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Frauds and Fakes Overrun $2B Sneaker Resale Market. This New Tech Could Change That.

In the decades since Nike dropped the original Air Jordan in 1984 and NBA great Michael Jordan himself delivered nightly on-court feats that seemingly defied the laws of physics, the cult of the must-have sneaker has taken on a life of its own—and the fervor surrounding exclusive drops and limited releases shows no sign of slowing down.

And in 2020, clues of the sector’s importance just might come in the form of who’s trying to stake a claim in a market for athletic footwear that Grand View Research said in 2018 could top $95 billion by 2025.

That’s where Entrupy comes in.

The eight-year-old tech startup may have made its name by creating easy-to-use tools authenticating pricey high-end handbags and similar luxury goods. Now, however, Entrupy is breaking into a whole new category with Legit Tech Check (LTC), a system designed to tell whether those Nike Air Jordan 1s and Adidas Yeezys are, in fact, the real deal.

To be sure, the sneaker world is in dire need of proven methods to ensure the flow of legitimate product, especially where the most in-demand brands and perennially popular silhouettes are concerned. In October alone, U.S. Customs and Border Protection seized more than $2 million worth of counterfeit Nike shoes, and the sportswear maker’s footwear figured among fakes confiscated in a $4.4 million February raid last year.

Plus, some experts believe traditional investment assets like real estate, bonds and equity shares might soon have a strange new bedfellow—sneakers. Given that the $2 billion sneaker resale sector is set to triple by 2025, last year, Cowen & Co. analysts proposed “the idea that sneakers are now an emerging alternative asset class,” not just for diehard sneakerheads but for buttoned-up investors looking to park their money in a sure thing.

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Artificial intelligence startup Entrupy bowed Legit Tech Check to help retailers and sneaker resellers verify Nike Air Jordans and Yeezys.
Legit Tech Check uses sophisticated imaging technology to scan footwear placed inside, either matching it against a proprietary database or rejecting the sneaker as “unidentified.” Courtesy Entrupy

Sneakers can only be a “sure thing” if the market to buy, sell and resell them is built on trust, which Entrupy co-founder and CEO Vidyuth Srinivasan describes as a “critical issue for consumers, especially when transactions are increasingly digital, over large distances and involve opaque supply chains.”

“While a lack of trust can prevent sales, a violation of trust can topple a whole industry,” he added. “With LCT, we’re protecting both the end buyer and the seller from the damaging impact of trading in counterfeits.”

Entrupy solves for counterfeits with technology similar to its artificial intelligence-based handbag authentication platform. Where the luxury solution requires just a phone, app and handheld scanner to capture detailed images of an Hermès tote or Chanel stingray cross-body, LCT takes the form of a box that scans footwear using sophisticated imaging. Then, the scanned shoes either match with Entrupy’s proprietary database of authentic product, displayed in a smartphone app, or are rejected as “unidentified,” indicating the sneakers are but a poor substitution for the real thing. The process of individually scanning the left and right sneakers in a pair of shoes takes just minutes.

According to Entrupy, LCT is designed to aid retailers, marketplaces like eBay and high-volume sellers who make their living from flipping sneakers on secondhand markets like StockX and Goat. Though at launch the tech is limited to verifying just Air Jordan 1s and Yeezys—two of the most enduring products that drive about 20 percent of the market—Entrupy says support for additional sneaker brands and styles is being “added continuously.”

“While a pair of Yeezys may not have a price tag as high as a Louis Vuitton handbag, the high cost of counterfeits in the marketplace is the same,” said Srinivasan, adding that producing substandard clones creates environmental harm, fuels human trafficking and routinely bankrolls organized crime. “In fact, the 2015 terrorist attacks in Paris were partly funded by the sale of fake sneakers. It’s about time we had a reliable way to combat this scourge on the mass scale the market requires.”