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This fake sneaker king's operation made millions on Reddit. Then it all fell apart.

Here's how one former med student started a successful fake operation on Reddit from the comfort of his own home.

by Dexter Thomas, Quinton Boudwin, and Karen Ye
Sep 18 2018, 12:49pm

Chan never planned on being a criminal. Like most dealers, the 26-year-old former med student started out as a customer.

One of Chan’s newest products is a near-perfect copy of a recently released, special edition Converse All Star sneaker, designed by fashion luminary and Off-White brand founder Virgil Abloh. Chan’s version costs $80 — which is a great deal, considering that buying a legit pair could cost you $1,500.

Buying or selling fake shoes is illegal. But it’s also a booming industry that was created, ironically, by some sneakerheads’ obsession with authenticity. Chan used to share that obsession — until it got too expensive.

While attending medical school in 2016 in the U.K., Chan found himself lusting for a pair of Adidas NMDs, a lightweight running shoe with streetwear appeal. At retail, the pair costs $170. But they quickly sold out, and resale prices on online auction sites reached up to $800.

“That was some money that I was not willing to spend on shoes that were going to get dirty and kicked about,” Chan told VICE News. “I think it's kind of a huge waste, so the next best alternative that I can think of was to look into replicas.”

By “replicas,” Chan means, of course, what Adidas would call “counterfeits.”

When most people think of counterfeits, particularly from China, they think low quality — like the luxury bags, watches, and tech gadgets sold on Manhattan’s Canal Street. But the counterfeit sneaker marketplace is a lot more sophisticated than what you’d find in the back of a minivan, thanks to a thriving community of internet-savvy sneakerheads who don’t mind buying fakes.

In recent years, Reddit has emerged as a haven for those dedicated sneaker fans who want legit-looking shoes without the four-figure price tag — particularly the r/Repsneakers (“replica sneakers”) subreddit, a 70,000-strong swarm of sneakerheads who endlessly obsess over the latest batches of high-quality fake sneakers and how to get them. So naturally, Reddit was one of Chan’s first stops in his quest for those NMDs.

Sneaker fanatics like Chan are forced to flock to these underground markets because of the astronomical margins on rare sneakers. Over the last several years, the sneaker game has changed from a hobbyist’s playground into a $92 million hypebeast market, fueled by prospectors who have created a cottage industry dedicated to reselling footwear. When some people look at sneakers, they don’t see footwear anymore. They see boxes of liquid assets.

The Off-White Air Jordan 1s, for example, retailed for $190 and now resale for $1,140. Still want some Air Yeezy 2 Red Octobers? If you didn’t snag them at the $245 retail price, be prepared to drop $7,500 resale.

It’s a lot like bitcoin, which might sound like a silly comparison because you can’t wear bitcoin — until you realize that nobody wears these shoes, either. People hold them until they’re at peak value, dump them on the resale market, snap up another potentially lucrative pair, rinse, and repeat.

“Suddenly, we were getting 500 queries a day from people asking about shoes.”

So Chan dug into Reddit and various Chinese forums, trying to find a pair of the coveted NMDs. But he kept hitting a wall. Reddit didn’t have any promising leads, and the Chinese forums were confusing. Prices and sneaker quality didn’t line up, and the market had no structure. So he started talking to sellers on the forums, trying to figure out the cause of the disorganization. He wasn’t able to find out much about sellers’ business practices, but one detail did emerge: Every seller he spoke to told him they were based in Putian, China.

That made sense. Since the 1980s, both Nike and Adidas have held official factories in Putian. After nearly 40 years, it’s become a center of institutional and technical knowledge on the craft of sneaker-making. All the materials, the machinery, and even the skilled laborers are already there. All someone — say, Chan — would need to do to create a successful replica shoes business would be to simply divert some of those resources into an underground operation.

The more research Chan did, the more it looked like there was an opportunity. “I eventually decided, you know, I have a free summer,” Chan said. “Let's just come here and find out more about this industry.”

So when classes let out for the summer in 2016, Chan booked a flight. Before long, he’d forged a partnership with some locals and sketched out a business plan.

“We sort of established a partnership and decided, you know, hey, this could potentially be good business,” he said. “So I'll do the selling, and he's local, he will focus on the logistic aspects of selling shoes — you know, packing, shipping them, sending them out to the rest of the world.”

Chan returned to school that fall with a plan. He’d go to where his customers were — on Reddit — and try selling directly to them, via Reddit forums.

Unlike the shoe reseller market, which is inherently secretive and full of people trying to one-up each other for profit, Reddit’s r/Repsneakers subreddit is generally democratic and encouraging. Fellow sneakerheads genuinely want to help each other “buy from a weird-ass Chinese website and get shit for the low,” as one member of the community put it.

But r/Repsneakers is also a confusing sea of insider lingo. Phrases like “legit check” (confirming that a seller is legit), “QC” (quality check on shoes), “1:1 succ” (successfully obtaining or passing off fake shoes as the real thing), and the dozens of cryptic inside jokes would be off-putting, even to a native speaker of English, and nearly impenetrable for a Chinese businessperson with limited command of the language.

So as a speaker of Chinese, English, and sneakerhead lingo, Chan figured he had a unique opportunity: He could serve as the middleman between hungry reddit hypebeasts and the bewildered Chinese factory bosses who make the replica sneakers.

After all, it’s a sketchy proposition from the get-go, because the entire operation is illegal. If anything goes wrong, neither buyers nor sellers have any recourse. That made the market ripe for a savvy intermediary.

So Chan made a post on the r/Repsneakers subreddit to test the waters. “I’m bilingual,” read the headline of his first post. “What would you say if I could get you cheaper reps?”

The responses were immediate. Dozens of sneakerheads flooded the comments, and users begged Chan to make good on his promise. “496 votes?!” one poster said, noting how many upvotes Chan’s post had gotten. “Do the Math. That’s like $10K easy money. Get it cracking OP.”

Satisfied that there was a viable market, Chan set up his own subreddit, r/chanzhfsneakers. While most subreddits focus on a hobby or interest, this one was wholly dedicated to funneling potential buyers to Chan’s business — and it was more popular than he ever imagined.

“We just posted our Skype username, and people started adding us on Skype and asking us, ‘Hey, I'd like to buy some replica sneakers,’” Chain said. “Suddenly, we were getting 500 queries a day from people asking about shoes.”

Eventually, Chan created a wait list for potential buyers to put in their orders via Skype. Once a customer reached the top of the wait list, they would tell Chan what shoe they wanted to buy, the size they wanted, and make payment via bitcoin or money transfer app.

Then, Chan would send out orders to the factory. Once the shoes were ready, someone from his team of couriers would pick up the orders from the factories and deliver them to shipping agents, who would then send the shoes to the customers.

After six months of operating, the business had attracted over 10,000 sneakerheads from all over the world, according to Chan.

At one point, Chan said, 3,000 people were on the wait list to order. He had to hire a handful of employees just to handle calls. R/chanzhfsneakers was offering high-quality Yeezys and Jordans at reasonable prices — $90 per pair on average, plus $30 shipping. But more importantly, his customer service was much better than the average bootlegger. Although his customer base was mostly “whiny and fanatical kids” from the U.S., as he put it, Chan knew how to keep them happy. He took high-quality photos of his fakes to reassure potential customers of their pairs and responded quickly to questions. Margins were modest, at about $15-20 per pair.

But the volume more than made up for the slim margins. At his peak, from mid-2016 to the end of 2017, Chan said he was regularly selling up to 120 pairs on a good day and 30 pairs a day on average. In 18 months, his operation made around $2 million in revenue. Factoring in costs, Chan estimates that his team earned around $500,000 in net profits, and around $20,000 of that went straight to his pocket. But there were several unexpected overhead costs to cover, and he insists he was operating on a loss.

Still, business was booming — until Chan tried to expand too far. Seeing that his customers were hungry for a particular pair of Adidas Ultraboosts, he invested tens of thousands of dollars into creating a copy version. This would be no small feat: German company Badische Anilin & Soda-Fabrik provided the “boost” materials in the shoes, and Continental Tire made the rubber soles. Both of those materials would have to be sourced somehow, and then Chan would have to find a factory able to replicate the complicated design of the shoe.

In October 2017, after a year of work, Chan had created what he thought would be a popular new cash cow. He’d sourced the necessary materials. He was pleased with the quality of the stitching, and the colors were nearly indistinguishable from the original. Everything looked great, and his customers seemed excited to buy. He started taking orders and began to ship the shoes out.

Then, one customer complained. The holes on the mesh were too big, they said. The shape of the shoe was different from the original. The color was off.

Chan tried to reassure them that these were the best-quality replicas possible. But the customer insisted that the shoes were terrible — and then posted about it on Reddit. This public complaint set off a chain reaction. Other customers started complaining too, and soon Chan’s employees were inundated with so many refund requests that they couldn’t keep up. That made his customers even more angry; they were used to prompt responses.

Six months later, Chan posted an open letter on his subreddit, claiming that both the factories and customers were being difficult and unreasonable. He was stuck in the middle, he lamented, with $80,000 worth of “bricks.”

“The backlash following the cream chalk Ultraboost took every one of us by surprise,” the post read. “We did not expect such a volatile response after all of the work that we have put in.”

But the community had little sympathy. Just as quickly as its members had crowned Chan the r/repsneakers savior, they branded him as a greedy scammer. Business slowed to a trickle.

Chan was unlucky, or lucky, depending on how you look at it. Instead of a failed product and fickle customers tanking his business, he could have been a target of a police raid, which is fairly common in Putian. But those crackdowns generally happen only to big-time operations, after months of monitoring. And both government officials and counterfeiters know that raids are an infinitely repeating game of whack-a-mole. Even if Chan were to be arrested, another Chan, or 10 more, would appear.

But Chan hasn’t stopped selling shoes. (He still has those Converses if you want them.)

His latest product isn’t a sneaker, though. It’s a suitcase, copied from this year’s Rimowa and Supreme collaboration: basically, the same suitcase Rimowa’s been selling for years, just wrapped in a giant Supreme logo. The original went for $1,600 retail and sold out in 16 seconds. It now goes for over $4,000 on the resale market.

Chan figures suitcases are a safer market. The margins are better, and luggage is a lot easier to replicate.

Still, mistakes happen. Sitting near the entrance of Chan’s office is a reject from when he was still prototyping the suitcases. It’s almost perfect, except for the color of the Supreme logo. The original is bright silver; this one looks more white. A true hypebeast wouldn’t be caught dead using it, for fear of being “called out” as a poser. But after two years of dealing with fanatically paranoid customers, Chan has lost his taste for that drama in his personal life.

“Calling out doesn’t matter,” he shrugged, nudging the suitcase. “People’s opinion doesn’t really matter to me. I’ll most definitely just use this.”

Editor's note 9/18 10:08 a.m. ET: A few details were removed from this story after publication to protect the source's identity.