This sneaker-selling startup is trying to stomp out fakes

Even the best counterfeit sneakers have their tells. A pair of fake Air Jordans might use the wrong color stitching o...

Posted: Jan 6, 2018 12:55 PM
Updated: Jan 6, 2018 12:55 PM

Even the best counterfeit sneakers have their tells. A pair of fake Air Jordans might use the wrong color stitching or weigh an ounce too much or too little. Sometimes, there's a different scent.

"When you smell a Nike factory shoe, it has that distinct factory smell. And when you smell a fake Nike, it has that fake artificial smell," said Eddy Lu. "If you've smelled enough sneakers, you know that smell."

Lu has smelled a lot of shoes. He is the co-founder of GOAT, a marketplace for selling and buying sneakers. Launched in 2015, the startup's goal is to make it easier to find and bid on shoes online, and harder to be duped by counterfeits. It uses image recognition and human inspectors to screen (and sniff) for fake shoes

Sneakers are a big business. Athletic footwear was a $17.5 billion industry in 2016, and resales are estimated to make up $1 billion of that market.

Secondary sales are driven by the shoe-loving subculture of "sneakerheads." Decades after Nike released its first Air Jordans, people still lineup outside of boutique shoe stores for hours to buy the latest limited edition sneakers.

They sell and trade the collectable shoes through eBay and Craigslist, on social media like Facebook and Instagram, and in real life at consignment shops or conventions like SneakerCon.

GOAT's co-founder Daishin Sugano came up with the idea for GOAT after getting stuck with a pair of fakes from eBay. He and Lu thought there could be a better way.

"The reason marketplaces sometimes suck is all the dirty work we're going to handle," said Lu.

Related: The future of getting dressed: AI, VR and smart fabrics

Some sellers are already making a good living from the marketplace, which sells through a web store and mobile apps. The company says some individual sellers made more than $2 million off the app last year.

Atlanta-based seller Ashley -- who declined to share her last name -- brought in more than $300,000 last year on GOAT. She was a grad school student with a day job when she started selling sneakers on the side. Before she moved her business to GOAT, she said she had to deal with fakes, fraud and returns, and was the victim of a major theft.

Counterfeit shoes are one of the biggest problems for the industry. GOAT's screening process has helped it get a foothold in the sneaker community because it takes the burden for detecting fakes off of buyers.

To list a pair or shoes, a seller sends in seven standardized photos. GOAT will try to authenticate that they're real, using machine learning to do a first pass on the photos and comparing them to an image database of real and fake versions.

Once a listing is up, buyers bid on shoes, similar to eBay. But instead of shipping them directly, the seller sends them to GOAT's headquarters where experts inspect each pair. They use microscopic technology to look at the shoes, weigh them and check things like the fonts.

Related: Amazon's smart mirror patent teases the future of fashion

Sellers are charged a fee, which goes up or down based on the quality of the experience. A good seller is charged 9.5% and $5 for a shipping label.

Limited edition shoes are a small market -- Lu says there's only 12 or so "hyped" models a year. To grow, the Culver City based company has moved into selling general release shoe models. It has raised $37.6 million from investors.

Around 75,000 sellers use the app, often in addition to other channels. It has around six million members, according to Lu, and around 250,000 different sneakers listed at a time.

Lu believes a lot of sneaker sellers on GOAT are young - teenagers using accounts their parents set up. Sellers of all ages have discovered a pair of shoes can be surprisingly lucrative.

"I can stockpile inventory to hold my money," Ashley said. "I buy sneakers that I know will only appreciate in value, versus spending money on useless items. When I have a need for cash, I cash out.

"Even if the sneaker is for retail, it's better than money in my bank account."

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 36680

Reported Deaths: 1250
CountyConfirmedDeaths
Hinds299254
DeSoto195920
Madison148439
Jones122449
Harrison117716
Rankin112619
Neshoba104677
Forrest103843
Lauderdale96681
Scott82415
Jackson79819
Washington73713
Copiah67016
Leake63420
Lee62822
Oktibbeha61928
Grenada6049
Warren60021
Holmes59541
Lamar5837
Wayne56519
Yazoo5607
Lowndes54817
Leflore53456
Lincoln53335
Lafayette5064
Pike50520
Sunflower5048
Monroe46135
Panola4546
Covington4465
Simpson4433
Bolivar41218
Tate39213
Attala38624
Newton37610
Adams35820
Pontotoc3556
Marion34512
Claiborne30811
Pearl River30332
Winston30111
Chickasaw30019
Marshall2923
Jasper2816
Noxubee2799
Walthall2708
Clay26111
Union25412
Smith25212
Coahoma2306
Clarke22325
Lawrence2132
Yalobusha2089
Tallahatchie1954
Kemper18414
Carroll18211
Montgomery1793
Calhoun1705
Humphreys16910
Hancock14813
Itawamba1478
Tippah14611
Webster13411
Jefferson1283
Prentiss1274
Jefferson Davis1254
Tunica1253
George1233
Greene11610
Amite1123
Alcorn1072
Tishomingo1061
Quitman1011
Wilkinson989
Perry914
Stone772
Choctaw764
Franklin542
Sharkey480
Benton470
Issaquena101
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 54768

Reported Deaths: 1096
CountyConfirmedDeaths
Jefferson6746170
Mobile4904140
Montgomery4547112
Tuscaloosa269053
Madison22689
Marshall198011
Shelby169125
Lee159637
Morgan13385
Baldwin127711
Walker107532
Elmore106721
Etowah101114
Dallas10029
DeKalb9677
Franklin93816
Autauga69815
Russell6860
Unassigned67928
Chambers67730
Butler65229
Limestone6393
Tallapoosa63069
Cullman6156
Houston6077
Lauderdale5776
St. Clair5443
Calhoun5155
Colbert5096
Escambia4888
Lowndes48422
Pike4795
Jackson4352
Coffee4284
Covington41612
Talladega4017
Barbour3992
Dale3951
Bullock37810
Hale35423
Marengo35411
Chilton3312
Blount3201
Clarke3176
Wilcox3038
Winston2995
Sumter29213
Marion29014
Pickens2746
Randolph2639
Monroe2603
Perry2502
Conecuh2318
Bibb2241
Macon2199
Choctaw21712
Greene1989
Henry1553
Washington1488
Lawrence1360
Crenshaw1323
Cherokee1247
Geneva980
Lamar891
Clay852
Fayette851
Coosa661
Cleburne451
Out of AL00
Tupelo
Clear
76° wxIcon
Hi: 91° Lo: 71°
Feels Like: 76°
Columbus
Clear
72° wxIcon
Hi: 91° Lo: 70°
Feels Like: 72°
Oxford
Clear
70° wxIcon
Hi: 91° Lo: 68°
Feels Like: 70°
Starkville
Scattered Clouds
70° wxIcon
Hi: 89° Lo: 68°
Feels Like: 70°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather