Vestiaire Collective is slowly but steadily morphing into a giant e-commerce platform for luxury garments and accessories, according to industry analysts. An “eBay for fashion items, but with a premium positioning,” the French startup announced in January that it raised $62 million, bringing its total funding to $118 million if you include other investors, such as Zadig & Voltaire, Ventech, Balderton Capital and Condé Nast International.
The round of funding was led by a new investor, Vitruvian Partners, as part of Vitruvian's increasing focus on French opportunities. Existing major shareholders Eurazeo and Idinvest Partners also participated, reaffirming their support for the company. (In September 2015, the Paris-based site raised roughly $37 million in a Series D round led by Eurazeo).
According to a statement from Vestiaire, its success thus far – which includes consistent growth over the past four years – has largely been based on its unique value offering: It is “the only consumer-to-consumer marketplace where 100% of the products are physically checked by a team of experts, a quality control that makes the platform unique.”
While the company, which was launched in October 2009, is, in fact, the leader in terms of luxury re-sale in the U.K., Germany, Spain and Italy, it has some work to do in the U.S., where it has set its sights for the most immediate growth in the future.
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.”
According to Sébastien Fabre, founder and CEO of Vestiaire, the company will “pursue with 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.”
It is worth noting that Vestiaire has some significant competition, particularly in the U.S. The first of these entities that comes to mind: The RealReal. The San Francisco-based luxury consignment platform, which launched in 2011 by former Pets.com CEO Julie Wainwright, has been particularly successful. Boasting 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, The RealReal 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.”
The RealReal has raised $123 million in funding since its launch. The company began in April 2015 by announcing they had raised $40 million in new venture funding led by Industry Ventures, with participation from Greycroft Growth, DBL Partners, e.Ventures, and existing investors. That brought the fast-growing company – which was expected to boast $400 million in gross merchandise value in 2016 – to a total of $83 million raised in venture backing at that point. And it was not finished.
Exactly a year later, The RealReal raised an additional $40 million in Series E financing led by Greenspring Associates. According to a statement released by the company in April 2016, the funding would be used to expand its business both in the U.S. and internationally, and would be put toward “strategic investments.” Or, in other words (TechCrunch’s word), “the company is working to use the funds to propel it much further than competitors in this still crowded market.”
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 - in our opinion - has to do with their ability to democratize fashion in ways that fast fashion retailers 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.
It seems the purpose or the stated purpose 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 democratization of fashion. We have asserted in the past that such efforts towards giving a larger pool the right to consume elite fashion - by way of offering trend-driven clothing at relatively affordable prices - is not all its made out to be in more ways than one. Instead of distribution anything with a semblance of luxury or high fashion, we end up with a Kenzo-themed collection for H&M that consists of garments and accessories that are a far cry from any designer's main line in terms of quality, etc. As such, does this represent a true democratization 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 a la H&M and Nasty Gal), these sites are making authentic high fashion and luxury goods more affordable than ever before. This is worth noting and celebrating.
Vestiaire Collective's ambition is to become the clear global leader as a trading platform for both buyers and sellers by 2018. 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.