Vestiaire Collective raises $64.2 million for its second-hand fashion platform

Vestiaire Collective just closed another big round of funding in the middle of an economic crisis — the round closed in early April. The startup raised $64.2 million (€59 million) and the company has raised more than €209 million in total, according to Crunchbase. Vestiaire Collective operates a marketplace of pre-owned fashion items. Users can both sell and buy clothes and accessories on the platform.
There’s a huge list of investors in today’s round — Korelya Capital, Fidelity International-managed funds, Vaultier7, Cuit Invest and existing investors Eurazeo (Eurazeo Growth and Idinvest Venture funds), Bpifrance, Vitruvian Partners, Condé Nast, Luxury Tech Fund and Vestiaire Collective CEO Max Bittner are all participating.
With 9 million members across 90 countries, Vestiaire Collective has become a huge marketplace. And it makes sense that an e-commerce website focused on pre-owned items is working well. There has been a ton of backlash against fast fashion over the past few years.
People now also value circular business models as it becomes more affordable to refresh your wardrobe, especially during an economic crisis, and it is better for the environment.
As always, Vestiaire Collective will use the new influx of cash to expand to more countries. In particular, with Korelya Capital as a new backer, the company will expand to South Korea and Japan this year. While the company started in France, 80% of transactions are now cross-border transactions.
Originally, Vestiaire Collective asked you to send your items to its warehouses to check them before putting them on sale. The startup has been betting on direct shipping from the seller to the buyer in Europe and it has been working well. You can get reimbursed if there’s something wrong with what you ordered though.
Direct shipping has been available in Europe since September 2019 and it now represents over 50% of orders in the region. Up next, Vestiaire Collective will introduce direct shipping in the U.S. this summer and in Asia by the end of 2020.
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Fashion Reseller Poshmark Fast Tracks Video Feature, Targeting Shoppers Stuck At Home

Poshmark is joining the social media juggernauts capitalizing on a captive consumer base by adding a video feature to its fashion marketplace that aims to make shopping for used clothing on your phone feel more like, well, shopping.

With stores and restaurants shuttered and millions of people stuck at home, platforms like Zoom, TikTok and Instagram are thriving, and now the San Francisco-based business, which sells used clothing, shoes and accessories, will allow its eight million sellers to post live 15-second videos or upload footage from their phones that links directly to the items they are selling.
Poshmark was founded by Manish Chandra, Tracy Sun, Gautam Golwala and Chetan Pungaliya in 2011 as a way for women to sell clothes they no longer wore. The app lets them “like” and comment on other people’s listings, which helped make Poshmark a more personal experience than shopping for secondhand stuff on eBay. It has since expanded into categories like menswear, kids and home décor, taking a 20% cut on sales. In 2019, it said it paid out $2 billion to sellers, double the previous year. It was reportedly valued at $1.25 billion after some existing investors sold shares in a secondary transaction last year, according to the Wall Street Journal.
The company has been building and testing a video option for over a year and planned to roll it out in the second half of 2020 but fast-tracked the launch due to the pandemic so it could offer more of a “real-world experience” to shoppers. The new feature allows sellers to show off the ways they styled an outfit they have for sale or give the backstory on how they acquired a particular item, for instance. The content will automatically disappear after 48 hours.
The feature mimics Instagram, which lets influencers and brands tag clothing, furniture or other items in their posts and link to a website where it is available for purchase. Instagram has been doubling down on its shopping features and last year began allowing customers the ability to checkout from some retailers without leaving the app. Social shopping apps such as LikeToKnow.It also offer people the ability to shop the looks that they see on celebrities and influencers. However, none allow for the purchase of secondhand clothing, a segment that is growing 21 times faster than the overall apparel market.
“Physical retail is challenged in this environment,” says Chandra, 52, CEO. “People are looking and turning in so many ways to online.”
Chandra is hoping that video will increase engagement and sales among its 60 million registered users, who spend an average of 23 to 27 minutes per day on the Poshmark app. With purchases generally correlating to time spent on a service, Poshmark sees this as a way to forge a better connection between buyers and sellers, and help move the $175 million worth of inventory that gets uploaded to its platform every week (Poshmark doesn’t hold any inventory, leaving users to buy and sell directly from each other).
While many retailers are struggling amid prolonged store closures and a looming recession that has cut into discretionary spending, Chandra says that Poshmark’s business has been fairly steady. A wave of new sellers have turned to the platform for supplemental income after cleaning out their closets or even as a main source of income. The bigger challenge is demand. Poshmark is reliant on apparel sales, which dropped a whopping 52% on a national level in March, according to the Department of Commerce. Chandra declined to provide specifics, but says demand has picked up after lagging at first.
“We were concerned in the early days of the crisis,” says Chandra. “But it seems to have balanced out.”
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The Death of the Department Store: ‘Very Few Are Likely to Survive’

Shuttered flagships. Empty malls. Canceled orders. Risks of bankruptcy. The coronavirus has hit the behemoths of the retail world.

Neiman Marcus has stopped accepting new merchandise.Credit...Karsten Moran for The New York Times

Retailers have begun taking extreme measures to try to survive. Le Tote, a subscription clothing company that acquired Lord & Taylor last year from Hudson’s Bay, said in a memo on April 2 that the chain’s entire executive team, including the chief executive, would be let go immediately. It also suspended payments of goods to vendors for at least 90 days, citing “immense pressure on our liquidity position.”

Macy’s, which also owns Bloomingdale’s, extended payment for goods and services to 120 days from 60 days and, according to Reuters, has hired bankers from Lazard to explore new financing. Jeff Gennette, the chief executive, is forgoing any compensation for the duration of the crisis. The company was dropped from the S&P 500 last month based on its valuation.

J.C. Penney has hired Lazard, the law firm Kirkland & Ellis and the consultancy AlixPartners to explore restructuring options, according to two people familiar with the matter, and confirmed that it skipped an interest payment on its debt last week. It is expected to make a decision on what to do, including potentially filing for bankruptcy, within a few weeks, one of the people said.

Related Articles: How Covid-19 Changed the Resale Market

Related Articles:  J.Crew Prepares to File for Bankruptcy

But none of them were in as immediate dire straits as Neiman Marcus, which has both an enormous debt burden — about $4.8 billion, thanks in part to a leveraged buyout in 2013 by the owners Ares Management and the Canada Pension Plan Investment Board — and a raft of expensive rents in the most high-profile shopping destinations, signed during boom times.

In late March, Neiman stopped accepting new merchandise and furloughed a large portion of its approximately 14,000 employees as the rumors of bankruptcy began to swirl. Its chief executive, Geoffroy van Raemdonck, announced that he was waiving his salary for April. The brand denied to vendors and its own employees at its sister brand Bergdorf Goodman that it was engaging advisers to explore a bankruptcy filing, but on April 14, S&P downgraded Neiman’s credit rating. Last week, the retailer did not make an interest payment that was due on April 15, angering bondholders and further fueling suspicions that a bankruptcy filing was imminent. A spokesperson for Neiman Marcus declined to comment.

Barneys offered steep discounts after declaring bankruptcy last year.Credit...Stephen Speranza for The New York Times

Even Nordstrom, widely considered the healthiest department store, said this month that it could be facing a “distressed” situation if its physical locations closed to customers for “an extended period of time.” Erik and Pete Nordstrom, chief executive and chief brand officer, are both receiving no base salary for at least six months. The chain has stunned some vendors with last-minute cancellations via email in recent days.

Across chains, prices for new merchandise sold via e-commerce have already been slashed by 40 percent in some cases. Order cancellations for the pre-fall season — which would normally have started delivering next month — have been increasing. Some brands said shipments have even been turned away upon delivery to warehouses, and extensions of payment terms are cascading through vendors, who are then forced to negotiate with their own manufacturers, marketing agencies, fulfillment centers and landlords.

“I’ve had a showroom for over 30 years, and we have always used the word ‘partnership,’ when talking about our relationship with the department stores,” said Betsee Isenberg of the showroom 10Eleven, which represents numerous brands such as Vince and ATM. “Through 9/11, through 2008, we worked hand in hand with our retailers. This is the first time the onus has been on the brands — many of which are losing millions and millions of dollars because of the canceled orders. It is just not fair that it is survival of the fittest.” In a new report, McKinsey refers to the situation as “wholesale Darwinism.”

The resort season has been canceled entirely, and fall orders have been put on hold, raising questions about what inventory will be left if and when shops reopen and consumers return to store.

The Neiman Marcus store at Hudson Yards in Manhattan. With stores closed, retailers have seen sales plummet.Credit...Mark Wickens for The New York Times

“Nobody knows what Q4 will be like, but you have to start putting the orders in now,” Sucharita Kodali, a retail analyst at Forrester, said of the holiday season, normally the most lucrative time of the year for the chains. “Some people don’t even have the money to put in Q4 orders, and may have to cancel Q4 orders anyway, and it’s a mess. There’s never been this much uncertainty.”

Robert Burke, the eponymous founder of a luxury consultancy, said he expected brands to move further away from a wholesale business, focusing on direct-to-consumer and a model with department stores where they control their own space and inventory.

Shares of J.C. Penney, which has temporarily shut its more than 800 stores, closed at 23 cents on the dollar last Wednesday after the retailer said it did not make a $12 million interest payment due that day. Brooke Buchanan, a representative, said it was a “strategic decision” in order to take advantage of a 30-day grace period before it was considered in default.

Normally bustling stores like Saks Fifth Avenue are now empty.Credit...Haruka Sakaguchi for The New York Times

Ms. Buchanan said J.C. Penney had “been engaged in discussions with its lenders since mid-2019 to evaluate options to strengthen its balance sheet, a process that has become even more important as our stores have also closed due to the pandemic.”

Cash flow for all department stores has dropped sharply. In a note on April 13, analysts at Cowen estimated four months of liquidity at Macy’s, six months at Kohl’s and seven months for J.C. Penney. Nordstrom, they predicted, could withstand store closings for 12 months.

“The nature of the mall is if you lose a big anchor like a Macy’s, you have co-tenancy issues and you have more pressure on the mall traffic, which was already a big issue,” said Oliver Chen, an analyst at Cowen. Co-tenancy clauses typically allow other tenants to demand rent reductions if certain key chains depart. Mr. Chen said that could accelerate the ongoing divide between top-tier malls and the second- or third-choice malls in certain areas.

According to a report this month from S&P Global Market Intelligence, department stores were more likely than any other consumer industry to default on their debt in the next year. It estimated the probability at 42 percent.

Nordstrom’s new store in Manhattan. Analysts predicted that it had enough cash to withstand 12 months of stores closures.Credit...Karsten Moran for The New York Times

In its April 2 memo, the management of Le Tote and Lord & Taylor said only “key employees” were being retained to preserve the business. A representative for Lord & Taylor and Le Tote declined to comment or disclose the number of employees who were furloughed and laid off.

“It appears to be a virtual certainty that Lord & Taylor will liquidate its business in the near future, either in or out of bankruptcy,” said James Van Horn, a partner at Barnes & Thornburg and a specialist in retail bankruptcy. “They were already one of the most challenged department stores prior to the coronavirus pandemic, and when the majority of the management team is leaving, the vast majority of employees are laid off and a minority of employees furloughed, there does not seem to be any other strategy but to liquidate the inventory.”

Mr. Van Horn said he expected that other chains might strategically employ Chapter 11 reorganizations to legally shed stores, lightening their rent burden.

“It will likely be a domino that falls,” he said. “Whether it is first or 10th, we don’t know.”

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By 2023, the secondhand clothes market will double to $51 billion. Here’s why

How Poshmark, Depop, and the RealReal are making your closet more eco-friendly

Resale platforms like the RealReal, ThredUp, and Depop have made shopping for used clothing easier than ever—and consumers are buying in. Fueled by millennials and Gen Z, the secondhand market is on track to more than double over the next five years, from $24 billion to $51 billion, according to ThredUp and retail analytics firm GlobalData. Traditional retailers are taking note: In 2019, Foot Locker invested $100 million in shoe reseller GOAT. Here’s a look at the numbers behind fashion’s latest trend.

Sources: The RealReal, Poshmark, GOAT Group, Depop (User Numbers, Depop demographics, What’s Selling); Company Valuations: Recode, April 2019 (StockX), market cap as of October 16, 2019 (the RealReal), the Wall Street Journal, April 2019 (Poshmark); ThredUp 2019 Resale Report (Who’s Shopping); A New Textiles Economy report, Ellen MacArthur Foundation (Environmental Impact); Euromonitor International (new clothing per capita)

A version of this article appeared in the Winter 2019/2020 issue of Fast Company magazine.

 

Fast fashion is out. Renting and resale will become the new normal

Around the globe people become more aware of the trade off between buying fashion items, wearing them a few times, disposing and what it does to our planet. Many new (online and physical) retail platforms have started concentrating on second hand items and renting out. Some even say that the second hand fashion market will outgrow fast fashion by 2028.

The end of ownership.
Second to oil, the clothing and textile industry is the largest polluter in the world. The carbon footprint from textiles production in 2015 was greater than the CO2 equivalent of international flights and shipping combined. Three-quarters of our clothing will end up burned or buried in landfill. Some say that more than half of the fast fashion produced around the world is thrown away within one year. New circular techniques are being used in the production processes. But in a world where people are more conscious and aware of what and why they buy, it is normal that new retail concepts enter the market place. Enter, second hand and rental.

Resale and rental are changing the script.
Fashion is big, really big. The world market is estimated around $1,3 trillion, bigger than Russia's GDP. The market of resale fashion is tiny, but developing quite fast. From just thrift stores and buying on platforms as e-Bay, to a vast array of new brands. Resale apparel used to be the domain of bargain hunters, some were treasure hunting. Now early adaptors are browsing the many new (online) platforms entering the market place.
Some crucial facts and data from US based Thredup:

• the US resale market will grow from $7bn in 2019 to $23bn in 2023
• including already existing thrift stores total market will grow to $51bn by 2023
• resale apparel has grown 21x faster than the retail apparel market in the last 3 years
• 2/3 of all women shoppers have bought or are willing to buy resale
• 40% of consumers now consider the resale value of an item before buying it, a 2x increase from 5 years ago
• Millennials and Generation Z are adapting 2.5 times faster, compared to other groups.
• second hand, rental and subscription are projected to be the top 3 fastest growing categories in the 2019-2028 timeframe
• in 2018 the US fast fashion market was $35bn, compared to $24bn for second hand. By 2028 the second hand market will have grown to $64bn, whereas fast fashion's growth is projected at $44bn
• According to Mintel 44% of young women said they would like tone more eco friendly in their approach to fashion

Why own stuff?
There are multiple drivers for this massive shift. There is the obvious penetration of social media and the importance of influencers. Female fashion buyers are increasingly savvy on updating their wardrobes to the latests crave of the catwalks. With real buying power mostly being flat, in many economies, this obviously create tension. Add the increasing consciousness on sustainability and the fact that a new perception has been growing on possession and ownership (why own stuff?, aka the sharing economy), it's easy to see why things are moving. Some also mention smaller housing as a driver for change, with the average number of items in consumers' closets declining from 164 items in 2017 to 136 in 2019.
Elizabeth Cline, author of the Conscious Closet: “Resale offers the wardrobe-rotating fun of fast fashion without the guilt or waste. By driving preferences away from disposable fashion towards higher-quality clothes, reuse is a boon for our personal style and the planet.”

Rental is different, a closet in the cloud.
For many online fashion retailers "wardrobing" or "ASOS parties" are a huge problem. The demand for fresh looks is prompting many people to order online, wear it and return it later ("after the party"), often for free. Fashion industry returns hoover around 40-50% of items being bought online. Many new platforms persuade consumers from wardrobing into hiring. The US apparel rental market is relatively small, estimated to grow to $4,4bn by 2028, just 1% of total clothing sales. But it grew 24% in 2018 compared to 5% for the wider clothing market, GlobalData shows.
These rental platforms are buying clothing wholesale from brands, some are introducing revenue sharing models allowing brands to upload items, the platform taking care of cleaning and delivery in return for a share of revenue.
Rent the Runway redefined the fashion rental market already in 2009, starting with one offs like a dress for a gala. Many platforms have evolved now to a monthly subscription model and are positioned mostly upmarket. Some even IPO-ed recently, because investors love the recurrent revenues of the subscription business model.
Some examples. Both second hand and rental. Physical and online.

The diversity of brands and formats serving second hand and rental customers is immense. Round Two in the US is a resale outlet, with only two stores. A tactile experience with overflowing racks, but not as in the old thrift stores, where you would occasionally meet a bargain hunter. Round Two is different, young people and kids are roaming the racks, with brand new items and slightly worn ones. A brand new $300 T-shirt by Supreme, next to a vintage bootleg Janet Jackson T-shirt ($250) . It's a place where you can buy and sell. Nothing is on consignment (in that case the seller retains ownership).

Vintage Brands store in Monnickendam (Netherlands) is doing the same as Round Two, though aimed at a different customer. Yearly over 700 women offer their personal fashion and accessory items, from Zara to Gucci, in consignment in this cosy store. Loyal customer find an extra reason for visiting the store: the social aspect is important, talking with the owner and other customers, on what's "new" and hot. You can sit down and read a magazine, drinking coffee. Sellers are often buyers. Vintage Brands' main marketing channel is word-of-mouth and social with a look book on Facebook and Instagram. The annual catwalks are famous and people drive over 100 miles to see models showing off.
Hirestreet is the UK first high street rental service and aims at budget conscious students. Hirestreet offers 10 day rentals for prices as low as £7. Most stock refreshes every week. Users will enter event date and choose outfit filters (with the "occasions" filter ranging from date night to maternity...) and Hirestreet will generate available rentals. Isabella West from Hirestreet found out that young women were spending over £500 a year on fast or disposable fashion and if they hired rather than bought they could save £400: "I found this amazing. £400 is the price of a holiday."

In the US the two dominant platforms are Rent the Runway and the RealReal, both very successful and growing fast. Rent the Runway (valued at $1bn) is a fashion subscription platform offering premium and exclusive fashion and accessories brands. It claims 10 million members. Its "unlimited plan" at $159 per month will offer unlimited access to as many items as a customer wants. If you love the idea of wearing premium brands like Gucci, Kates Spade and Diane Von Furstenberg RtR is a great option. RtR merchandise arrives in a garment bag with a prepaid UPS label for returns. Next to its platform they operate 5 stores and multiple drop off locations, but it is essentially a technology (and logistics) company. With the data being used both on the returns and via its "virtual closet" RtR is perfectly positioned to personalise its offering.
The RealReal is a premium luxury resale platform, with a Gross Merchandise Value (GMV) of $710mm in 2018, processing 1,6 Million orders from 400,000 different buyers. Items are authenticated and researched before being offered on its online platform or physical stores. In many cases professionals (authenticators) are visiting the seller, and discuss which items could be sold on the RealReal's platform, they are also advising on price. The merchandise is held in consignment for sellers. The company takes a 40 per cent cut of each sale, which is reduced for high-value items or for consignors who sell more than $10,000 per year. 56% of the RR's consignors count environmental impact as a key reason to sell on the platform. Buying a second hand Fendi bag for the price of the new Michael Kors bag ($300) is probably equally important.
In a complete reversal of things 7 years old Le Tote, a US based rental fashion platform, bought 190 years old Lord & Taylor department stores, some 35 locations located in the Midwest of the US. An old legacy company absorbed by a new one. Le Tote's proposition is different from RtR's. Most of its customers spend just $69 per month for mid-market brands like J Crew and Zara.
Meanwhile high street brands as Scotch & Soda, Rebecca Taylor and Urban Outfitters (with Nuuly) have started renting out items in a comparable scheme as RtR.
H&M could rethink it's $4bn unsold stock and put in on a rental platform. They just announced a limited rental service for its new premium collection from recycled fibers in a Stockholm store. Express, a fashion mall brand with 600 stores in the US, started a rental service with a $70 monthly subscription. Ikea even launched a furniture rental service earlier this year.
Rental and buying secondhand fashion is beyond icky.
So things are definitely moving. This business is beyond the icky feeling people used to have with wearing items somebody else had worn before. It's still early and it is probably harder to persuade consumers to hire affordable apparel than catwalk creations, just because there are just too many cheap alternatives available. Some platforms are growing too fast, causing some hiccups. With young and conscious consumers growing up and becoming more influential this will change. The sharing economy is here to stay. oa here

Farfetch partners with second-hand clothing service

Luxury fashion platform Farfetch has partnered with second-hand clothes donation service Thrift+, giving customers access to a free collection service for unwanted items in exchange for credit to use on the etailer’s site. 

A participant in Farfetch’s technology accelerator programme, Dream Assembly, Thrift+ sells second-hand fashion online and donates a portion of the proceeds to one of 160,000 registered charities in the UK.
Through the new partnership, customers will be able to order a Thrift+ x Farfetch donation bag online. They can then book a free collection service, or drop off the filled bag at a local drop-off point.
Thrift+ will photograph and list items for sale on its site. Once an item sells, one-third of the proceeds are donated to the customer’s nominated charity, and one-third is awarded to the customer as Farfetch credit. Customers can also choose to donate their share to charity.
Thomas Berry, director of sustainable business at Farfetch, said: “We know our consumers would like an easy way to clear their wardrobes of unused items, and at the same time, they would like to feel positive about it. Thrift+ x Farfetch links our customer base with an innovative service that improves the donation experience and has a positive impact by giving good quality clothes another useful life and supporting multiple charities.
“This is a natural extension to our Farfetch Second Life resale programme, focused on luxury handbags, and part of our broader approach to sustainability.”  ao here

6 best vintage shops where millennials and Gen Zers are buying their Gucci, Dior and Prada handbags

The drawers in your mother’s closet are probably a treasure trove full of archival designs you can no longer find in stores. Otherwise, second-hand goods are the answer.

The interest in vintage designer bags has also grown considerably among millennials and Gen Zers. Photo: @DILN_

The year is 2019, but curiously many are dressed more like their ‘90s style icons these days. Some are even revisiting throwback fashion trends from the 2000s that we all thought should be left in the past. After dad shoes, scrunchies, bucket hats and tiny sunglasses became hot fashion items in the past two years, capri pants and biker shorts are now having a moment. The interest in vintage designer bags has also grown considerably among millennials and Gen Zers. From Fendi’s Zucca print and Dior’s signature branding, to Gucci’s house monogram and Prada’s classic, inverted triangle logo plate, retro purses are all over Instagram.

So, where can you find these old luxury handbags? The easy answer would be your mother’s wardrobe. Those drawers of hers are like a treasure trove full of archival designs you can no longer find in stores. You’ll just have to rummage through them for your dream bag, and hope that your mum doesn’t notice anything has gone missing. Just kidding.

For those who prefer a less sneaky route, we’ve rounded up a list of the six best stores to shop for designer bags online. Read on to learn where we get our second-hand goods.

The RealReal

 

Vestiaire Collective

Vestiaire Collective is where supermodel Karlie Kloss shops her Chanel bags, so you know it’s got to have a great selection. Another major player in the reselling market, the web store sees a vast line-up of pre-owned handbags by Prada, Fendi and the like — all available at reduced prices.

 

What Goes Around Comes Around

Luxury Garage Sale

 If you’re a fan of designer bags but not particularly fond of the price tags they come with, then Luxury Garage Sale will be your new best friend. The upscale consignment store offers a massive range of coveted styles, including archival styles from Saint Laurent and Louis Vuitton. Check the site now to see if you can find any bargains.

Madison Avenue Couture

The Hermès Birkin is one of the most coveted luxury handbags on the market. If that’s your ultimate dream bag, look no further than Madison Avenue Couture. The store carries a huge selection of new and preloved Birkins that are difficult to get hold of.

Rebag

 

 From vintage Prada to Goyard and Balenciaga, expect to find a stunning array of statement designer handbags at vastly reduced prices on Rebag’s website. For those who live in California, Florida or New York, you may also visit Rebag’s IRL locations to see its inventory in person.

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