Japan's beauty industry fights online fakes with blockchain tech

Smart packaging helps ensure that consumers are buying the real thing.

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Cosmetics companies in Japan are turning to intelligent packaging technologies such as quick response (QR) codes, near field communication (NFC) tags, and blockchain to combat counterfeiting especially in online marketplaces.

Fake cosmetics are rampant in e-commerce sites, where consumers can't physically verify what they are buying, Ahmad Khan, a senior analyst at GlobalData, told Retail Asia.

Counterfeiters use cheap ingredients, copycat packaging, and fake websites to deceive buyers, who also fall prey to quick promos on YouTube, Instagram and Tik Tok, he pointed out. Khan said 37% of Japanese consumers are influenced by social media ads.

Aside from QR codes and NFC tags that protect consumers from fake products, interactive features such as augmented reality (AR) and product tutorials let brands engage consumers to increase brand loyalty, Khan said.

Japan's beauty industry is projected to grow 5% to 7% annually through 2028, with online shopping expected to account for 21% of the market, according to GlobalData. As a result, manufacturers are under pressure to adopt anti-counterfeiting technologies such as blockchain.