You are using an older browser version. Please use a supported version for the best MSN experience.

StockX CEO: Nike claims of sneaker counterfeits are 'meritless'

Yahoo Finance US logo Yahoo Finance US 6/14/2022 Brad Smith

Online resale marketplace StockX continues to rebut Nike's claims that counterfeit products are slipping through the seams of its sneaker authentication process. 

In February, Nike initiated a lawsuit against the e-commerce company over its non-fungible token (NFT) series based on Nike sneakers. In recent amendments to that lawsuit, Nike alleged that it had ordered four pairs of the brand's shoes from StockX on separate occasions and received fake ones.

“We believe the original case has no merit,” StockX CEO Scott Cutler told Yahoo Finance Live (video above) about the lawsuit. “Their recent amendments are equally meritless.”

The company also fired back at Nike's allegations in a press release.

“The timing of Nike’s new allegation is suspicious,” StockX stated. “Nike alleged that they had counterfeit shoes months before they filed their initial complaint, but only added these claims after their lawsuit against StockX’s Vault NFT failed to gain traction or to win over public sentiment. Like Nike’s initial claims, Nike’s new allegations lack any merit.”

Nike did not respond to a request for comment.

A pair of Nike Air Jordan 1 Retro shoes are seen before being packed to ship out of Stock X on January 10, 2018, in Detroit, Michigan. (JEFF KOWALSKY/AFP/Getty Images) © Provided by Yahoo Finance US A pair of Nike Air Jordan 1 Retro shoes are seen before being packed to ship out of Stock X on January 10, 2018, in Detroit, Michigan. (JEFF KOWALSKY/AFP/Getty Images)

The dispute serves as a red flag for resale marketplaces that operate on trustworthiness. Authenticity guarantees have been a differentiator for platforms such as StockX, Flight Club, Stadium Goods, and TheRealReal. 

Following Nike's lawsuit, StockX released additional details about its authentication process, which has verified (or rejected) more than 35 million products since 2016. The report also outlines the products with the most counterfeit attempts.

This is not the first time the secondhand retail industry has felt pressure to prove the authenticity of their products. Luxury reseller TheRealReal has repeatedly defended its products against customer reviews that claim it sold knock-offs, which have sent the stock price lower since the company's IPO in 2019. In the last week, TheRealReal founder and CEO resigned as the marketplace looks to begin a new chapter.

Crunch time for the culture economy

StockX has other concerns beyond its legal battle with Nike.

“Where we’re focused is on providing a great experience,” Cutler said. “But I think as you’ve seen across all e-commerce experiences, the consumer is in a much more challenged state and a much more unpredictable state than we’ve seen.”

StockX, which was valued at $3.8 billion, has become a leading hub of sneakerhead culture by providing an alternative destination for buyers and sellers who previously relied on eBay. Consumers purchased shoes and apparel at a high clip during 2021 — driving Nike to record profits in its 2021 fiscal fourth quarter — and StockX was able to capitalize on the demand. 

But now the trendy goods platform will need to maintain that growth against an inflationary economic backdrop that is leaving consumers to weather price shocks across multiple categories.

The authenticating room for sneakers is viewed at Stock X on January 10, 2018 in Detroit, Michigan. (JEFF KOWALSKY/AFP/Getty Images) © Provided by Yahoo Finance US The authenticating room for sneakers is viewed at Stock X on January 10, 2018 in Detroit, Michigan. (JEFF KOWALSKY/AFP/Getty Images)

In an effort to diversify its product lines, the company has started to expand into other categories including collectibles, electronics, and even NFTs. 

In January, StockX launched Vault NFTs, which enable customers to purchase digital assets that are tied to physical products. 

"They're stored in a facility in a StockX vault," Cutler said. "And we have had a few transactions where people have chosen to redeem that product, to be able to pull it out of the vault, which they can do at any point in time."

Cutler declined to comment on when the company would make its public market debut but reiterated that the company is focused on business execution, authentication standards, and global expansion.

Bradley Smith is an anchor at Yahoo Finance. Follow him on Twitter @thebradsmith.

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube

AdChoices
AdChoices

More From Yahoo Finance US

Yahoo Finance US
Yahoo Finance US
image beaconimage beaconimage beacon