If you follow the money funding fashion startups, you’ll find a lot of it going to new models that put consumers in the driver’s seat by rethinking traditional approaches to buying and selling clothes—and apparel resalers are leading the pack.
On Thursday, 128 million euros ($141 million) in new funding propelled Lithuanian secondhand fashion startup Vinted into unicorn status with a valuation topping $1 billion—a first for the European nation surrounded by Belarus, Latvia and Poland. Lightspeed Venture Partners, a backer of Stitch Fix, Verishop and Gen Z-oriented livestream shopping newbie Dote, led the raise, which included participation by previous investors Sprints Capital, Insight Venture Partners, Accel and Burda Principal Investments.
Over the course of seven years, the Vinted ranks have swelled from the co-founding duo of Milda Mitkute and Justas Janauskas to a team of 300, with offices beyond its Vilnius headquarters in Berlin, Prague and Warsaw. A community of more than 25 million consumers buys and sells pre-owned and first-quality, never-worn clothing, shoes, beauty products and accessories for women, men and children in the U.S. and 11 European markets, which include Austria, Belgium, the Czech Republic, France, Germany, Lithuania, Luxembourg, the Netherlands, Poland, Spain, and the UK.
Vinted says its e-commerce-meets-classified-ads digital platform—which serves “everyone who believes that good clothes should live long”—carries styles and fashion finds “you won’t find on the high street.” Most users are somewhere between 15 and 35 years of age, according to CEO Thomas Plantenga.
Unlike fellow secondhand players ThredUp and The RealReal, which take control of inventory and manage the complex logistics of order fulfillment, Vinted operates similarly to Poshmark’s peer-to-peer platform marketplace approach. With no fees to list, sellers upload photos of their wares onto the Vinted smartphone app, draft a succinct description, set a price and wait for inquiries and offers to begin rolling in.
Shoppers can pay for purchases via PayPal, a bank card or their Vinted balance, at which point the seller packages up the order with a prepaid label. Sellers receive payment once the customer confirms parcel receipt and gives the green light. Consumers have two days to lodge a complaint if they’re not satisfied with their order.
Vinted has labored to inject new levels of convenience into the process of accessing secondhand fashion. In October of last year, the company forged a partnership with logistics firm Hermes enabling platform users to deposit and collect their Vinted parcels at a network of brick-and-mortar shops.
The company is riding a groundswell of consumer demand for sustainable ways of replenishing their wardrobes, thanks in large part to the activist eco warriors of Gen Z decrying the fashion industry’s dirty reputation coupled with the rallying cry of Marie “spark joy” Kondo prompting closet cleanouts nationwide. Brands have been caught red-handed destroying stockpiles of first-rate unsold goods, shining an uncomfortable spotlight on apparel’s inventory failures. Plus, nearly three-quarters (72 percent) of millennial shoppers report scaling back their purchases these days, per Walker Sands, while 65 percent prefer patronizing brands and retailers committed to operating sustainably.
To pile on further, ThredUp’s 2019 Resale Report is among the year’s most-cited studies, packed with data that challenges fast fashion’s crumbling supremacy. Though still gathering steam today, the apparel resale market, it says, is set to eat fast fashion’s lunch by 2028, mushrooming to 1.5 times its rival’s size. That burgeoning threat could be why inventory-saddled legacy retailers like Macy’s and J.C. Penney have cozied up to ThredUp, hosting the resale platform’s pop-up shops inside their traffic-challenged stores.
Vinted’s good fortune follows after a turbulent period around 2016 that saw a failed attempt to mimic the Poshmark-style monetization model, which drained the startup of money, alienated droves of users and left with company “with only nine months to live,” Plantenga said in a recorded talk over the summer at Berlin’s NOAH19 conference, which connects investors and C-suite startup executives in Europe.
With the startup facing dire straits, Plantenga was hired to help Vinted make “a couple very, very big bets”—like downsizing half of the headcount, shuttering offices in San Francisco, London, Munich and Paris and retooling the fledgling firm with a “technical” focus.
Now, like Poshmark and similar peer-to-peer players, Vinted has nurtured a global community where the average user spends nearly an hour daily interacting on the platform. “We were able to scale this and bring the community to an engagement level that really works for us,” Plantenga said.