The second-hand clothing market is booming, leading Vinted to see sales rise almost exponentially. Yet losses are also going through the roof at the fashion platform. Not to worry: the potential is still huge and investors are stepping in.
Last year, Vinted’s sales rose from 148 million to 245 million euros, a growth of 65 %. That strong performance was supported by consumers’ high interest in second-hand fashion. Cost-consciousness and sustainability are decisive factors for them. However, growth does come at a high price for the fashion app: losses rose from 24 million euros in 2020 to 118 million in 2021.
Those figures are mainly the result of sharply increased marketing investments, business magazine Quote reports. Vinted spent a whopping 193 million euros on advertising last year, three times more than a year earlier. This is a deliberate strategy: instead of making profits now, the management prefers to invest in accelerated growth, according to the annual report. The company seems to be able to get away with it: last year, the startup raised 250 million euros from investors. The company still has 239 million euros in cash, and 50 million in corporate bonds.
“Drop in the ocean”
Vinted now operates in sixteen countries and is valued at 3.5 billion euros. It is now Europe’s largest platform for second-hand fashion. CEO Thomas Plantenga sees no end to the growth for now: the first nine months of this year already saw another 37 % increase in sales. “The second-hand market is just a drop in the ocean“, he told the Financial Times: the second-hand market still represents only 3 to 4 % of the total fashion market.
The fact that more and more fashion retailers are getting into second-hand themselves does not bother the startup. The real competition, Plantenga believes, are shoppers buying new clothes. The CEO wants to convince them to look second-hand first, before considering a new purchase. To make that easier, he is building a European network of lockers. A first test is under way in France. “We want you to put clothes in a locker in the Netherlands and have a woman in France pick it up,” he says. For expansion, the focus is on Europe: “Europe is our home, we really understand that market”, says the CEO, pointing out that markets like the United States and Canada are very different.