The case of the gray-market blues

By KC Boxbottom in Brand Protection on April 26, 2012

High-end perfume bottle

Jim called and told me his troubles. He was losing money. More critically, his brand was losing prestige.

He made high-end perfumes. His company sold only to high-end outlets, such as perfume stores and exclusive department stores.

“KC, my perfumes are turning up in pharmacies and discount stores,” he confided. “It destroys the image and my customers are losing sales. I need help, and need it fast.”

“Fiddlesticks on grey markets!” I exploded. “Your regular customers are over-ordering and reselling the excess under the table on the gray market. You need a simple way to track what ships where. You need a unique code on every order. A unique code is not enough by itself. If the culprits can see the code, they can erase or obliterate it.”
Steganography is just the ticket here. Steganography hides the code in plain sight in the package graphics. A pulse CO2 laser will be just the ticket. They can print a legible code at microscopic scale. Nobody will even know it is there. Mount the laser on a short conveyor in your warehouse and code each carton as it is repacked for distribution.

When your mystery shoppers find a fragrance in a pharmacy they can use a magnifying glass to read the code. That will tell you who you sold it to and who sold it on. What you do with that information is up to you.

Ships must stay in their designated channels. So must your products.


KC Boxbottom, packaging detective, is on the case to solve tough packaging puzzles. He is the alter-ego of John Henry, CPP. Known as the Changeover Wizard, Henry is the owner of, a consulting firm that helps companies find and fix the causes of inefficiencies in their packaging operations. He produces a free monthly newsletter called Lean Changeover, which contains articles and tips on changeover and related issues. Reach him at [email protected].

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Wow! What a great idea! I went to visit a customer last month who is in the printing business. He shared with me the fact that they have a similar type coding system in place for a well known company who’s products are always being sold as knock-offs. They actually use this hidden code right on the front of the packaging to identify whether or not the products are authentic. When they send their ‘investigators’ out and they discover there are products being sold without that hidden code, they are removed from the shelves. He explained how the process was done and even showed me where it was on the actual package (of course, I saw nothing!); they use their super-secret-code-breaking glasses or something. I think it’s an added bonus to go the extra step, in the coding, to actually identify ‘who’ is selling these products on the gray market. Whether or not Jim tries this system out, I think it’s great advice and gives him options!