Counterfeit sneakers have already created a multi-billion dollar industry. And that trend is only growing.
As brands like Nike and Adidas continue to make sought after pairs, the fakes manufacturers don't seem to have plans to slow down anytime soon. Just back in August, U.S Customs and Border Protection in Texas seized more than $3 million worth of counterfeit Dior x Air Jordan 1 sneakers, as part of a shipment that included over 1,800 pairs of the limited-edition collaboration between the luxury fashion house and Nike.
While that confiscation was undoubtedly a win for both brands and consumers, as well as the CBP federal agency, there are still an obscene amount of illegal goods that slip through the cracks — and that might make it into shoppers' hands, whether they chose to buy them consciously or not. This is particularly true in the sneaker space, where the resale market is valued at $2 billion and, what's more, is expected to reach as much as $30 billion by 2030.
Thankfully, there are companies big and small trying to mitigate the number of fake sneakers that end up getting sold to consumers. One of them is ARthentix, a Canada-based startup that recently launched an app that uses a mix of augmented reality and blockchain technology to help people verify that their brand new, second-hand pairs are indeed authentic before they even purchase them. The way the system functions is simple: ARthentix works with retails to place Certificate of Authenticity (COA) tags on the shoes prior to being sold and, then, the buyer can use its iOS or Android app to scan those and see a message in augmented reality that lets them know their pair is legit.
Behind the scenes, ARthentix and the shops that choose to use its verification platform are building a blockchain-powered database where they can enter specific details about each authenticated sneaker, such as the style name, size, and a serial number. This is key because it's what keeps ARthentix's labels secure and free from any potential counterfeits.
“A business to keep the sneaker community safe.”
Unlike the physical tags that StockX puts on its "verified authentic" sneakers, which have no functional, data-driven purpose, the ARthentix can't be duplicated since every single one has information tied to them when they get scanned using the app. So, even if a bad actor manages to clone an ARthentix tag to slap it on a pair of fakes and try to fool a buyer, the system is smart enough to detect that the COA itself is a counterfeit.
Additionally, the tamper-proof labels are capable of digitally carrying historical data, including the seller's name, location, and the price the sneaker has been sold for in the past. What's unique about what ARthentix wants to accomplish, as well, is that you can't even create an account to use its app unless you've bought a sneaker from one of its partners — in theory, this should create a network of reputable buyers and sellers since your real information is attached to the application and the COA labels themselves. That's why ARthentix says it's main focus is to team up with sneaker resellers that have the necessary infrastructure and trust to authenticate sneakers.
To start, the company is partnering with shops such as Urban Necessities in Las Vegas and Stay Fresh up in Canada, which will start selling pairs featuring ARthentix's tech. Norm Lai, CEO and founder of Arthentix, told Input in an interview that it's important to note that his company wants to create a verification, not authentication, platform. The latter, he said, will still be completely up to the retailers ARthentix is working with, meaning they're responsible for inspecting every aspect of the sneakers and ensuring their authenticity before the company's COA tags end up on them.
“It's all about making sure that the kid who spends $400 on a pair of Yeezys doesn't get ripped off.”
"For us, it's about securing and creating something that people cannot duplicate," Lai said. "We don't just allow anybody to sign up. We literally vet everybody. It's a lengthy process, but at the end of the day, it's not just a business to make money. It's a business to keep the sneaker community safe." At the same time, he added that the long-term idea is to bring more resell shops onboard and turn ARthentix into a seamless and streamlined verification ecosystem that doesn't exist today in the sneaker industry.
The main players in the resell space — GOAT, StockX, and eBay — all have their own methods of verifying and authenticating sneakers, and ARthentix doesn't see them as competitors but rather as prospects that could benefit from its technology. "We're not a threat," said Lai about where he sees ARthentix fits in relation to those other brands. "If anything, we're a complement to what [they] do, so working with any of these companies we're definitely open to." He said he hopes that will happen eventually with help from the sneaker community, including people like Jaysse Lopez and Aleix Dai, founders of Urban Necessities and Stay Fresh, respectively.
Lai emphasized that although ARthentix will make money from retail shops that choose to adopt its blockchain and AR tech — he said, "We only charge the dealers a small fee per pair" — what the company and its initial partners hope to develop is a platform that can become ubiquitous and widely adopted. That's exactly what's going to be the challenging part, though — getting everyone in the industry working together with the same goal in mind. ARthentix isn't the only company looking to infiltrate the verification and authentication sneaker market, either, as we've seen other startups like Entrupy show off systems that rely on artificial intelligence to spot fakes.
Time will tell if ARthentix is compelling enough to lure more resale services in as partners. But for now, at least the company is trying to shake up an industry that's practically begging for help – especially as counterfeits only keep getting closer and closer to the real designs, and as more pairs move between different owners. "It's all about making sure that the kid who spends $400 on a pair of Yeezys doesn't get ripped off," said Lai. "That's [our goal] first and foremost."