In the coming years, the market for second-hand fashion could grow to a volume of 51 billion US dollars. In Germany, Zalando and About You are currently launching their own models to sell used fashion. The big market leaders in this country are clothing gyroscopes and mummy gyroscopes with a total of 8.5 million users.Now the Lithuanian parent company is daring a risky step: the two brands are to disappear piece by piece and be merged under the umbrella brand Vinted.
CEO Thomas Plantenga told us how the company was able to become a European unicorn and how he wants to establish the new brand in Germany.
34 million users worldwide
Not long ago, the doorbell for the name Vinted was certainly not heard by very few Germans. The Lithuanian company is behind the well-known second-hand marketplaces Kleiderkreisel and Mamikreisel, which together have over 8.5 million members in Germany. A mainly female target group sells and buys second-hand clothing for themselves and their children here. The company, founded in 2008 by Milda Mitkuke and Justas Janauskas, currently has 34 million users in a total of twelve markets (eleven in Europe and the USA).
Since an investment round of 128 million euros at the end of 2019, Vinted has been a unicorn. Back then, well-known VCs such as Insight Partners, Burda Principal Investments and Accel had invested. So now the big step to take on the company name in Germany. “If you look at it from a brand perspective, it’s suicide,” CEO Thomas Plantenga told OMR. Anyone who looks at the history of Vinted quickly realizes that the Dutchman seems to have a feeling for how he can get more and more out of the business model.
The success story starts with the new CEO
When Thomas Plantenga joined the eight-year-old company in 2016, Vinted was not doing well. “The business was at an end,” he told Techcrunch in 2018. He immediately resolves to turn the business model and the company inside out. Plantenga is laying off almost half of the 240 employees, closing offices in San Francisco, London, Munich and Paris and doing away with the sales commission, which until then was responsible for the majority of Vinted’s brand sales.
Since the start of the Dutch CEO, Vinted has grown two and a half times per year, according to the company. In 2019, the platform’s gross sales were 1.3 billion euros worldwide. The value describes the money that saleswomen at Vinted have made with their used clothes. The company is silent about sales. In 2018 it was 32.9 million euros with a loss of 42.9 million euros. With two and a half times growth in 2019 and 2020, sales for this year would be a little over 200 million euros. Today over 500 employees work for Vinted brand.
Three sales pillars
But how does Vinted make money today without a sales fee? Overall, the business model is based on three pillars: visibility push, advertising and buyer protection. The former is reminiscent of eBay classifieds . For a fee, providers can have their products end up higher up in the search results. Advertising placements within the Vinted apps and on the websites serve as a second pillar. The company is currently pushing its various buyer protection functions the most.
In an interview with OMR, Vinted CEO Thomas Plantenga said openly that the increased use of these functions was one of the most important goals when the new app was launched: “In the old apps, only a few Germans use our transaction system, which protects them from fraud are, ”he says. “Now we are starting to take over shipping costs so that users can get to know our tools.” For a fixed fee of 70 cents plus five percent of the sales price, Vinted brand handles the payment and enables the shipment to be tracked. The buyer bears the costs.
If users of the new app make more use of this function, Vinted’s sales will increase. But there are other reasons for merging clothes and mummy tops. “If you bring together different communities that overlap in their interests, you get more engagement,” Thomas Plantenga told OMR. “That brings more value for everyone. And people who are already on the platform will sell even faster in the future. ”If there is more movement on Vinted brand, the marketplace will benefit enormously in the long term.
“This year we are preparing for high costs for the first time. But in the long term, we have to make the investments, ”says Plantenga. A merged Vinted also ensures that new users can find the products they are looking for more quickly. This also increases engagement on the platform. In the past few months, Vinted has packed its children’s and adult brands in Belgium, Spain and the Netherlands into one app. The data from the smaller markets would have encouraged the team to take the step in the company’s second largest market (after France).
User-friendliness should “outshine” risks
“We have two big goals: We want to offer users a better experience and draw as many as possible into the new app,” says the Vinted CEO. He reckons with a certain churn (loss of users), “the view of user-friendliness and long-term perspective outshines all risks.” But that will not be that easy: All 8.5 million clothing and mummy top users should step by step into the Vinted app – the process should be completed by the end of the year. “We try to be totally transparent. First we communicate what is happening and why via email and in the app, ”says Plantenga.
Simply migrating the account information is not the problem. Posted products, news, reviews and reserved products must also be transferred. “We have already tested the migration tools in other markets and are sure that the information from the old app will end up in the new one without any problems,” says the CEO. “In the most recent test in Lithuania, almost all active users switched to the new app immediately.” Overall, the company is still in a complicated phase. The acquisition of new customers is currently still going on on the clothes and mummy tops. If the existing customers mostly sell in the Vinted app, the marketing measures will also be changed.
The competition never sleeps
The courageous step of the Lithuanian market leader comes in a heated phase for the second-hand business. In Germany, with Zalando and About You, two major players have added used fashion to their range . About You started “Second Love” just a few days ago. “All the players in the second-hand market are currently creating a new market together. I don’t see any cannibalization effects there, ”said Plantenga. “In the end, Zalando and others are trying to boost sales of their new goods. I don’t see that as direct competition. ”In fact, the About You and Zalando model is different. Both companies do not offer a C2C (Customer To Customer) platform, but sell used goods they have bought themselves via their online shop.