Alibaba Group Holding Ltd Turns To QR Codes To Fight Fake Goods

Chinese e-commerce juggernaut Alibaba has received widespread criticism from all corners for failing to curb the sales of counterfeit goods on its sites. A few days ago, French luxury group Kering sued Alibaba, accusing the Chinese company of encouraging the sales of fake goods. Alibaba said it would fight the “wasteful litigation.”

Alibaba’s investment in Visualead bearing fruit?

Now the Hangzhou-based company has turned to QR codes to curb the sales of fake goods. QR codes are immensely popular in China. You can see them on almost everything from print ads to billboards to public toilets. In January, Alibaba invested about $10 million in Israeli QR code startup Visualead. The two companies said that they would give away the new dotless visual codes technology to sellers for free.

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These unique codes include images at the center, with patterns of dots in all four corners. Alibaba is launching the QR code initially in collaboration with chocolatier Ferrero Rocher and cosmetics giant L’Oreal. They will be able to generate a QR code for each individual item, and place it on the label.

Alibaba raises the cost of counterfeiting

When customers receive their orders, they simply have to scan the QR code on the label using Alibaba’s Taobao or Tmall mobile app to confirm the authenticity of the product. Alibaba and Visualead plan to put eventually the code on billions of products. In the process, the e-commerce giant will get a chance to display promotions for the brand as Visualead’s code contain images as well.

The Israeli startup says each code is unique to an individual product. The code “burns” automatically once it is scanned, so it cannot be used more than once. The dotless code technology uses a secure scanner that comes integrated with Visualead’s software development kit. So, counterfeits have no chance to create apps that can falsely confirm the authenticity of their goods.

Alibaba’s codes will not be compatible with Tencent’s WeChat, which made QR codes popular in China.