StockX CEO talks efforts to combat sneaker fraud

Brands like Adidas (ADDYY), New Balance, and Hoka are gaining popularity in the sneaker market. However, not everyone selling is to be trusted. CEO of StockX Scott Cutler joins Wealth! to discuss the platform's fraud prevention efforts.

Cutler notes that the U.S. secondary market is projected to be a $70 billion market by 2027, with half of the transactions occurring online. He emphasizes StockX's aim to protect against fraud through "physically inspecting" every item sold, having rejected over $600 million worth of merchandise.

With more than 200,000 products in their catalog, Cutler stresses the importance of ensuring that each product "is what it's represented to be," to maintain the integrity of the platform and consumer trust.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Angel Smith

Transcripción del vídeo

- Finding the perfect sneaker can really take your fit up a notch. But what about sneakers as an investment? Joining me now to tell us about the latest sneaker trends and tips to maximize your sneaker investments, as well as tips to avoid counterfeiters, we've got Scott Cutler, StockX CEO. Good friend of the show.

Scott, I mean, first and foremost, we just got to talk about the spinning shoes behind you. I mean, I imagine some type of magnet is at play there, you got to fill us in on on what exactly is happening in those cheetah sambas behind you. And I'd love to know as well, if someone's looking to become a seller on StockX, what are some of the top tips that they can implore in order to be successful?

SCOTT CUTLER: Well, I chose to highlight, just for you, one of the top selling products last year, which is a collaboration with Wales Bonner and Adidas in a samba silhouette. Yes, it's very cool, it's rotating behind me. It just highlights some of the trends that we've seen in this marketplace which is the rise of Adidas, non-Yeezy, New Balance, Hoka, On, uggs, crocs, that are becoming increasingly popular among the demographic on our platform. But we've also done a lot of work as we hopefully will highlight here today, all the works that we're doing around anti-counterfeiting and fraud prevention efforts to make sure that this great product gets into the hands of the right consumers.

- Let's talk about that right now. How is StockX squashing some of the counterfeiters. This is always a big concern when you go into any resale platform, or any platform where you can purchase something that had already been purchased at retail, and now you're trying to validate the experience, but also the actual products that someone is reselling too.

SCOTT CUTLER: So taking a step back, you have to realize that the US second hand market alone is projected to be a $70 billion marketplace by 2027. The online portion of that is about half. So we have tried to continue to differentiate ourselves relative to other marketplaces by physically inspecting every item that's sold on the platform.

And since inception, we have verified 55 million products, and then we've rejected over 600, or sorry $600 million worth of products on the platform. And so it's been a really important thing for us in this report to be able to highlight the work that we're doing using technology, to not only prevent bad product from getting to, to the market, but also preventing bad actors from actually ever even getting onto the platform.

- Yeah, absolutely. I mean, there's, there's a lot of luxury listings on the platform as well. People want to ensure that it is authentic, that it is real. How do you go about looking at a lot of those luxury listings? What are the hot luxury listings that you're seeing on StockX right now?

SCOTT CUTLER: So as we look at luxury overall for us, it includes obviously sneakers, it includes apparel and accessories. We've got over 200,000 products in our catalog. And important to that process is actually using technology to verify that the product sold on the platform is what it's represented to be. As we look at last year alone with the use of that technology, we rejected 325,000 items from reaching consumers.

And when we look at the use of that technology, we've incorporated things that are industry standards such as scanning RFID labels into our verification process, to again, prevent product from getting into the hands of consumers. And again, this product represents the best brands in the world. And so we think there's an opportunity here, given that the second hand market is so important to consumers, to do a lot more collaboration with brands and marketplaces, to raise the standards for the way marketplaces act in the world.