The stigma against second hand apparel and footwear is quickly becoming a thing of the past: according to a recent report by resale platform ThredUp, the market has grown 21 times faster than first hand fashion retail over the past three years and is expected to grow from 24 billion US dollars to 51 billion US dollars in the next five years, in the United States alone. That means the secondhand market will be 1.5 times bigger than fast fashion by 2028, when previously-owned items are forecasted to account for an average of 13 percent of American closets.
The market is so promising companies working in this space have been receiving significant investments. ThredUp raised 175 million US dollars in August, while competitor The RealReal raised 300 million US dollars in its initial public offering. Neiman Marcus acquired a minority stake in Fashionphile, a resale website for luxury handbags, accessories and jewelry, while Farfetch acquired sneaker resale platform Stadium Goods before launching its very own resale platform for designer bags.
Farfetch is not the only retailer dipping its toes in the resale space. Zalando, the European fashion marketplace, opened a pop-up store in Berlin earlier this year to sell used fashion items purchased from customers of Zalando Wardrobe. Similarly, H&M has announced an ecommerce trial of second hand sales for its & Other Stories brand.
Younger consumers are the ones driving this growth. Affected by the aftermath of the 2008 economic crisis and plagued by student debt, young adults are the “thriftiest” of generations according to recent research. For many of them, fashion resale offers an extra source of income. “Personal closets transform into a revenue stream and shopping decisions are made by looking at investment potential. Clothes are seen as tradable assets. Platforms such as The RealReal and Vestiaire Collective allow us to know how much those pieces can be worth and therefore can be traded upon season after season”, explains Ana Roncha, Course Leader of the master’s degree in Strategic Fashion Marketing at the London College of Fashion, in an email to FashionUnited.
Also working to the resale market’s advantage is the fact that consumers are becoming increasingly aware of the environmental impact of the fashion industry. A recent report by British NGO Fashion Revolution revealed that one in three European consumers take sustainability into account when shopping for clothes. In the US, 34 percent of consumers declare themselves to be concerned about how the clothes they wear affect the environment, according to a survey by the Changing Markets Foundation and the Clean Clothes Campaign. “We’re seeing more and more consumers make a conscious choice of moving away from fast fashion. With the above comes an awareness that the lifecycle of our clothes needs to be extended and therefore our purchases need to be based on quality,” says Roncha.
Looking to get a behind-the-scenes peek at the segment and where it is headed, FashionUnited is interviewing some of the most prominent players in fashion resale around the world. Make sure to drop by our website every Tuesday.
This week we’re interviewing Max Bittner, named CEO of Vestiaire Collective in November 2018, succeeding co-founder Sébastien Fabre. Launched in Paris in 2009, Vestiaire Collective is a fashion resale platform used by over 8 million members across 50 countries worldwide, who submit an average of 40,000 new items from some 3,500 brands every week. Despite its French roots, 79 percent of Vestiaire Collective’s transactions now occur outside of France. The company has offices in Paris, London, New York, Milan, Berlin and Hong Kong.
Bittner is the founder of Lazada Group, Southeast Asia’s leading ecommerce company, valued at 3.15 billion US dollars and acquired by Alibaba in 2017, five years after its inception. Previous roles include senior positions at Rocket Internet, in Germany, and McKinsey & Company. Soon after joining Vestiaire Collective as CEO, Bittner became an investor in the company, leading a financing round alongside Bpifrance in June, which raised 40 million euros to fuel the platform’s international growth and develop data-driven solutions for other companies in the fashion industry interested in adopting a circular business model.
You’ll soon be celebrating one year at Vestiaire Collective. How has the experience been so far?
It has been an amazing experience so far, I’ve been really happy with the situation I’m in to join Vestiaire at such an exciting time. The company has done amazing work over the last 10 years in helping to pioneer the second-hand movement. I think a lot of the tailwinds are in our favour at the moment.
I think both consumers and the overall industry has shifted a lot of focus on second-hand fashion as a driver towards sustainability and circularity so it’s a great time to be in the business right now.
Vestiaire has amazing fundamentals in place and really engaged buyers and sellers. I think with my experience I can bring a lot to the table. I’ve been here for eight months now and we’re making a lot of progress and it’s really about combining our strengths and making the best out of the momentum that we already have.
You were also one of the leading investors in Vestiaire Collective’s latest financing round in June. Why did you decide to participate?
I think it is good for me as a CEO to put my money where my mouth is and be committed to the company and to really believe in the direction it’s going in. We are at an exciting stage and I want to invest my money in companies that I find exciting. Looking at Vestiaire today and considering the visions I have for it in the future, I wanted to really show my commitment and I think it is a smart investment, it’s as simple as that.
The capital injection of 40 million EUR will be used to fuel the company’s international growth, especially in Asia, a region you are very familiar with as founder and former CEO of Lazada Group. Can you tell us a little more about Vestiaire Collective’s plans for Asia?
I think a priority for me is to invest in technology in the business, that was the number one priority of this funding round. What I mean by that is that we can now use the money to ramp up our tech team and data team. That’s the primary use of capital for this round. Asia is a really important market, not just for our business but for the luxury fashion industry as a whole, so naturally we want to grow there.
We started testing the waters in Asia around two years ago - we launched in Hong Kong and Singapore - and it went extremely well. So from there we’re really just thinking about where else we can expand.
Vestiaire Collective’s London office.
What about Latin America? You’re also expanding to Mexico and Brazil. What are company’s plans there?
What we have done is we have recently opened up our global website to another 40 or so markets, including Brazil and Mexico. We see ourselves as a community that is built around connecting buyers and sellers globally. We don’t want the products we sell to be limited by geography so we want to build up more markets and make ourselves available to as many people as possible so they can participate in the community.
Markets that are easy to serve are really attractive for us, so it’s not specifically about Latin America or specifically about other particular markets, it’s more about expanding the community so more people can participate in the circular movement.
The overall goal and vision is really to create the world’s most desirable wardrobe and for that we want to work together as a cohesive community that inspires people and allows them to connect to one another in the most fun and sustainable way. I think this expansion is just a natural consequence of what we have been doing over the last 10 years of continually increasing the reach of the community.
How many people visit Vestiaire Collective monthly? What are the top countries visiting the website?
We have roughly three million people active users on the website and app each month. In terms of market size, France is still the largest, representing roughly a quarter of our users. Then after that US and Europe are also very strong.
Vestiaire Collective also intends to offer data-driven solutions to fashion companies looking to become more sustainable. That sounds very exciting! Can you tell us more about these plans?
When we think about our business of buying and selling, brands really play a fundamental part in the overall ecosystem. They are the seller of the first-hand goods, so they are hugely important.
We believe that in a world where consumers are changing their approach to consumption and where they are becoming more conscious of both the sustainability of their consumerism and about what happens to the product after they’re done wearing it, the second-hand market is becoming increasingly important. I think because of that, there are a lot of benefits for brands to work together with us on the overall ecosystem.
If people become educated about the potential resale value of a certain bag or a watch or a piece of jewellery, then I think that gives them much more comfort to pay a higher original price for high quality products.
It’s about educating people about the difference between investing in products that have a higher quality, higher longevity and better craftsmanship versus buying fast fashion that falls apart after six or seven times of washing it.
Our goal is to help brands on that journey, not just to say ‘hey you should be more sustainable’ but really creating data solutions for them to understand what happens to the product after the primary sale, what the consumers do with the product. It’s about giving them transparency to participate in that circularity - it’s about helping them to take part in that circular movement.
Speaking of sustainability, tell us about the company’s latest news, Direct Shipping and Circular Brand Partnerships. How will these services work?
The initial partnership came about from us asking ‘okay what is important for a brand? What can we do if we work together with brands on certain products? How can we make 1 + 1 = 3 both for us and the consumer?’ So we started talking to brands which are very conscious of their role in the circular movement, and as we were designing some different evolutions of our business model, one being direct shipping, which is a service that really empowers both the buyer and seller. We have customers who have been selling with us since the beginning and we wanted to reward them with our trust. A trusted seller badge means the seller can ship the item to the buyer directly. The service also empowers the buyer as they have the choice whether to have an item authenticated or not.
The service means our partners can encourage sustainable behaviour and by having brands participate in this overall direct shipping evolution of our business model we provide circularty with them.
Because then they can encourage their consumer base to sell their own goods to make these goods participate in the circular movement, and at the same time we are encouraging people to reinvest their money into their own brands, so the brands create loyalty, we create and ecosystem with our sellers to buyers and buyers to sellers, and together we help to make the industry more sustainable.
At the moment we have six brands who are participating in the partnership - Sandro, Maje, Claudie Pierlot, Ba&sh, Amélie Pichard and MaisonCléo. But this is really just the first step in this idea that we want to work closely with brands and to give them more of an ability to engage with consumers on their website to better represent their brand and their image on our app and on our website. So I think this is really just day one for us on this journey of working together with the ecosystem to drive more circular behaviour.
The resale market is projected to reach 51 billion US dollars in 5 years, as stigma against second-hand fashion disappears. In your view, what are the factors that led to this growth?
I think there are a few different factors which are really driving the growth of the resale market. We live in a world where consumers, especially younger ones, are really changing the paradigm of the way things are done.
The first real change is to do with ownership. This new generation has grown up with Uber and Airbnb, so I think the resale market is a natural extension of this idea that products and services are constantly passing through in some sort of way. It’s part of the uberization of everything.
Social media also plays a key role. People are constantly showcasing what they are wearing so styles are ever accelerating. People are buying more because they’re exhibiting what they’re wearing more often. This of course means there’s a financial aspect brought in. Now that you have the option to sell what you’ve bought and buy second-hand clothes for cheaper - it really just makes sense financially.
I also think consumer preferences on participating in a more sustainable consumption model is something that the younger generation is much more aware of. They know there is a real need to do something and to act.
Finally, I think it is about the customisation of the offer. There is less of a stigma around second-hand clothing now - there’s no longer this idea that you have to go to a dusty store tucked away in a dark corner somewhere. Customer preferences have evolved and second-hand platforms like Vestiaire Collective are providing something that modern consumers are looking for.
How would you summarize Vestiaire Collective’s future?
The future for us is about emphasising and building on the idea that we are not just an ecommerce website -- we are a community of buyers and sellers, but one that does so much more than simply buy and sell products. The community is about inspiring, the community is about communicating, the community is about sharing ideas and opinions. The future for us is about about creating this global community that together helps build the world’s most desirable wardrobe.
This article has been written with the collaboration of Huw Hughes.
Pictures: courtesy of Vestiaire Collective, Vestiaire Collective’s homepage screenshot