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The Fake Fake: Why Luxury Resale Authentication Matters More than Ever

Luxury resale is on the rise as consumers continue to seek out vintage styles and make sustainable shopping choices. But how are brands to protect themselves against counterfeits and fakes?

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Luxury resale — the online buying and selling of pre-owned luxury goods at affordable prices — is having a moment. Used Prada on eBay. Vintage Gucci on Instagram. Online consignment stores selling pre-owned ZARA, Nike and Hermès. As everything old becomes new again, resale has become online retail’s hottest new trend. It follows, then, that these brands turn to luxury resale authentication to protect their reputations.

How popular is luxury resale with consumers? Driven by renewed consumer focus on sustainability and affordability, the global resale industry topped $37 billion in 2021.  Experts predict these figures could reach $51 billion by 2023. The luxury secondhand market is growing four times faster than the primary luxury market.

According to Forrester eCommerce analyst Sucharita Kodali, resale currently makes up only 5% of the market. But, “It is growing faster than apparel certainly is growing. It’s growing faster than the retail industry is growing. It’s even growing faster than eCommerce,” she said.

What Is Behind the Luxury Resale Trend?

The resale boom is partly fueled by shifting consumer habits brought on by the pandemic. These include shopping in sustainable ways and buying rare and exclusive luxury items at bargain prices. Style changes and people clearing out their closets have also contributed to a surge in the availability of pre-owned luxury items. 

The timeless appeal of secondhand fashions also feeds into the growing vintage trend popular with millennial and Gen Z shoppers. Younger buyers are buying pre owned clothing 2.5 times faster than other age groups. They are also more willing to purchase pre-owned products than older consumers. 

Resale also offers shoppers a wider variety of luxury items than online or brick-and-mortar stores. Online luxury consignment sites like The RealReal, Vestiaire Collective, Fashionphile, and Watchfinder & Co. usually give buyers more choices than name-brand stores. Combining a vast selection of pre owned luxury fashions at bargain prices has proven a lucrative strategy for consignment platforms.

Counterfeiters on the Rise

Not coincidentally, the rise of luxury resale has led to increased counterfeiting, with fashion brands being a favorite target. Recent data reveals the total trade in fakes is nearly $4.5 trillion. Fake luxury merchandise accounts for 60% to 70% of that amount. According to studies, one-fifth of all the luxury goods on social media are counterfeit. Globally, the luxury industry loses $30.3 billion per year to fake online sales. 

“The luxury resale market is booming and really is only just beginning to take off,” said Jenna Padilla and Anastacia Bouzeneris, co-founders of online authentication service Real Authentication. “Scammers will always try to come in and take advantage of the opportunity. Generally, the most popular styles are counterfeited. Branded collateral is counterfeited as well. Just because the seller shows the box, tags and brand receipt does not mean they are genuine.”

Counterfeiting is now worth between $1.2 trillion and $1.5 trillion annually, according to the International AntiCounterfeiting Coalition (IACC). With so many fakes glutting the market, how can online resellers and eCommerce luxury brands ensure a product’s genuine authenticity?

The Importance of Luxury Resale Authentication

Close up photograph of a silver link men's wrist watch

Brands are increasingly turning to luxury resale authentication strategies to battle counterfeiting and gain customer trust. Consumers are willing to pay more for a pre-owned piece guaranteed to be genuine. But for customers to trust luxury resale items, authentication is critical. There are now several ways brands and consumers can ensure product authenticity.

In-House Authentication

Many pre-owned resellers like The RealReal, eBay and ThredUp have in-house luxury authentication methods to ensure the products they sell are genuine. Specially-trained verification experts perform physical and visual inspections to determine whether a product is original. Experts pay close attention to small details like screws, bolts, linings, labels and zippers. Since these customer fittings are expensive to produce, counterfeiters often fake them or skip them entirely. 

Authentication Services

Authentication platforms like Entrupy, Authenticate First, and Real Authentication are dedicated solely to product authenticity verification. They are not resellers. Instead, they offer expert luxury authentication of handbags, wallets, watches, footwear, jewelry and apparel. They share similar processes where users upload photos of items to an app or website platform. Human experts then inspect the items using high-tech tools, resources and industry knowledge to verify authenticity. Buyers and sellers can pay for a variety of options like basic authentication, cards and certificates, turnaround times and valuation.
Entrupy goes a step further by using a combination of AI, machine learning and microscopy to offer real-time authenticity. Entrupy’s AI algorithms compare highly-magnified images of items against a database of millions of known authentic and counterfeit products. The company claims a 99.1% accuracy rate and delivers verification within seconds.

Blockchain Technology

Luxury brands like Louis Vuitton, Prada and Christian Dior are turning to advanced blockchain technology to battle counterfeiters. Blockchain records data in a way that makes it difficult or impossible to change, delete or hack. Blockchain gives a product a unique identifier that can be traced from raw material to the point of sale and eventually to secondhand markets. In this way, brands and consumers have access to an item’s entire history and digital proof of authenticity. While still in development, blockchain promises “authenticity from scratch.” 

Brands Are Launching Their Own Online Resale Programs

While slow to the game, more brands are seeing the benefit of opening dedicated online resale shops. Many brands have traditionally avoided such options, citing the costs and resources needed to launch a resale site. But thanks to changing consumer trends toward sustainability, many eCommerce brands see the wisdom of folding resale into their broader marketing strategies. IKEA, Patagonia, Lululemon, REI, Levis and Diesel are name brands offering buyback and resell programs. Even Amazon has thrown its hat into the resale and trade-in marketplace.

Summing Up

Luxury resale offers consumers luxury brand items at bargain prices, but it is not without risks. With so many counterfeit products in circulation, second-hand retailers and resellers must take precautions to ensure their products are genuine. As luxury resale authentication gets more sophisticated, brands and consumers can rest assured that secondhand luxury products are the real deal.

Whether your DTC eCommerce business wants to launch a dedicated resale site, run a flash sale or open a dedicated, safe resale site, Scalefast can help with your specialty store needs. Talk to one of our eCommerce experts or schedule a demo today.

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