Inside the shadowy, lucrative business of ‘superfake' luxury handbags

Mint

11 hours ago

Sandor Walkup was waiting for a table at an expensive restaurant in Charlotte, N.C., when he noticed a woman checking out his Himalayan Birkin. It is a rare crocodile-skin handbag that maker Hermès charges tens of thousands of dollars for and only sells to top clients.
'As I was walking through the restaurant she stopped me and said, 'I love your bag, it's the perfect size. It probably cost you a fortune.'"
When the woman asked if he would consider an offer for it, Walkup, a TikTok influencer, leveled with her: 'Ma'am, the bag is a fake." The woman was surprised at how convincing the Birkin was and asked where she could buy one for herself. So he gave her the details of a private dealer who sells top-notch fakes.
Counterfeiters have perfected the knockoff handbag—and it is disrupting the economics of the luxury industry. Fake purses have always been around, but they were the cheap and plasticky kind that could be picked up for a few bucks from a sidewalk seller.
A new generation of 'superfakes," as they are known in the industry, look as good as the real thing and cost anywhere from $500 to $5,000. Counterfeiters take your order through encrypted services such as WhatsApp or Telegram, give real-time customer service and deliver the goods straight to your door in a branded box.
They pay social-media influencers to promote illicit goods directly to American and European consumers. The technique is proving so good at sanitizing counterfeiters' shady image that the language used to talk about the bags is changing. The word 'fake" isn't used anymore. Instead, fans call the purses replicas, mirror bags, superclones or 1:1s ('one to ones").
In a red flag for luxury brands, young shoppers are embracing the superfakes. A social-media storm erupted in April when Chinese counterfeiters posted videos claiming that major luxury brands are secretly manufacturing their handbags for next to nothing in China. In most cases, the claims made in the videos are bogus.
But the posts reinforced doubts in the minds of Gen Z consumers about the industry's steep markups and whether people who buy genuine luxury goods are getting a raw deal. Popular handbags such as a Lady Dior sell for up to 15 times what they cost to manufacture, according to Bernstein, a brokerage.
Buying a replica is becoming a way 'to give big brands the middle finger," says Marian Makkar, a luxury marketing expert based in Australia who has researched the superfake phenomenon.
There are early signs that young shoppers' cooling attitude toward authentic luxury is hitting the industry's top line. Last year, Gen Z shoppers spent roughly $5 billion less on luxury brands than they did in 2023, data from consulting firm Bain & Co. shows. This might simply be a sign they are feeling pinched by rising bills, or that they are defecting to fakes in high numbers.
The attitude shift about superfakes is a gift to counterfeiters who now market their goods as a financially savvy alternative to overpriced luxury brands: Why pay $11,000 for an authentic Chanel classic flap purse when you can get a near-identical $600 replica from a Chinese factory that claims to source its leather from the same European supplier as the Parisian brand?
People in the secondhand-luxury business first noticed a new strain of counterfeits around five years ago. Some of the superfake handbags were so good that they couldn't be spotted with the naked eye.
Luxury resale website Fashionphile has a counterfeit Louis Vuitton handbag on display alongside a real one at its New York flagship store—an 'authenticity challenge" to see if shoppers can spot the real from the fake. The company's founder Sarah Davis says people who work as sales assistants for top luxury brands haven't been able to tell the bags apart.
Rival reseller The RealReal had to invest in XRF technology to test the metal composition of handbags' buckles to spot the new fakes. The company also bought X-ray machines to examine their innards. Counterfeiters have perfected the outside of the bags, but might still leave a trace on the inside, according to Hunter Thompson, director of authentication at The RealReal. 'It could be a tiny detail such as how a nail head is hammered in."
Anticounterfeit professionals have theories about how the fakes got so good. One is industrial theft. Luxury brands store the instructions about how to make authentic handbags on digital templates known as tech packs.
These master manuals contain an excel spreadsheet with the purse's exact measurements, a technical drawing, details of the threads, trimmings and leather used, and even the precise number of stitches per seam. If a brand's tech pack falls into the wrong hands, counterfeiters can easily make a carbon copy. The risk that this information leaks out of a factory has risen as brands outsource more production.
Counterfeiters also try to poach workers from genuine factories to get inside knowledge. People who stitch luxury handbags for a living earn a decent but not extravagant wage, so might have their head turned by an offer from an illicit manufacturer.
Hermès pays its France-based handbag artisans the equivalent of $40,000 a year including bonus payouts, based on Glass Door salary reviews. That is less than what the brand charges its U.S. customers for a single crocodile Birkin handbag. Some of the company's former employees were convicted in 2020 for running a counterfeit ring outside their day job.
Most fakes are still made the old-fashioned way: A counterfeiter buys an authentic bag, rips it apart to see how it's made and then reverse engineers a fake.
The best superfake purses are often produced in factories in China that run legitimate businesses for mass-market fashion retailers during the day, according to James Godefroy, a Guangzhou-based investigator with brand-protection agency Rouse. By night, a ghost shift produces knockoffs.
Counterfeiters boost demand by paying social-media personalities to review fake handbags. The feed of one Instagram account, @davidslifestyle, is full of videos of counterfeit unboxings. Followers can click a link to the influencer's direct.me page, where they will find affiliate links to more than 150 fake goods including Louis Vuitton Neverfull totes and Hermès Birkin bags.
The links lead to a Hong Kong-based website called Save Bullet. The influencer earns 10% from any sale his videos generate, based on information about Save Bullet's affiliate program. So in the case of a $789 fake yellow Hermès Birkin, the influencer pockets nearly $80 for every bag his followers order.
@davidslifestyle said that he reviewed real as well as replica luxury goods on his channel, and bought authentic products until a year-and-a-half ago, when he felt the quality went down.
Counterfeiters' new online-distribution model is a nightmare for luxury brands. Fake handbags once arrived at customs ports in big shipments, making them easier to intercept. Now that counterfeiters sell directly to consumers, a tide of individual packages is overwhelming customs authorities and slipping past checks.
Luxury brands pay private investigators to gather information about what counterfeiters are up to. They open fake accounts on online forums where counterfeiters do business and go undercover in factories.
Investigators like to watch a freewheeling Reddit community called RepladiesDesigner that has over 200,000 members. Fans of the fake bags share China or Hong Kong-based WhatsApp numbers for recommended sellers and post photos of their latest purchases. Reddit said in a statement that it may ban any subreddit where it is clear the community is 'dedicated to violative content."
Counterfeiters are moving to private Instagram or invite-only Telegram groups that are harder for luxury brands to track. 'It is like joining a golf club now," says Jak Cluness, vice president of intelligence and investigations at brand-protection company Corsearch. 'You have to be recommended by another member to get in." He is tracking a WhatsApp group that uses a subscription-based model charging members $98 a month to get access to the best-quality fakes.
A counterfeit dealer who goes by Heidi said in a text interview that she works for several factories that each specialize in a different brand. A fake Hermès Birkin 25 in Togo leather from a place she called the Hidden Star factory will set you back $1,800. Prices for counterfeit Birkins in exotic skins such as crocodile start at $4,000 compared with more than $50,000 for the genuine bag.
For a counterfeit Chanel classic flap purse, the seller recommended the 187 Factory. Its $575 fakes have proven so popular that there are even 'fake" 187 superfakes. Rival counterfeiters pose as the factory but send an inferior knockoff.
Online sellers are usually freelance operators who reel in customers with details such as the accuracy of the stitching and whether the seams line up properly, according to Cluness. They even send quality-control videos of the counterfeits to make sure the shopper is satisfied with their bag before it ships. A busy freelance seller can make anywhere from $5,000 to $20,000 a month in commission.
Counterfeit factories also make fat profits. A top-quality fake costs around $150 to produce in China, including labor and materials. Operating margins can be 50% or higher if the factory handles its own sales directly. Genuine luxury brands are lucky to make a 40% operating margin on handbags, as they have to spend on fancy stores, living wages and multibillion-dollar advertising budgets.
A Guangzhou-based counterfeit factory owner who goes by the surname Li says he makes a profit of $450 per fake Hermès bag, and sells roughly three hundred a month. He recently spent more than $70,000 to acquire three genuine purses as templates—a Birkin 30 bag, a Mini Kelly II, and a Himalayan Birkin 25. He is disassembling them on a cutting table to create patterns for fakes.
He calls people who pay full price for genuine luxury goods 'stupid and vain." His own customers can be high-maintenance. 'A person who buys a knockoff is often very thin-skinned and very nitpicky," he said.
Brands sometimes see counterfeits as a gateway drug that will eventually lead shoppers to buy the genuine article. Briege Elder, a London-based PR manager with Hunt & Gather agency who used to work as a sales assistant at Louis Vuitton and Gucci, said people regularly came to the brands' stores carrying fake handbags.
It was an unspoken rule not to call out a knockoff. 'We would never address a fake product, ever. Not if it was the worst fake in the world or the best." People carrying a fake were treated as aspiring customers. 'They have a counterfeit today, but they might become a customer in future," Elder says.
Brands' relatively small anticounterfeit budgets suggest they aren't yet seriously worried about the superfake phenomenon. LVMH, the biggest luxury company in the world, spent more than $11 billion on advertising last year but only $45 million on anticounterfeit efforts. That seems skimpy. Superfakes counterfeiters are becoming real competitors.
Write to Carol Ryan at [e-mail] Produced by Alexandra Citrin-Safadi