The common party line in the luxury resale market is that authentication is more of an art than a science, something one can only learn through a mixture of experience and intuition. Fashionphile rejects that idea.
"It's just a science," insists CEO Ben Hemminger.
The company puts this into practice by sending every piece that arrives at its Carlsbad, CA campus through a rigorous screening process involving a combination of highly-trained staff and top-of-the-line technology. The whole operation — from the loading dock where employees accept shipments of goods waiting to be authenticated to the brightly-lit room where product gets photographed per precise standards to a locked cage containing hundreds and thousands of luxury pieces — currently exists in the 30,000 square foot building. In the front is a showroom where southern California customers can come drop off their bags to be evaluated on site or pick up a new style they've been eyeing. In the back, there's a large, bright-pink metal ramp, custom-designed by a company that makes playground slides, where freshly-packed boxes zip down to meet delivery trucks. (I ask if I can take a quick ride down it, but apparently that's an OSHA violation, and so I take the stairs.)
It's quite the evolution from Fashionphile's humble beginnings in 1999 as an eBay shop run out of founder Sarah Davis's home, but something she says has been organic from day one. "We've done every single job in the building," Davis says. "There was a point when Ben or I did all of the packing and shipping, photography, authentication, pricing and customer service."
"We both love finding out what things are worth — treasure hunt, find it out, sell it for more, that whole arbitrage of used luxury things," Hemminger adds.
Initially, Davis was doing this herself, bringing on brother-in-law Hemminger around 2006 when she realized there was an opportunity to grow the business beyond its auction roots. At the time, she exclusively dealt in secondhand Louis Vuitton, having logged hours learning how to authenticate the brand; with Hemminger on board, they aimed to broaden the business, but proceeded very carefully.
"I figured out authentication on one brand and could handle that by myself," she says. "You don't add the brand before you have the authentication in place. We can't just open a box, go, 'What's this? Oh, let's sell it,' because everything we have is highly counterfeited stuff."
Together, they began to familiarize themselves with more designers, starting with Chanel — spending months shopping in stores, buying bags, taking them apart and comparing them with counterfeits until they felt comfortable with the product literally from the inside out. When they were done, they wrote a "guide" to authentication; Davis put together the Louis Vuitton edition and Hemminger worked on the one on Chanel.
Fashionphile still uses those guides today, as evidenced by the binders collected on the desks of their authenticators packed with laminated pages detailing everything from precise colors and hardware to logos and fonts. And as the brands they accept evolve, taking on new creative directors or aesthetic directions, so, too, do their corresponding guides, which are more living, breathing documents than carved-in-stone laws.
Counterfeits are involved in this process, too, as they provide key insight into identifying how fakes are made. When Fashionphile gets an item they deem is counterfeit, they charge the sender a $75 fee ($125 for Hermès Birkins or Kellys) to have it returned to them. Not only has this served to weed out would-be scammers — either people sending in a luxury item for a freebie authentication, something which costs Fashionphile time and money, or counterfeit rings looking to make a score — it has also provided a library of goods for the company to learn from. Inside "The Graveyard" at Fashionphile HQ are dozens of black boxes, each labeled by brand, filled with everything from fake Christian Louboutin shoes to forged Gucci packaging, abandoned by their senders but put to use training Fashionphile employees.
While touring the campus, Davis pokes into an office where a handful of employees are gathered around some of Dior's newest styles, examples of counterfeits and a binder detailing what to look for in authentic Dior bags. Training for authenticators is extremely vigorous here: Before an employee can work on their own at Fashionphile, they must undergo 5,200 hours of training in just seven brands; after 6,100 hours, they can work within 21 brands; after 6,460 hours, they can work on 32 or more. It's a process they've dubbed "Fashionphile University."
But while the human component remains crucial to Fashionphile's business, they've also added in lots of tech. There's a device that can precisely identify Pantone shades, which is especially useful in authenticating Hermès; equipment that can detect lab-grown diamonds, which can sometimes (but not always!) signal counterfeit jewelry; a machine that can X-ray a bag to reveal the hardware within — another giveaway in particularly well-done fakes.
Not satisfied to exclusively rely on appliances readily available in the market, however, Fashionphile is also working on bringing the human element into digital form through in-house innovations. There's software in development which the company says can currently detect counterfeits in three popular classes of bag with 100% accuracy using microframes. There's also a pricing tool which pulls data across key factors (like condition, current inventory, historic shelf life and color) into an algorithm which optimizes pricing, as well as a visualization tool customers can use to get an instant quote on their goods without having to ship it in, which delivers a 95.3% accuracy.
This tech also allows Fashionphile to pick up on trends before humans even can. Remember when the Fendi Zucca print came roaring back into fashion? Or when the Dior Saddlebag regained It status? Fashionphile's system registered that those styles were moving faster than normal — so fast, in fact, it couldn't raise the price quickly enough to match the trend. These are all great for customers, of course. But they're also making business faster — and more profitable — for Fashionphile.
"We've created all these tools to make it so that, as soon as possible, when you walk in our door, you can be fully capable in your position. Our technology is enabling you to get that way faster," Davis says. "There was a time when you came into Fashionphile as a procurement person who was quoting the bags, it took you months to be helpful to us. We've now created tools that make you super-effective within days."
Can Technology Keep Fake Handbags Out of the Marketplace?
The RealReal's Authentication Practices Are Not What They Seem, According to New Investigation
What Goes Around Comes Around Is More Than Ready for the Resale Market Boom
"That whole combination of expertise and tech is just really about scaling, because if we were going to stay stagnant and just be a mom and pop, we wouldn't really need it. Our authenticators with no tech can do maybe 20 bags an hour; with these tools, they could probably do 60 an hour," Hemminger adds. "If we're going to be worldwide, and be a $2 billion, $3 billion company, we will probably still have a lot of authenticators, but they would never be able to do that much volume. It [becomes] review versus primary research."
It's hard not to be deeply impressed by the level of work and accuracy that goes into this authentication, both on a human and technical level. Their lead jewelry authenticator walks me through two seemingly identical Cartier Juste un Clou bracelets, down to the karat of gold used in the product. The only giveaway? The stamp etched into the fake, which should identify the maker, is slightly different when examined in a jeweler's loupe. Then, I'm told a story about an Hermès Birkin, made by Hermès employees off-the-clock with stolen Hermès leather sold in the black market, identified only when the x-ray revealed that the screws inside the metal feet were wrong. (For me, this all brings about an existential crisis about what, exactly, makes a luxury good so valuable, but that's another story for another day.)
Indeed, Davis and Hemminger say that when they have brought luxury companies onto campus to walk them through the authentication process — they can't say who because of NDAs, of course — they've been so impressed that there have been early talks of partnerships. It's just a question of educating these brands, which have been historically unfriendly to the resale market, about the value of consignment, Hemminger explains: "They think we're a problem because of counterfeits. We actually helped them tremendously in showing them how we can help stop counterfeits."
"But one of the big benefits that I think some brands are starting to get is that we actually increase sales for brands. No one's buying a new car every two years — that's just the cycle, and you can only do that because you're trading in the old one," he continues. "We think 10 years from now people will just buy more Chanel flaps or whatever, and the new bags will increase in velocity of sales. It doesn't devalue the brand. It just means more people are carrying it."
Up until now, the brand's growth has been slow and steady, but with the re-commerce market exploding the way that it has, Hemminger and Davis feel the time is right to ramp up their efforts to lock down the luxury accessory market. They've let the rising tide lift their boat, so to speak, and now they're ready to establish themselves as a primary player in the space.
"If you Google resellers in our world in 2013, there are a bunch of players that raised money and they're just not here anymore," Davis says. "We've built this really solid foundation — and taking our sweet time doing it, partially to our detriment. We've built this nice little fire; we throw some dry wood and gas on that thing, it's going to go crazy, because it's all solid."
Regardless of whether luxury brands get on board, Fashionphile is in expansion mode. In addition to the Carlsbad campus, there's a 100,000 square foot warehouse in the works in New Jersey, all the better to service East Coast customers. There are two standalone Fashionphile showrooms: Carlsbad and New York City. In 2019, the brand took a minority investment from Neiman Marcus and now operates selling studios inside select retail locations — currently, in Dallas, Beverly Hills, San Francisco and Newport Beach, with more to come in 2020 — where customers can get paid on the spot, including the option of a Neiman Marcus gift card.
And while Fashionphile is certainly in a good position for cornering the luxury resale market, it's hard to imagine they don't see potential in all the authentication technology they've developed. Davis and Hemminger don't consider mom-and-pop consignment operations as rivals, for example, so they haven't ruled out licensing their apps for a fee. There's talk of making the Hermès color guide available on the site as a resource for customers. Davis even quips at one point that luxury brands should send their employees to Fashionphile University for training.
While there are certain things they plan to keep proprietary, they're keeping an open mind for what the future might hold on the tech front.
"We recognize that there's a cost of sharing the information that we have or the tools that we have — it might help a competitor, or we'll lose a couple of sales," Hemminger admits. "But the other side of it is, by being the authority in the marketplace and being out there with all your information, you become more of a household name, you become recognized for your authority and the brand grows. I think we don't want be too tight-fisted about it because we realize that being generous is a two-way street."
Disclosure: Fashionphile paid for my travel and accommodations to visit its headquarters in California.