Vinted is an online marketplace that enables the purchase, sale and exchange of fashion items among private consumers. The company focuses on second-hand fashion in the female, male, or kids categories.
The business model of Vinted is based on charging sellers a fixed and variable (percentage) fee for every transaction conducted on its platform. Furthermore, sellers can opt in to purchase additional features such as Wardrobe Spotlight or Item Bump to promote the products they sell.
Founded by two Lithuanian entrepreneurs in 2008, Vinted has become a household name in the fashion industry. The company has raised over $260 million in venture capital funding while serving over 25 million customers around the globe.
How Does Vinted Work?
Vinted is an peer-to-peer online marketplace that facilitates the purchase, sale and exchange of clothing items. As the name indicates, Vinted primary focus lies in vintage and/or second-hand fashion.
Users can sell clothes in either the Women, Men or Kids category. Sellable items include things such as:
- Jeans, skirts, lingerie, dresses or sweaters
- Shoes, i.e. sandals, heels, boots, or flip-flops
- Bags, including shoulder bags, fanny packs, handbags, backpacks and more
- Accessories, for instance watches, sunglasses, belts, jewelry, or hats
- Beauty products such as perfume, hair and nail care, or makeup
If a user finds an item of his/her liking and they agree to the price set, they can simply proceed to purchase the product. Vinted will then equip the seller with a prepaid shipping label, making it easy for sellers to ship the products.
Furthermore, as the operator of the marketplace, Vinted takes care of the payment and refund process while ensuring that the buyer receives their products in the desired quality and time.
A Short History Of Vinted
Vinted was founded in 2008 by Milda Mitkute and Justas Janauskas in Vilnius, Lithuania. As with every idea worth pursuing, the concept of Vinted originated from a conversation Janauskas shared with a friend at a bar.
They chatted about creating a website that would allow people to trade their used fashion items with each other. Soon after, Janauskas and Mitkute (who joined him later on as co-founder) created a prototype and released it into the world.
Without any dedicated marketing efforts, the pair saw their platform grow on the backbone of users engaging in their forum-style community.
While coding on his project one night, a couch-surfing guest of Janauskas from Munich, Sophie Utikal, prompted him on what he was working on. His explanation excited Utikal so much that she wanted to take that concept to Germany.
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The pair agreed that Janauskas would take care of all technical work (as he himself is a software engineer by profession) while Utikal would handle all promotional activities.
Today, Vinted operates under the brand name Kleiderkreisel in Germany and is one of the company’s top-performing markets. Similar to Lithuania, the platform mostly grew by word of mouth.
That same model was replicated in countries such as the Czech Republic or Great Britain. The success drew a lot of attention towards the startup, which ended up receiving an investment from Lithuanian angel investor Mantas Mikuckas. Soon after, Mikuckas joined the company as COO in 2013.
By 2015, the company was able to expand into the US on the backbone of a €25 million funding round. A year later, the company attracted over 12 million users, with another 11,000 joining daily. Over 22 million items were listed across the 11 countries it was involved in.
Despite all these positive growth numbers, Vinted’s journey hasn’t been without obstacles. In the early 2010’s, users of Kleiderkreisel revolted heavily against the company imposing fees on selling (selling on the platform had been free of charge prior and monetization occurred through display ads).
By 2016, the company was burning tremendous amounts of cash with prospects of eventually becoming bankrupt. Insight Venture Partners, one of the company’s investors, hired Thomas Plantenga to work out a mitigation plan with the company.
As a result, Vinted closed down its offices in San Francisco, London, Munich and Paris while reducing headcount from 240 to 150. Furthermore, the company decided to focus on two core markets: France and Germany.
The turnaround became a great success, which allowed Vinted to raise additional capital in two more funding rounds. As for Plantenga, he became the company’s new CEO in 2017 and manages the company’s strategic direction to this date.
How Does Vinted Make Money?
Vinted makes money by charging sellers a fixed and variable fee on every successful transaction facilitated through their platform.
The fixed amount is used to cover fixed costs such as payment processing or providing the shipping label. Fixed fees range anywhere between $0.3 to $0.8 for every transaction.
Additionally, a variable amount of 3 to 8 percent is applied. This depends on the purchase price agreed between the buyer and the seller (regardless of postage costs).
The seller fee model is very common with marketplace operators. Many other platforms such as eBay, Poshmark or ThredUp are charging its sellers for helping them facilitate transactions.
Additionally, Vinted has two other monetization streams, which are:
- Wardrobe spotlight
- Bumping listed items
Wardrobe Spotlight is a paid feature that promotes a seller’s wardrobe (list of products they offer) to other users with similar fashion preferences.
For seven days, buyers will see 5 listings from a seller’s wardrobe in special spots on their newsfeed. Three items include the most favored products from the seller’s wardrobe while the other two will match the buyer’s newsfeed preferences.
Item Bump is a paid feature that guarantees sellers more visibility for their items, which allows to speed up the selling process. When a listing is “bumped”, it is shown to more potential buyers in their feed and search results over a span of 7 days.
Fees for item bumps can range anywhere between $0.5 and $5, depending on the category of given item, the price of an item, and amount of products that are currently bumped on the Vinted platform.
Vinted Funding, Valuation & Revenue
According to Crunchbase, Vinted has raised a total of $260 million in five rounds of venture capital funding.
In its latest Series E round, announced in November 2019, the company raised $128 million at a valuation of more than $1 billion. This funding announcement put the company officially in the unicorn club.
Notable investors of Vinted include the likes of Lightspeed Venture Partners, Accel, Insight Partners, Sprints Capital, or Burda Principal Investments.
As typical with any venture-backed startup, Vinted does not publicly disclose any revenue metrics. During its Series E funding, they stated to expect selling €1.3 billion worth of clothes across its 11 markets. With selling fees of 3 to 8 percent, revenues would be in the ballpark of €40 to €100 million.