Keeping Online Counterfeits Off Luxury Marketplaces

Sales of counterfeit goods, particularly on third-party sites that facilitate transactions between individual buyers and sellers, have skyrocketed with the advent of online shopping. Even well-established and trusted marketplaces like Amazon are struggling to crack down on counterfeit products, the sales of which are expected to reach $1.8 trillion by 2020.

This is a problem that online luxury fashion marketplace Vestiaire Collective has sought to resolve by hiring in-house experts that can analyze and verify products’ finer details before they are submitted and put before buyers.

“Counterfeits affect less than 0.5 percent of all pieces sold on the site because we have several layers of verification before we even receive the item,” Maximilian Bittner, CEO of Vestiaire Collective, said in a recent interview with PYMNTS. “It’s important to authenticate high-value items from luxury houses, as physical quality, smell and … small details like engravings and stitching are integral to identifying counterfeits.”

Launched in Paris in 2009, Vestiaire Collective has a community of more than 8 million members in 50 countries worldwide that list 40,000-plus new pieces every week.

Online Luxury and the Importance of Authentication

Fraudsters have become increasingly skilled at selling counterfeit goods online in recent years, and while authorities are always looking for physical stockpiles of counterfeits, it can be harder to nab products once they are digitally posted for sale. It is even harder to track them once they have been sold, putting pressure on digital marketplaces to identify fraudulent listings. Counterfeit sellers will often use falsified reviews and images of legitimate products to draw in potential buyers, Bittner explained.

“Once an item is sold, we receive it from the seller, [after which] it receives a physical check by our dedicated in-house team of experts,” he said. “Our curation team first checks all of the submitted images and rejects any product that appears to be a counterfeit — even if there is slightest doubt — or that is poor quality.”

Such authentication checks must be quick as customers, especially millennials and members of Gen Z, have come to expect seamless transactions and fast delivery. These generations also have more buying power than others, and their speed and convenience expectations are largely unaffected by authentication and security needs.

“Consumers and buying power have dramatically shifted toward savvy and eco-conscious younger demographics,” said Bittner. “Millennials and Gen Z are driving the growth of the secondhand market and eCommerce, generally. Both are generations that have grown up with technology and feel comfortable using it to purchase products at all price ranges.”

Vestiaire responded to this need with its Direct Shipping service for European customers. The option bypasses the marketplace’s typical authentication procedures and allows buyers to receive their items directly. This feature is only available on purchases under €200 from trusted sellers to prevent counterfeiters from sneaking through the company’s verification checks.

Authentication and the Global Economy

Marketplaces need to approach fraud and counterfeit protection in new ways as cybercriminal and consumer preferences continue to shift, Bittner noted, adding that Vestiaire is currently examining how artificial intelligence (AI) and blockchain could improve luxury product authentication. Strong verification procedures are also important as the company expands into new markets like Asia, where shopping and payment preferences may be different.

“This allows Vestiaire Collective to have a unique position in the resale space, since we provide our fashion community with a diverse product curation from different sellers and buyers from all over the world,” Bittner said. “Technological innovation, customer engagement, personalization and discoverability are also priorities as we move toward becoming an app-first platform.”

Fraudsters are unlikely to give up their counterfeit schemes and listings in the expanded global economy, meaning marketplaces must be vigilant if they wish to not only compete, but also excel.