Retailers Use AI to Build Trust in Secondhand Luxury, Sneaker Sales

There is nothing like searching online for a nice secondhand watch, handbag or pair of sneakers, only to have the item show up and turn out to be phony, causing headaches for the consumer and costly chargebacks for the merchant.

“Anything you spend over $50 or $100 on, you always have that latent question somewhere in your head: Am I being take here? Is this a scam?” Vidyuth Srinivasan, CEO of high-value goods authentication platform Entrupy, told PYMNTS in an interview. “And that’s exactly what we’re trying to stop. That shouldn’t be a question anymore.”

Counterfeits, Srinivasan said, are a $3 trillion problem for the retail industry, “and it’s only growing every day,” which is why Entrupy set out to create a “scalable and repeatable” tool powered by artificial intelligence (AI) to help identify fakes and provide labels for those authenticated as real, not just on eCommerce sites but across all physical goods.

He added, though, that he doesn’t view Entrupy’s role as going up against counterfeiters — the company doesn’t confiscate goods and isn’t building technology to defeat them.

“They’re always going to exist in one form or the other,” Srinivasan said. “Batman never says that he’s going to stop all crime. What you can do is you can provide the best possible and best available tool sets to people.”

That doesn’t mean, he said, that everyone will accept and use those tools, because not everybody wants to solve the problem — after all, there are certain people who would rather have a counterfeit for one reason or another. The goal is simply to build more trust in transactions for consumers and businesses, such as pawn shops, consignment stores and other resale merchants, who want to do the right thing.

“We want to be sort of like the Verisign of physical goods,” Srinivasan said. “We need to work with everybody … and that’s how we look at authentication or building trust as a tool.”

How It Works

Entrupy’s technology and platform were initially restricted to luxury handbags, using a handheld microscope that connects to an app to take microscopic images of physical goods that allows thousands of merchants around the world to authenticate their goods.

Now, the company is in the final stages of testing a sneaker authentication app, which does not require the handheld microscope but still has the same AI-driven product verification technology. Last week, Entrupy opened a beta testing program, inviting sellers and resellers of frequently counterfeited sneaker styles free access to the technology through the end of the year at a minimum.

Authenticating sneakers differs from verifying handbags, Srinivasan said, because of how the different counterfeit markets work. For sneakers, it’s about speed because the category thrives on immediacy and the latest drop. For handbags, though, there’s no sense of urgency or immediacy, and the counterfeits are more about quality.

“Any market where we see that there’s a huge gap and therefore an opportunity to provide the similar level of trust and get people onboarded to this platform, I think we’re going to go into that,” Srinivasan told PYMNTS.

Entrupy also has the ability to “fingerprint” items that are scanned by sellers so that it can track a chain of custody and provide further assurance that the handbag or sneaker is legitimate. And if the verification technology gets it wrong, Entrupy provides a financial guarantee that it will eat the cost.

Srinivasan said for many businesses, though, the value is not necessarily in helping sellers authenticate their goods — Entrupy allows merchants to build trust with first-time customers who may not know how to identify fake items from legitimate ones.

“That assuages that knowledge gap by saying, ‘Hey, it’s not just me, amazing snake oil salesman saying my snake oil is legitimate, it’s this third party saying it,’” Srinivasan said.

Looking Ahead

Entrupy also offers its fingerprinting technology to help prevent return fraud and ensure that customers are not wearing apparel and then returning it; returning counterfeit items; or swapping an old product for a new one prior to the return.

Srinivasan said everything the company does is in the name of providing more trust in transactions for those who are buying and selling items. Up until now, Entrupy has been focused on the seller side, but as the company grows, Srinivasan said he wants to become more of a buyer tool, too.

“It’s not an easy job, but at the same time, I think it’s totally worth it,” he said. “Because I think that the more you have such trustworthy tools, and especially in the simplest way possible … it’s seamlessly integrated.”