Concerns Over Sneaker Fraud On the Rise But How do We Fix it?

Shoeography | Wednesday, May 08, 2019 | 0 comments

It's not uncommon for sneakerheads to drop thousands of dollars on a new pair of kicks. Some estimates have claimed that the global sneaker industry is worth more than $55 billion and this number is only expected to grow. The resale market alone is estimated to be worth more than $1 billion.
In fact, the U.S. sneaker industry alone makes up more than one-third of the global sneaker market with an industry worth more than $21.2 billion. Some marketing specialists have even begun to consider sneakers an alternative asset class as they're heralded as a collectible item.

 "We propose the idea that sneakers are now an emerging alternative asset class that 1) earns illiquidity premiums; 2) provides diversification -- non-correlated with traditional asset classes; and 3) earns favorable risk-reward characteristics," claim Cowen Equity Research analysts.

As a result of the pervasiveness of the sneaker market, it's not surprising that rates of fraud have steadily begun to rise.
A recent study performed by sneaker reseller vIRL surveyed more than 1,000 sneaker fans about their industry habits and concerns regarding the market.
The study found that almost 81% of sneaker fans bought their sneakers online but nearly 69% of these individuals are concerned over the authenticity of their sneakers. While more than 40% of internet users buy items online multiple times each month, coming up with ways to stop fraud is becoming more important than ever.
 Online shopping has never been a sure shot. Even though up to 80% of malicious online attacks come from within an organization, counterfeit goods have become an increasingly difficult problem to wrangle.

While companies like vIRL offer authenticity guarantees, 73% of people who purchased counterfeit sneakers from online sources believed that their purchase was legitimate. Worse yet, more than 40% of shoppers paid for a product that never received.
While 85% of business' customers live within five miles of their location, the internet’s ecommerce market is massive. This can be detrimental for the sneakerheads hoping to weigh in on the resale market for collector shoes. According to vIRL, some flippers are able to make a profit of more than three times the original price of the shoe.
Sneakers have become more of than just a fashion choice; they're an investment for many.
In fact, more than two-thirds of those flipping shoes believe their shoes will become more valuable in the future.

The transparent nature of Blockchain has become one of the top ways to buy and sell sneakers online. Even vIRL sneakers are traded on the WAX Blockchain. Users are able to view a vendor's purchase and transaction history, create digital versions of sneakers, and more. This type of resource is pivotal for sneakerheads who typically sell their sneakers on social media sites or third-party hosts like eBay.
Just last August, more than $58,000 worth of Nike sneakers were stolen when thieves bought more than 200 pairs of shoes in China before returning counterfeit goods for a refund. Though four suspects were taken into custody, this kind of fraud happens on a smaller scale every day.
Is Blockchain enough to save the sneaker industry? It's still too soon to tell. In the meantime, sneakerheads will have to used verified sites like vIRL for shoe trading and resales.

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