The Vestiaire Collective Business Model – How Does Vestiaire Collective Make Money?

Executive Summary:

Vestiaire Collective is a fashion resale platform that allows users to purchase mostly used luxury clothing, shoes, and accessories.

Vestiaire Collective makes money by charging fees. Those fees have to be paid by sellers when they successfully sell something on the platform.

Founded in 2009, Vestiaire Collective has grown to become one of the world’s leading fashion resale platforms. It is now valued at $1.7 billion.

What Is Vestiaire Collective?

Vestiaire Collective is an online marketplace that allows users to purchase used luxury clothing, shoes, and accessories.

Consequently, anyone that has a surplus of luxury brands available in their wardrobe can sell on the platform as well.

Sellers simply register an account, download the platform’s app, and upload a photo and description of the items they would like to sell.

Once the items have been sold, they are shipped to Vestiaire Collective. The platform then checks the products to confirm their authenticity and ships them directly to the customer upon completion. Additionally, customers can have items shipped directly from the seller as well.

Sellers can set up dedicated profiles that entail a picture, follower counts, transaction histories (such as the number of recently or historically sold items), their favorite items, and many more data points.

Customers can acquire pieces from some of the world’s most luxurious brands including Gucci, Prada, Louis Vuitton, Balenciaga, Versace, and dozens more.

The platform adds 3,000 carefully selected products every day. Over 300,000 products are available for purchase in total.

Vestiaire Collective can be accessed by browsing the company’s website or by downloading its mobile apps (available for Android and iOS devices).

Vestiaire Collective Company History

Vestiaire Collective, headquartered in Paris, France, was founded in 2009 by Alexandre Cognard, Christian Jorge, Fanny Moizant, Henrique Fernandes, Sebastien Fabre, and Sophie Hersan.

The founding team possessed decades of experience in a variety of fields such as tech and fashion. Fabre, Vestiaire’s long-time CEO, had stints at Microsoft and Vivendi. He also took leading roles at startups such as dating site NetClub, which was sold to in 2007.

Most of the founders also frequented more elite and fashion-conscious circles. Many of their friends had dozens of high-quality designer pieces laying dormant in their wardrobes.

Around the same time, the great financial recession was wreaking havoc across the world, forcing many people to rethink their consumption patterns.

This led some to seek alternative paths to make a buck or two. Many bloggers, for example, began to sell leftover clothing via their own websites. Others simply utilized established marketplaces like eBay.

Unfortunately, these means of selling had one major disadvantage for customers: ensuring authenticity. Many sellers would simply sell counterfeit products.

In order to test the concept, the co-founders asked their family and friends whether they would be willing to sell their excess clothing on the platform. Fanny Moizant’s mother, for instance, had her own clothing store in Paris, which provided the team with a decent number of pieces.

In fact, when they launched the platform in 2009, it had a total of 3,000 second-hand items offered for purchase. The platform was initially launched as ‘Vestiaire de Copines’, which is French for ‘the friend’s wardrobe.’

The launch of Vestiaire de Copines was self-funded by the founders. However, being the first platform of its kind, it would soon garner interest from both consumers and investors. For reference, competitors such as Poshmark or The RealReal only launched two years later.

Vestiaire de Copines, in the meantime, stayed busy growing. It raised a €1.5 million Series A in June 2010 followed by a €7.5 million Series B fundraise in October 2011. The next year two years proved to be some of the most transformative in the young startup’s history.

First, they renamed it Vestiaire Collective to appeal to its growing international audience. The rebranding was accompanied by the launch in the U.K. in March 2012.

Exactly a year later, the French platform expanded into the United States. Two months later, in May, Vestiaire Collective managed to cross the inaugural mark of one million registered users. Investors also continued to like what they saw.

In September, the team raised another $20 million in Series C funding. Half of the funding came from magazine publisher Condé Nast, which owns publications such as Vogue. The funding allowed Vestiaire Collective to gain a stronger foothold in the North American market.

Apart from expanding into other markets, Vestiaire Collective also continued to add new categories to the site. In 2014, for instance, it introduced a Male as well as Vintage section, among others.

Vestiaire Collective continued to grow its business by raising additional capital. In September 2015, it netted $37 million in Series D funding from mostly existing backers. At that point, the platform claimed four million members and had offices in Paris, London, New York, and Berlin.

Another $62 million fundraise in January 2017 allowed Vestiaire to expand into other parts of the world, most notably Asia as well as Australia. That same year, it opened an authentication center and office in Hong Kong to be able to serve those very same customers.

In order to get the word about the platform out, it even launched its first set of advertising campaigns via TV, still photography, and digital video. Vestiaire Collective already had a respectable six million customers and was available in 47 countries when it launched the campaign.

Vestiaire Collective also had to experience some setbacks, though. In November 2018, its co-founder and long-time chief executive Sebastien Fabre stepped down from his role. He was ultimately replaced by Lazada co-founder Maximilian Bittner.

Its new CEO Bittner even participated in Vestiaire’s next round in June 2019 during which the company raised €40 million in funding. Bittner’s experience also proved valuable in entering more markets in Asia.

In 2019 alone, Vestiaire Collective expanded into Taiwan, Thailand, Indonesia, India, and Malaysia on top of the UAE, Saudi Arabia, Israel, Brazil, and Mexico. At that point in time, close to 80 percent of all transactions on the platform were already taking place outside of France.

The continuous growth, furthermore, enabled the platform to open its first physical store in London in October. Weeks earlier, the platform introduced direct shipping as a way to speed up the delivery process and reward its most reliable sellers.

Interest in Vestiaire completely exploded in early 2020 once the coronavirus pandemic broke out across the world.

To take advantage of the heightened interest (especially due to the temporary closure of retail stores), it raised another $64 million in funding in April 2020.  Over nine million members were part of Vestiaire Collective at that point.

Up until the pandemic, Vestiaire Collective and competing platforms had a tough time convincing other luxury brands to embrace reselling. However, this all changed with the pandemic. As a result, Vestiaire Collective was able to introduce its ‘Brand Approved’ program in late 2020.

The program enabled fashion houses to have some control over what is bought and sold by directly offering their pieces on the platform. Soon after the launch of the program, Vestiaire Collective announced partnerships with the likes of Alexander McQueen, British heritage brand Mulberry, and Mytheresa, among others.

In the meantime, Vestiaire’s team continued to add capital to its balance sheet. They raised two rounds (Series H & I) of €178 million each in March and September 2021. Investors in those rounds valued the company at $1 billion (Series H) and $1.7 billion (Series I), respectively.

That same month it announced its Series H round, Vestiaire Collective also hit another major milestone. It became the first resale fashion platform to receive a B Corporation certification, highlighting its commitment to sustainable practices.

The competition, though, didn’t sleep either. In December, luxury marketplace Farfetch, which focuses on unworn clothing, acquired resale platform Luxclusif for an undisclosed sum. Vestiaire Collective responded by acquiring Tradesy, one of the leading resale platforms in the United States, in March 2022.

Today, Vestiaire Collective employs over 800 people in close to a dozen offices across the globe. The combined businesses of Vestiaire and Tradesy boast a membership community of 23 million.

Explaining The Business Model Of Vestiaire Collective

Vestiaire Collective makes money by charging fees. Those fees have to be paid by sellers when they successfully sell something on the platform.

Commissions are a common monetization tactic for online marketplaces, which is the business model that Vestiaire Collective operates under.

In exchange for those fees, sellers get access to millions of customers, which increases their likelihood of selling an item.

Customers benefit by being able to securely purchase and receive luxury fashion items at discounted prices.

As previously stated, traditional marketplaces like eBay suffered from counterfeit products being offered on its platform, which severely decreases a customer’s trust – and thus their propensity to purchase something.

Vestiaire Collective became one of the first marketplaces to insert itself as a trustworthy middleman by authenticating the products that were sold.

In the coming years, others have followed. Notable examples include Poshmark, Tradesy, StockX, or The RealReal, among others.

It certainly helps that Vestiaire Collective operates in the luxury fashion segment. The sales price (and thus margins) tends to be significantly higher, which warrants investing in authentication services.

Vestiaire Collective, in exchange for those services, then imposes a fee on the seller. Its fee structure is ultimately dependent on the country that the product was sold in as well as the item’s price.

Sellers in the U.S., for example, pay $10 for items below $80. All items priced between $80 and $16,500 have a selling fee of 12 percent. Products above $16,500 have a fixed fee of $2,000.

On top of that, Vestiaire Collective applies a payment processing fee of around 3 percent. The fee is used to cover the cost imposed by payment providers such as MasterCard and Visa.

Lastly, since Vestiaire Collective only releases the seller’s money upon successful completion of the shipment and after the customer’s acceptance, he or she is incentivized to offer authentic products.

Vestiaire Collective Funding, Revenue & Valuation

Vestiaire Collective, according to Crunchbase, has raised a total of $683.6 million across ten rounds of venture funding.

Notable investors include Ventech, Balderton Capital, Condé Nast, Vitruvian Partners, Tiger Global Management, SoftBank, and many more.

Vestiaire Collective is currently valued at $1.7 billion after raising €178 million in Series I funding back in September 2021.

The company, since it remains in private ownership, has opted against disclosing its revenue figures to the public – at least for now.

Who Owns Vestiaire Collective?

It can be assumed that Vestiaire Collective is primarily owned by its investors, most notably Ventech, Balderton Capital, and Condé Nast.

All of those three investors have invested money into the platform in early rounds, which is normally where most of the upside is captured by investors.

Additionally, they have also led multiple rounds and participated in various others. Ventech, for example, has invested money into Vestiaire Collective during five different rounds.

Another supporting factor of the investor’s ownership is the fact that none of the firm’s founders hold positions in the firm’s C-suite.

In fact, many, such as former CEO Fabre or CTO Cognard, have moved on and are now founders of other companies. That normally means that they would sell the majority of their shares as new funds are raised.

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.