Second-hand fashion site Vinted "fritters money away" despite €1.3 billion business
today Oct 11, 2019
As Vinted struggled to find a viable business model, it risked closing down in 2016. Three years later, the second-hand fashion website has reinvented itself and has become a key player in Europe in the pre-owned apparel and accessories market. Yet, despite a volume of €1.3 billion, Vinted’s business remains unprofitable, and the site is now relying on European expansion and the renewed interest in second-hand clothing to find a cure.
“Vinted is frittering money away,” CEO Thomas Plantenga tells FashionNetwork.com with a smile. “Each month, we invest €1 million in customer service. But we are certain that, if we increase in size, we will be able to pay our bills."
‘Size’ refers to the number of items available through the site, which currently stands at 120,000. Vinted was founded in Vilnius, Lithuania, by Milda Mitkute and Justas Janauskas in 2008. Its basic premise is that expanding the range of products on offer and providing trustworthy service are the keys to success.
The site currently has 23 million members in 11 countries, and the average price per item sold is €15. Private vendors sell on average two items per week. Customer loyalty is paramount, with 80% of members returning to the site in the month following their last visit, and 60% doing so for the two following years.
“France saved us,” says Plantenga, who took charge of Vinted in 2016, when sales flattened out and costs were rising. “We had a 10-month cash flow. The model wasn’t working and we weren’t distinctive on the market."
Plantenga at the time decided to economise, notably closing down Vinted’s seven offices abroad. The site then began to think about its strategy, coming up with a simple mission: “to make clients happy.”
“Not a fashion company”
A decision was then taken to “maximise user value,” increasing the commission to 5% as a way to accelerate the product range’s expansion, together with the start of a targeted communication strategy. Without neglecting the site’s core aspect, customer service. After redeploying in Germany under the name Kleiderkreisel, Vinted experienced a boom in demand in France, marking the success of its strategy.
“We aren't a fashion company. We have a staff of just over 300 people, half of them engineers, half working on customer service. We aren't here to say what’s fashionable, our users do so. Our job is simply to make everything easy, quick and secure,” says Plantenga. An approach that led Vinted to collaborate with French payment solution provider Mangopay, to feature services encouraging users to repeat purchases and sales.
Collaborations and internationalisation
Several operators have contacted Vinted with a view to establishing a partnership. Plantenga isn’t against the idea, but said he just doesn’t have the time. As for expanding the range, this is happening spontaneously.
“We are seeing that the products put up for sale are increasingly upmarket,” reveals Plantenga, underlining how this shift is proof of the confidence Vinted inspires in users.
Vinted currently operates offices in Berlin, Warsaw and Prague, and wants to compete across the whole of Europe. Ahead of expansion in Asia or the Americas?
“I don’t want to lower our service quality by moving too quickly beyond Europe, already a challenge in itself,” says Plantenga, who is currently focusing on Spain, Belgium and the Netherlands. “Eventually, we have nothing against that, but one thing at a time."
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