 emissions from air transportation alone, never mind the packaging waste and other environmental and ethical issues. It’s not just environment – the quality of the products is often queried. Without buying from recognised and audited companies, shoppers simply don’t know what they are buying.
Social media has also provided a massive opportunity for counterfeiters. The potential reach is massive. 73% of consumers are now actively shopping on social media platforms, a survey by bazaarvoice recently revealed. According to Root Digital, TikTok has over 1 billion monthly active users. 55% of TikTok users have bought something from a brand after seeing their products on the app. 50% of TikTok users have made a purchase after watching a TikTok Live – 18% of marketers currently use TikTok for marketing purposes and this will no doubt rise.
According to recent studies, around 3.3% of global trade is estimated to be counterfeit goods, meaning roughly one in every $20 spent globally could be on a fake product.
It’s therefore vital that we safeguard against these fakes. Business reputations, customer trust, and business growth sustainability rely on this. And it needs to be very high on the agenda for any startup.
The best way to do this is though AI protection and this should be an ongoing part of any product-led startup model.
