Deterring counterfeit products through e-platform store-brand strategy

Online retail offers unparalleled convenience but also increases consumers’ exposure to counterfeit products. This study investigates how an e-commerce platform’s store-brand introduction strategy can deter counterfeit sales when a retailer sells both genuine products and deceptive counterfeits. We find that the effectiveness of this strategy depends on the authentic product’s unit production cost and the store-brand product’s quality. Without a store-brand product, the retailer is incentivized to sell counterfeits when the authentic product’s production cost is high. When a store-brand product is introduced, this incentive persists only if the store-brand product is of low quality and the authentic product’s cost remains high. However, the platform may not always introduce a store-brand product even when it effectively deters counterfeits, as intensified competition can offset potential profit gains. We find that launching a store-brand product is optimal for the platform when the manufacturer’s production cost is sufficiently high. Interestingly, the retailer’s total demand can increase in some cases despite facing store-brand competition. This study is among the first to conceptualise platform store-brand introduction as a proactive anti-counterfeiting mechanism, showing how it deters deceptive counterfeits by altering the retailer’s incentives ex ante rather than relying solely on post hoc enforcement.