Over the past few years, the resale market in the United States has become even hotter, and many companies are competing for the market.
Vestiaire Collective, a French unicorn company, entered the US resale market from overseas.
Paris-based resale company, Vestiaire Collective
Vestiaire Collective was founded in 2009 as a resale EC platform that handles high-end brands.
The company has raised over $650 million in funding, including a $215 million investment from Kering in June 2021, pushing the company’s valuation above $1 billion, and becoming one of the unicorn companies in France.
Currently, they are moving to expand their business in the global market with their investment.
Strengthens its presence in the US market by acquisition of Tradesy
According to a ThredUp survey of 3,500 U.S. adult consumers and 50 fashion retailers conducted by GlobalData, it says that the global resale market is expected to grow by 24% in 2022. The report also estimates that the U.S. resale market will more than double by 2026, reaching $82 billion.
Vestiaire Collective initially focused on its sales in the European market, but In response to the rapidly growing American resale market, it decided to focus on the United States as a core market for global expansion and embark on strengthening its presence in the United States.
On March 2022, Vestiaire Collective acquired Tradesy, a pioneer in the American resale industry.
Tradesy was a competitor based in Los Angeles, serving more than 7 million customers in the United States. The company’s products and services were highly rated by users, with an average of 4.77 stars, and it was a well-established company that ranked first on second-hand clothing sites.
Vestiaire Collective entered the US market in 2014 but had a history of being unable to compete head-on with its competitors in the resale market at the time.
However, by merging the two businesses, Vestiaire had a better chance of competing for the shopper with a more competitive assortment. The two companies have integrated teams and shared internal tools such as technology in the high authentication field. In addition, the combined size of the two companies is 5 million items, 23 million customers, and a total product value of over $1 billion.
The two companies now operate separately, but Vestiaire Collective has also announced that it will shut down Tradesy by the beginning of next year and make major changes.
Strengths of the Vestiaire Collective
Vestiaire Collective also has a number of advantages in differentiating itself from its competitors.
One is the company’s sales model.
Many resale companies in the United States, including The Real Real, are doing a resale model that buys second-hand goods from the seller once and sells them to their customers as a company.
However, Vestiaire Collective and Tradesy operate as peer-to-peer marketplaces which is the seller takes pictures, updates the products, and ship the products themselves. Because of that, they can reduce the burden of inventory management and the transaction amount on the company side.
In fact, the company receives only 15% commission on transactions over $100 in the US market and pays sellers an 85% reward.
This is a much better condition for the sellers compared to one of their competitor companies, The RealReal’s tiered system that ranges from 80 percent commission on clothing under $50 to 20 percent on handbags over $5,000.
Also, Vestiaire Collective has the best authentication technologies.
The biggest concern in the second-hand goods sales market is to authenticate every listing to reassure buyers they’re buying the genuine article. The company has authentication centers and logistics in Paris, the United States, the United Kingdom, Hong Kong, and Singapore.
In addition, the company authenticates all international transactions and purchases over $1,000. If it’s under $1,000 listings within one market, buyers have two options: paying $15 for authentication or getting their purchase shipped directly from the seller.
In the resale market, it is difficult to acquire new customers because there are always people who never purchase second-hand items that are reluctant to make purchases because it is too troublesome.
Graham Wetzbarger, an authentication expert and luxury-resale consultant said “There’s a chunk of the market that we’re never going to tap, unfortunately, but Vestiaire’s global footprint brought something new to the table.”
Expanding into South Korea and becoming a global company
The global expansion of the Vestiaire Collective does not stop.
The company launched a local office in South Korea last July 2022. Along with this, they also opened their fifth certification center, following Tourcoing (France), New York, Hong Kong, Singapore, and London.
In this new launch, the customers in South Korea can access 5 million items (with 25,000 new items added every day), and also users around the world will be able to see the wardrobe catalogs from South Korea.
The company’s fully localized service uses Korean throughout the site and accepts payments in the local currency, Korean Won. It also features an easy sign-up method that syncs with local search engines “Naver” and “Kakao.” As with other global offices, It’s also available for drop-offs at convenience stores and local courier pick-up services.
“With its rapid growth and innovative multi-channel market, South Korea has such a great potential. We are very excited to enter this market today, expanding our seamless localized services and offering South Korean customers access to a huge global community of potential buyers and sellers. We expect this strategic launch to benefit other markets within the Asia-Pacific region.” said Vestiaire Collective CEO Max Bittner in a statement.
Vestiaire Collective Co-founder and president, Fanny Moizant added that South Korea is a very dynamic country leading global trends in tech, fashion, and sustainability. Launching in South Korea not only enables us to meet the huge demand in the resale market but also broadens the supply available to South Korean customers with our highly desirable international catalog.
According to Bain & Company, South Korea’s luxury market is worth about $15 billion, making it one of the world’s top 10 markets for personal luxury consumption.
Because K-Pop and Korean dramas have become a global boom and attracted many people’s attention, the luxury goods which Korean celebrities are wearing became a fashion trend.
At the same time, Vestiaire Collective’s strategic global expansion may open up new footage in the resale market that its American competitors have so far failed to realize.