image: Vestiaire
It is a whole lot easier to get an Hermes Birkin bag online than it is to get one in stores, where it is almost impossible unless you have built up an extensive purchase history with the luxury stalwart. The same can said for Chanel bags, which the Paris-based brand does not offer for sale online at all, and even some of the most pricey Louis Vuitton bags and garments, which the luxury goods giant reserves for sale in its store, even though they are available for view on its various international e-commerce sites.
The likes of Vestiaire Collective, which is slowly but steadily morphing into a giant e-commerce platform for luxury garments and accessories, are making these purchases possible. An “eBay for fashion items, but with a premium positioning,” Vestiaire – which was founded in Paris in 2009 –announced in early 2017 that it raised $62 million, bringing its total funding to $118 million, which has come from the likes of Zadig & Voltaire, Ventech, Balderton Capital and Condé Nast International.
According to a statement from the e-commerce site last year, its success thus far – which includes consistent growth over the past five years – has largely been based on its unique value offering: It is “the only consumer-to-consumer marketplace where 100 percent of the products are physically checked by a team of experts, a quality control that makes the platform unique.”
The Fight for the Top Spot in the U.S.
Having entered the U.S. market in 2015, Vestiaire “has subsequently grown in this geography where over in the last 18 months, it has established itself as a leading and expert company in the pre-owned luxury and fashion business. Part of the proceeds of this funding will be used to accelerate its position in this market.”
As Sébastien Fabre, founder and CEO of Vestiaire, said in a statement last year, the company is “pursuing similarly rapid growth in the US, as well as enter new high potential markets such as Asia Pacific.” He continued: “It’s time to go further and generate more sales in the U.S., as this is a huge fashion market.”
While Vestiaire is, in fact, the leader in terms of luxury re-sale in the U.K., Germany, Spain and Italy, it faces some significant competition in the U.S. One such entity that comes to mind: The RealReal, the San Francisco-based luxury consignment platform that was launched in 2011 by former Pets.com CEO Julie Wainwright.
The RealReal – the consignment-model site that boasts a rapid turnover rate (most items sell in less than 30 days), and over 4.5 million members, who have sold over 2 million items on its site as of the spring of 2016 – is a noteworthy opponent.
It is even more competitive in light of its “rigorous authentication process.” According to Fortune’s Erin Griffith, meticulous nature of the process is “evidenced by the four-inch thick binders full of specifications for thousands of luxury items on each employee’s desk. The company even holds internal ‘Find the Fake’ contests, giving away prizes to authenticators who identify tell-tale signs on counterfeits. The signs can be counter-intuitive—sometimes the fakes boast more expensive-looking details than the real ones. When a fake is spotted, The RealReal destroys it. To do anything else with them would be against the law, Wainwright says.”
Financially speaking, The RealReal has raised more than $170 million in funding since its launch, including a $40 million round in venture funding in April 2015 led by Industry Ventures, with participation from Greycroft Growth, DBL Partners, e.Ventures, and existing investors.
Exactly a year later, The RealReal raised an additional $40 million in Series E financing. As of this month, The RealReal’s founder Julie Wainwright, whose fast-growing company was expected to exceed $500 million in merchandise revenue for 2017, is “currently pitching investors about raising a fresh $100 million in new funding,” per Recode.
Others in the market – and there certainly are many – tend to follow one of two models. Some rely on a DIY selling model, such as Poshmark, the re-sale site with upwards of 1.5 million members and $25 million in funding from an April 2016 round led by GGV Capital. This means that sellers photograph, post, package and ship their items directly to buyers. Others, like thredUP, which boasts the title of the “Largest Online Consignment & Thrift Store,” handles all of this for sellers, who merely send their goods to the company, which markets and sells the goods on their behalf.
One other noteworthy player in the re-sale game is eBay. One of the longest-standing parties when it comes to online marketplaces, eBay recently announced that – in light of the rising luxury resale market and consumers’ lack of confidence in buying secondhand luxury goods online (due to the saturation of the market with counterfeit goods) – will begin authenticating luxury handbags, footwear and other commonly counterfeited luxury goods this year.
The move is almost certainly one that will enable the online seller to distinguish itself from similarly situated online marketplaces, such Amazon and Alibaba’s platforms, which are riddled with counterfeits. It will also enable eBay to tap into the market currently being pioneered by the likes of The RealReal and Vestiaire.
A Blueprint for Success
As for why these retailers have been so successful, that has to do with the ease with which they enable consumers to purchase products that are otherwise not shoppable online. It might also stem from their ability to democratize fashion in ways that others simply have been unable to.
One of the most buzz-worthy developments in retail over the past decade or so – since Karl Lagerfeld first teamed up with Swedish fast fashion giant, H&M (or really, when Halston teamed up with J.C. Penney in 1983) – has been the luxury brand x fast fashion collaboration. The purpose (or the stated purpose, at least) of these collections, whether it be Missoni for Target, Versace for H&M, Christopher Lemaire for Uniqlo, or what have you, has centered on the so-called democratization of fashion, i.e. making high fashion available to larger pool of consumers.
As we have asserted in the past that such efforts are rarely all they are made out to be in more ways than one. Oftentimes, instead of distributing garments and accessories with a semblance of luxury or high fashion, we end up with a Kenzo-themed collection for H&M that consists of products that are a far cry from any designer’s main line in terms of fit, quality, etc. As such, one could very rightfully question whether this represents a true democratization of fashion at all?
This is where luxury re-sellers come in. Instead of churning out cheap luxury fashion-esque garments and accessories (aka low quality Bangladesh-made high fashion imitations á la H&M and co.), these sites are making authentic high fashion and luxury goods more affordable than ever before.
Vestiaire Collective’s ambition is to become the clear global leader as a trading platform for both buyers and sellers by the end of the year. Given the increasingly competitive market and seemingly endlessly flowing funds devoted to it, paired with the overwhelming demand from consumers for these types of services, the battle for market share in the luxury resale sector will be an interesting one to watch.
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