Hanushka Toni, the CEO and co-founder of luxury resale company Sellier, recounts a story about a potential vendor who wanted to sell an Hermès Mini Kelly bag. Although the bag appeared visually perfect, Sellier’s inspection revealed that it didn’t have the distinct “new-car smell” that an authentic Hermès bag should have. When Sellier ran the bag through its AI software, it was confirmed to be a fake.
Luxury fashion industry players are adapting to the rise of AI in various ways. Hardly Ever Worn It recently launched a chatbot called “Maia” on its platform to optimize search and help customers find specific looks or products without spending hours scrolling. Shopify has also integrated ChatGPT into its Shop app to assist sellers in writing product descriptions. However, the battle against “super-fakes,” which have plagued luxury brands and resale companies, remains a top priority.
The global luxury counterfeit and replica market is valued at around $1.9tn, and black-market manufacturers are increasingly using advanced techniques like laser cutting and 3D printing to create convincing copies. To combat this, luxury brands and resale companies are leveraging AI technology and data-driven authentication systems to detect inconsistencies in fabric, stitching, or metals that indicate a counterfeit product.
For example, LVMH-owned brand Patou has introduced an AI-verification system called Authentique Verify. This system digitally “chips” their items during the production process, allowing them to track the products and prevent return fraud. Authentic product photographs taken on a phone capture microscopic properties that allegedly cannot be replicated, serving as a unique identifier.
While larger luxury conglomerates hesitate to experiment with new counterfeit technology due to the risks involved, smaller luxury brands and resale businesses see the potential benefits and are willing to try AI authentication. Sellier, for instance, specializes in luxury bags and accessories from brands like Hermès, Chanel, and Louis Vuitton. The company decided to invest in AI after one of its clients purchased a fake handbag from a competitor. Sellier understands the importance of ensuring authenticity for its clientele and uses a combination of human authentication, brand expert assessment, and the Entrupy AI system for authentication.
Entrupy is a software that uses a microscopic attachment for iPhones or an app for iOS devices to scan and photograph luxury handbags or sneakers. The software analyzes millions of data points to determine the authenticity of the item. To date, Entrupy has scanned $2bn worth of luxury handbags, with around 9.6% turning out to be counterfeit. This technology provides reassurance for brands that prioritize fair labor practices and premium quality goods.
Each company’s authentication approach should be tailored to its business model. For example, the global luxury consignment marketplace The RealReal plans to have 40% of its authentication powered by AI in 2022, focusing on handbags due to their vulnerability to counterfeits. The recent implementation of environmental regulations in France, which scrutinize brands’ supply chains, is also expected to have a significant impact on the counterfeit industry.
Pierre Denis, a former CEO of Jimmy Choo and an investor in the luxury authentication space, believes that blockchain technology, such as NFC or NFT code bars sewn into bags, may be a preferable method of authentication for certain brands. Brands like Louis Vuitton, Chloé, and Prada are already experimenting with this technology. Denis envisions a future where brands bring their supply chains and resale operations in-house, employing tailored solutions to protect their authenticity. However, he warns that counterfeiters are constantly innovating and that everything can be forged, emphasizing the need for ongoing vigilance in the fight against counterfeiting.
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