PARIS, France — Consumers may be shopping less during the pandemic, but investors are betting that there will still be plenty of demand for luxury goods — used ones, anyway.

European resale market leader Vestiaire Collective has raised €59 million ($63 million) from new investors Korelya Capital, Vaultier7 and Cuir Invest, alongside existing shareholders including Eurazero, Bpifrance, Vitruvian Partners, Luxury Tech Fund, Condé Nast and the company's chief executive Max Bittner.

The money will be used to help the company break into Japanese and Korean markets while doubling down on US expansion and social commerce efforts. It brings the company's fundraising to-date to €209 million. Bittner declined to disclose the valuation of the company, but noted it was 50 percent higher than its valuation in June last year.

“It’s really building on the success of last year and the very positive momentum, and then seeing the opportune time to be more aggressive around [our strategy],” said Bittner, adding that, just before the coronavirus outbreak, order growth had more than doubled year-on-year.

People are becoming more value-minded and probably more longevity-minded about products.

Before the coronavirus pandemic upended the fashion sector, the luxury resale was a booming market, expected to grow 12 percent each year to reach $36 billion by 2021 and account for 9 percent of the total personal luxury goods market, according to a 2019 report from BCG, produced in partnership with Vestiaire Collective.

Currently, digital platforms account for just 25 percent of second-hand luxury sales globally, according to the report. But as the fragmented network of independent brick-and-mortar consignment boutiques that used to dominate the resale market are forced to close their doors amid government lockdowns, upscale digital-first players like Vestiaire Collective, The RealReal and Rebag could see their market share increase.

“People are becoming more value-minded and probably more longevity-minded about products,” said retail consultant Robert Burke. “There will still be a market for luxury goods, but not in a disposable way. So, I think that's where you get into the resale market.”

Covid-19 may well accelerate this trend. While the virus is taking a significant toll on the primary luxury sector, Vestiaire Collective has seen a boost in business over the past few weeks as house-bound consumers clear out their wardrobe and spend more time surfing the web. Last week the company experienced its biggest sales day ever, while sales in Europe are currently 20 percent above pre-Covid 19 levels on a daily basis. The number of daily listings on the platform is 33 percent higher than the pre-Covid-19 baseline.

Luxury brands have begun sending more product directly to resale platforms, as they struggle to dispose of inventory that went unsold after they closed stores. Over the past six weeks, The RealReal’s inventory from brands has grown 30 percent compared with the same period last year. The company also said it’s had an influx of enquiries from businesses looking to sell on the platform.

Bittner said Vestiaire Collective has been approached by luxury players about potential partnerships since the pandemic broke out.

“We’re still trying to figure out what the right way of cooperating is right now,” he said.

That is not to say Vestiaire Collective hasn’t experienced any disruption. The company was forced to temporarily shut down its warehouse in New York after the city ordered non-essential businesses to close. Following state approval, operations in the US are now back up and running.

The platform’s biggest competitors have also seen turbulence. The RealReal, which operates on a consignment model, has had to close some stores and a warehouse. Its stock is down over 40 percent this year, though shares have rebounded since hitting an all-time low in late March.

Meanwhile, New York-based Rebag has shut down its network of nine stores. “As a digitally native company, we’re focusing primarily on our digital footprint,” said Chief Executive Charles Gorra.

I would expect that the resale market is probably going to be equally affected — or even more affected.

The economic downturn caused by the coronavirus could hurt demand for resale.

“I would expect that the resale market is probably going to be equally affected — or even more affected, if we consider that second-hand clients have a higher likelihood of being exposed to unemployment,” Bernstein analyst Luca Solca said.

For the moment, however, Vestiaire Collective is focused on growth. The expertise of new investment partner Korelya Capital, a French-based firm that specialises in helping European startups crack the Asian market and is backed by Korean tech conglomerate Naver, will help the company’s expansion into Japan and Korea this year, said Bittner.

Vestiaire Collective also plans to launch its direct shipping service — allowing shoppers to opt-out of the authentication process and have sellers ship products directly to them — in the US this summer, and Asia before the end of the year.

“The Covid situation in some way intensifies the pillars that Vestiaire is built around: it’s e-commerce, it’s being a platform; it’s community; and it’s sustainability,” said Bittner. “These are the things that will be a bigger focus, rather than a smaller focus, in a post-Covid world.”

Additional reporting by Cathleen Chen.

Editor’s note: this article was revised on April 21, 2020. An earlier version of this article stated that Vestiaire Collective’s fundraising to-date totals €208 million. This is incorrect. It totals €209 million.

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