Earlier this month, eBay scrapped seller fees on consumer-to-consumer fashion and it’s no wonder – the secondhand market for clothing is soaring. But there is one problem for established players such as eBay and Depop: the exodus of customers switching to Vinted
The Lithuanian-founded consumer-to-consumer site is leading a boom in sustainable fashion that has extended beyond thrifty younger consumers to get a wide demographic hooked on its platform.
Over Easter weekend, my daughter and I collectively bought five items and sold six on the Vinted platform – even as our inboxes filled up with discount offers from leading fashion brands.
Vinted topped Retail Week’s recent ranking of the UK’s fastest-growing retail brands with a whopping 171% uplift in transactional spend in 2023.
All indications are that this trend is set to continue. US marketplace ThredUp forecast in its 2024 resale report that the global secondhand fashion market is growing three times faster than the overall market and will reach $350bn (£284bn) by 2028.
According to ThredUp, 52% of consumers shopped secondhand last year.
So what makes Vinted so compelling and what are the implications for fashion retail in the UK?
Leading the European pre-loved market
Already present in 19 markets in Europe and North America, Vinted has more than 80 million members and is continuing to expand.
Group revenue jumped 51% in 2022 to €371.4m (£323.1m) and it narrowed losses by 62% year on year to €42.9m (£37.3m).
The UK is an important market for Vinted and one of the first it entered – as early as 2011. CACI data shows that its sales jumped 171% in the market last year, so this stellar growth looks set to continue. What is driving it?
Research from Vinted in August last year showed that 77% of UK consumers purchased items on the platform that would otherwise be too expensive, with savvy shoppers expecting average savings of 43% when buying secondhand compared with new.
More than a third of transactions (39%) on Vinted prevent the purchase of a new one, resulting in an average carbon emissions saving of 1.8kg of CO2 per secondhand item, giving customers the feeling of doing good.
A fifth of consumers said they would still choose to buy pre-loved clothing, even if prices were similar.
Social platform with a feelgood hit
Making sustainable choices is at the heart of Vinted’s ethos. What keeps customers coming back is the seamless customer experience and its addictive platform, which manages to provide the dopamine hit of social media on top of the feel-good factor.
Buying on a marketplace already has a treasure hunt feel to it. Every item is unique and there are new items being added constantly, which encourages shoppers to check the platform regularly.
As with social media, buyers and sellers on Vinted can set up profiles and follow one another, and they are strongly encouraged to leave reviews.
This creates a community feel and means sellers will put a lot of effort into getting a positive review from a buyer – even an item selling for £1 on the platform may arrive with a handwritten thank-you note.
Cleverly, Vinted personalises its platform by encouraging members to set preferences for sizing and brands.
The more it learns about you, the more relevant products appear in a continual newsfeed, providing a never-ending news stream of suggested items to scroll through alongside favourited items. This makes its app both relevant and addictive.
Leveraging technology to constantly evolve
Vinted is constantly evolving its platform to improve customer experience and that is a strong point of differentiation from competitors.
On the homepage, it uses two types of algorithms to show listings that are recommended to the individual user and to select listings by estimated relevance.
Search results can be filtered by category, brand, price range and more, and the platform learns and tweaks the experience to increase relevance.
There is a highly scrollable newsfeed, listing products is quick and easy, and Vinted ’badges’ are awarded to sellers once they sell a certain number of items.
Recent additions include features to easily relist items if they arrive and are unsuitable, and a recommendation engine that automatically suggests new items to complement outfits customers have recently bought.
Vinted’s technology is super-smart and fashion rivals should take note.
This level of personalisation is rarely seen anywhere, even at mainstream retailers.
Prioritising lockers and collection
Sellers on Vinted do not pay fees on items sold. Instead buyers pay for a postage label and a buyer protection fee, relatively low in both cases.
Payment is only passed on to the seller of an item once the buyer receives it and confirms ‘Everything is OK’.
This gives customers confidence in using the platform and the company is quick to resolve issues, with a service-level agreement of 48 hours to respond and a refund within five days.
Vinted prioritises sustainable click-and-collect and locker deliveries, which are always cheaper for buyers than postage to home.
Through its Vinted Go arm, the company is establishing a European network of collection lockers and partners with InPost and Evri in the UK.
Drive towards profitability
Despite the obvious demand for pre-loved fashion, selling it profitably is a big barrier to investment for many.
Vinted is yet to turn a profit, but as it scales it is succeeding in narrowing losses and finding ways to generate additional revenue.
The majority of revenue comes from its buyer protection fee, which is low (around £2.45 on an item priced at £35). And although there are no fees for sellers, there is a paid option to ‘bump’ items to make them more visible on the site.
In October, the platform introduced a chargeable verification service, which allows sellers to pay £10 to have designer items checked by Vinted, giving buyers confidence and generating a new revenue stream for the platform.
Recently, Vinted has tapped into third-party revenue by leveraging brand and retailer advertising on its platform.
Its retail media solution also monetises data from its user base to a paying audience of brands, retailers and researchers.
Are retailers missing out?
Vinted looks as if it is on a path to dominate the pre-loved fashion sector and fashion brands can learn a lot from its approach – interestingly, less from a sustainability perspective than for its excellent personalisation, use of algorithms and focus on customer experience.
Momentum is rapid and that is certainly generating excitement around sustainability and the feel-good factor that accompanies spending less and giving a new lease of life to a product.
As fashion retailers increasingly offer pre-loved fashion, rental and repair services themselves, it is important to keep an eye on the size of the prize, and second-hand fashion does look as if it offers strong potential.
Partnerships will serve retailers well but, ultimately, when brands think about the circularity of the items they produce and sell it may be worth investing now to own a greater share of resale.
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