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Business may be tough for the leading luxury brands but players in the second-hand market feel optimistic about the future. Vestiaire Collective and eBay are top players in the field. The French online luxury market has just received an extra cash injection from its main private equity backer. The U.S. firm, a veteran of the “we sell anything” style of e-commerce, is enjoying solid trading. Interviews with these two leaders in the sector shine a light on an increasingly confident market.

Eurazeo, a global investment group, has just put €13 million in cash into the company. “It’s a very small sum compared to the money we raised,” Vestiaire CEO Maximilian Bittner told Miss Tweed, referring to the hundreds of million euros the company has raised since a small group of entrepreneurs launched it in 2009. Also, he said it “shows how much closer we are to profitability.”

Vestiaire Collective aims to be profitable as of the second half of next year, Bittner said.

The company’s gross merchandise value (GMV) -- the total value of goods bought and sold on its online platform -- is growing now 25 percent year on year. New listers, or the number of people posting items for sale, are up 25-30 percent compared to last year, he said. The company’s GMV was about €1 billion last year, he told Miss Tweed at its Luxury at the Summit in Val d’Isère. Staff now totals 600 people, including around 200 developers, compared to 650 employees last year. Vestiaire had no plans for a brick-and-mortar boutique. “That’s not the business I am in,” Bittner said. “We have 5 million products on the platform. You cannot duplicate what we have in any store.”

Bittner is keen to quash recurring industry chatter that Vestiaire is struggling to become profitable. He resents the fact that many people associate his company with online fashion retailers such as Yoox-Net-A-Porter (YNAP) and Farfetch, which have been battling for survival, and MatchesFashion, which was brutally shut down last summer. Flannels, the fashion retail arm of the Frasers Group that bought MatchesFashion out of bankruptcy last year, has absorbed it. The business model of these companies has nothing in common with Vestiaire Collective’s. These retailers allow brands to sell to consumers, while Vestiaire helps consumers trade fashion and luxury goods among themselves.

Specialized in luxury fashion, Vestiaire carefully selects what is sold and gives its sellers statuses such as “expert vendor” or “recommended vendor” to build trust among buyers. Some sellers have no tag. The platform offers previously owned luxury items such as a $362 Gucci Marmont leather handbag and $229 Balenciaga trainers. On average, the seller pays a commission on the price and the buyer pays for shipping and authentication fees. Sellers get their money only once the transaction goes through. The company declined to give details about average commissions taken.

In 2022, Vestiaire bought its U.S. rival Tradesy, its most important acquisition to date. The deal, whose financial details were not disclosed, helped the French company to build a major presence in the United States. With higher interest rates in recent years, consumers in one of the world’s most important secondhand markets have become thriftier and even more eager to buy and sell pre-loved items to both make and save money.

“All in all, our business has been quite resilient,” Bittner told Miss Tweed. “We are optimistic about the future. Our order economics are at an all-time high and we don’t lose money on any order.” Also, he said he felt that the company had made great strides in marketing and building its customer base. “We’ve gotten very good at magnifying the storytelling and making people understand how unique Vestiaire is,” Bittner said.

The fact that Vestiaire Collective was mentioned a few months ago in the popular Netflix series Emily in Paris gave a huge boost to the brand’s profile and traffic on its website. Vestiaire has also conducted closet sales by celebrities such as actresses Jessica Chastain and Laura Dern. Another useful marketing initiative was the anti-fast fashion campaign Vestiaire published last year, featuring piles of used clothes on Times Square.

Bittner said business was growing fast in the United States, where he moved with his family last year. “It was a very good move for me to go to the U.S.,” Bittner said. “You cannot succeed in the U.S. if you are not in the U.S. So it was natural for me as a CEO to go there.” There were no plans to move a large part of Vestiaire’s staff to the United States, he added, as salaries there tended to be higher than in Europe.

In Europe, Vestiaire has signed partnerships with Richemont’s Chloé and Kering’s Gucci and Alexander McQueen to allow customers to buy second-hand items from those brands on its platform. Kering is one of Vestiaire’s shareholders. Vestiaire also receives stock from online fashion retailer Mytheresa, which just signed a deal to acquire YNAP. In exchange for items they no longer want to keep in their closets, Mytheresa customers get vouchers to purchase new items on Mytheresa. The partnership with Vestiaire has been working quite well, Mytheresa said.

These partnerships may represent a small part of Vestiaire’s business but they are important for the future. Customers increasingly expect brands to offer them the opportunity to resale their goods, industry analysts say. It’s part of the growing realization that fashion is a major polluter and it’s better to resale your clothes, bags and shoes than leave them in your closet or throw them away.

Once market conditions allow, Vestiaire Collective is aiming for an initial public offering (IPO) at some point. Every employee at Vestiaire is a shareholder. Holding shares that could soon be traded in the market has helped the company attract talent. The last round of funding with Eurazeo on Aug. 1, valued the Collective at $1 billion. That compares with a valuation of $1.7 billion when Vestiaire did a fund-raising in Sept. 2021, led by Japan’s SoftBank Group and Generation Investment Management. The latter investor is the sustainability fund founded by former U.S. Vice President Al Gore, a self-proclaimed fighter against climate change.

For now, Bittner said he’s not thinking about the company’s IPO. “I don’t spend even one percent of my time thinking when I can do an IPO. We are in an uncertain macroeconomic environment and it’s going to be like that for at least another year.”

eBay and Vestiaire compete with companies such as Lithuania’s Vinted and America’s The RealReal, as well as other resale websites. Vinted, which tends to be more specialized in affordable items than high-end fashion, is invading Vestiaire’s territory by offering more and more luxury items. However, there is growing concern among consumers about the authenticity of the goods sold on Vinted. No-one from Vinted would answer emails from Miss Tweed, from the CEO to the press service to financial backers – which is odd.

“Some people say that they sell more and faster on Vinted than on Vestiaire,” one senior industry source. That may be because there is also less scrutiny on Vinted regarding the authenticity and quality of the goods sold.

This week, Vinted completed another round of fund-raising led by asset investment firm TPG valuing the company at €5 billion, compared with €3.5 billion during its previous funding round, carried out in 2021.

“We’ve seen that consumers are increasingly choosing second-hand as a core part of their wardrobe, as sustainability and flexibility become top of mind for many people,” Andy Doyle, TPG Partner said in a statement issued on Thursday. “Vinted’s customer focus, leading product experience, and sophisticated approach to logistics have made this market accessible to an even broader population.”

Vinted and eBay’s success give Vestiaire hope regarding profitability and growth. eBay has been in the pre-loved fashion and luxury business for nearly three decades now and continuously invests in these categories. Recently, it acquired companies that help authenticate goods and allow for the digital transfer of products. The Silicon Valley giant said it was currently moving into new markets such as Japan and the Asia-Pacific region. “Our goal is to continue to expand the luxury resale market, making authentic designer fashion more accessible, especially to younger consumers who are increasingly drawn to pre-loved and sustainable options,” Mari Corella, GM of Global Luxury at eBay told Miss Tweed. The company said it recently held its first pre-loved fashion weeks, two shows during New York and London Fashion Week, in partnership with the Council of Fashion Designers of America and the British Fashion Council.

“Whether it be accessories or apparel, there is an ever-growing demand for unique, pre-loved fashion items that are difficult to source,” Corella said. “Across eBay’s breadth of inventory and millions of active users, our shopper data gives us unique insights into the most prominent trends in the world of fashion and how they are showing up across our priority categories. For example, the top watch brands Gen Z is shopping for on eBay based on year-over-year comparisons are Cartier, Omega, Panerai, Rolex and Tudor. In handbags, the Margaux bag from The Row, reportedly coined the ‘New Birkin’, has had a search surge of 400% by global eBay users in the past year.”

Mari Corella added: “We've seen a significant shift towards circular fashion and pre-loved purchasing - the number of listings featuring the word 'thrifted' has increased by over 400% in the past year. As circular fashion becomes more central to the future of the fashion industry, eBay is working to make it easier to participate in the growing market for circular fashion.”