PARIS, France — “In 2012, we had about 120 competitors worldwide. Right now, there’s maybe 10,” says Sébastien Fabre, chief executive of fashion re-sale site Vestiaire Collective. “So there’s opportunity.”
Indeed, consolidation in the fashion “re-commerce” space — where the Paris-based Vestiaire Collective is competing against a handful of other major players including San Francisco’s The RealReal and Santa Monica’s Tradesy — has strengthened the survivors as they gear up for what some see as a winner-takes-all battle amongst fashion resale start-ups.
As the competition rages on, Vestiaire Collective has raised $62 million (about €58 million at current exchange) in a Series E round led by Vitruvian Partners with the participation of existing investors Eurazeo and Idinvest Partners. Vestiaire Collective is the first French investment for Vitruvian, a European private equity firm, which also has a stake in fashion platform Farfetch.
“Vestiaire Collective is the largest specialist marketplace for pre-owned luxury clothes and accessories in Europe by a great distance,” Thomas Studd, partner at Vitruvian Partners, said in a statement. ”Its highly disruptive platform is rapidly growing the market and enabling it to take share from less-efficient legacy models.” The round brings the total amount of funding the company has raised to nearly $125 million (about €116 million). Previous investors also include Zadig & Voltaire, Ventech, Balderton Capital and Condé Nast International.
The fresh injection of capital will allow Vestiaire Collective to break into new markets in the Asia Pacific region and spend money on acquiring new customers in markets where there is significant room to grow, such as the US, creating 120 new jobs globally over the next 18 months. Right now, 65 percent of the company’s transactions are cross-border, although much of that is within Europe. It will also invest in a new European logistics facility. “The more countries you open, the more supply you have to fuel the global marketplace,” Fabre says.
Founded in October 2009, Vestiaire Collective’s hybrid business model has distinguished it from competitors. Built as a peer-to-peer marketplace like eBay, Vestiaire Collective allows sellers to post their own items and set their own prices. Unlike The RealReal — which operates on a consignment model, photographing and marketing the product itself, thereby taking much of the guesswork out of selling — Vestiaire assists sellers by photoshopping imagery against white backgrounds to ensure visual consistency. But it also requires sellers to ship sold items to its own facilities, where items are authenticated and quality-assured before being delivered to buyers.
The more interaction, the faster you sell. This community listens to the peer. They don’t listen to push marketing.
While the company declined to disclose revenue figures, sales are growing 60 percent year-over-year, on average, “and the US is growing faster than that,” according to Fabre. With nearly 6 million registered users in 48 countries, more than 3,200 new products are added every day, and the average basket is almost $430 (€400). Seventy percent of traffic comes from mobile.
One element of Vestiaire Collective’s strategy has been to be proactive with sellers, educating them about what products and brands are moving fast. “It’s a community of nearly 6 million people — with 170,000 new people coming in every month — discussing and creating social interactions around product,” he says. “The more interaction, the faster you sell. This community listens to the peer. They don’t listen to push marketing.”
An expanded global footprint will allow Vestiaire Collective to supply more of the right product at the right time, a critical element for resale sites. For instance, Fabre says the company saw Gucci quickly rise from the 15th most popular brand on the site to the second most popular brand less than a year after the Kering-owned brand installed creative director Alessandro Michele, which means the more product available, the better. “With supply in nearly 40 countries, it gives us the ability to adapt to every market and to find really specific product.”
But for Vestaire Collective, the greatest opportunity lies in the US, which remains the world’s largest market for luxury goods sales. “We had the same growth in 18 months in the US that we had in Europe after three years,” Fabre says. “It’s such a big buyer’s market.” However, it’s also where Vestiaire Collective faces the stiffest competition, in particular from The RealReal, which has raised nearly $123 million in funding. “We are increasing marketing and offering more service and a better user experience,” he adds.
But while Vestiaire Collective has ambitions to dominate in the US and beyond, some see space for multiple leaders in the global second-hand fashion market. And while it’s nearly impossible to place a number on the scale of the market, the rapid rise of fashion re-commerce businesses has forced luxury goods companies to work with the safe second market on authentication instead of dwelling on whether or not it cannibalises sales of new products.
“I don’t think we disrupted the luxury retail sector. We established a trusted and safe second-hand market,” Fabre says. “It keeps up the value of the fashion and allows brands to target a younger generation. The more products sold in the boutique, the more products sold on the secondary market.”