Vestiaire Collective The Challenges of Second-Hand Luxury

IN1432
Vestiaire Collective:
The Challenges of Second-Hand

Luxury
Back row, L-R: Sophie Hersan, Alexandre Cognard, Christian Jorge, Sébastien Fabre; front row, Fanny
Moizant, Henrique Fernandes
08/2017-6318
This case was written by Frédéric Godart, Assistant Professor of Organisational Behaviour, and Brian Henry,
Research Fellow, both at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate
either effective or ineffective handling of an administrative situation.
Additional material about INSEAD case studies (e.g., videos, spreadsheets, links) can be accessed at
cases.insead.edu.
Copyright © 2017 INSEAD
COPIES MAY NOT BE MADE WITHOUT PERMISSION. NO PART OF THIS PUBLICATION MAY BE COPIED, STORED, TRANSMITTED, REPRODUCED OR DISTRIBUTED IN
ANY FORM OR MEDIUM WHATSOEVER WITHOUT THE PERMISSION OF THE COPYRIGHT OWNER.
This document is authorized for use only in Naveen Amblee's PGP II (Term 5) : Marketing Luxury (ML) 2021-22 at Indian Institute of Management - Ahmedabad from Sep 2021 to Dec 2021.
Luxury is the only sector providing luxury margins.
Bernard Arnault, founder and chairman/CEO of LVMH 1
Fighting Counterfeit Goods: Preserving Luxury Pricing Online

In the first wave of the e-commerce revolution, consumers of luxury products often confused
counterfeiters with authorized e-retailers. Slow to see this as a threat to their business and
pricing models, luxury brands initially failed to take measures to control the online
distribution of their goods and did not educate consumers on where to purchase authentic
goods. 2 They understood how wrong they were when in 2004, Tiffany purchased 186 random
items from eBay and found that only 5% were genuine. LVMH discovered in 2006 that, of the
300,000 Dior products and 150,000 Louis Vuitton items listed on eBay, 90% were
counterfeit. 3
In September 2007, L’Oréal sued eBay in five European countries, alleging that the online
retailer had not done enough to police its site to stop counterfeit goods – litigation that was
not resolved until January 2014. 4 Other battles were resolved more quickly. In July 2008,
Bernard Arnault, chairman and CEO of LVMH, won a major victory over the sale of
counterfeit luxury and designer goods on eBay’s website in France: a French judge ordered
eBay to pay €38.6 million in damages for negligence in allowing the sale of fake bags,
lipsticks and designer clothes. 5 Pierre Godet, adviser to Bernard Arnault, said the verdict was
“an answer to a particularly serious question on whether the internet is a free-for-all for the
most hateful, parasitic practices”. 6 A month earlier, another French judge had ordered eBay to
pay Hermès €20,000 in damages for allowing the sale of counterfeit handbags. 7
Compared to similar proceedings in other European countries and the United States, the
lawsuits in France were far broader in scope. As a result of one ruling handed down by a
French commercial court, it became illegal to buy or sell authentic LVMH perfume products
on any eBay site in the world. 8 Even ads using the LVMH brand names Christian Dior,
Kenzo, Givenchy or Guerlain could not be legally posted on eBay. 9 For engaging in unlawful
marketing, eBay was fined an additional €1.7 million by the Paris commercial court in 2009. 10
1 Cited in Kapferer on Luxury: How Luxury Brands Can Grow Yet Remain Rare, by Jean-Noël Kapferer,
Kogan Page Publishers, 2015, p. 42.
2 Luxury Fashion Branding: Trends, Tactics, Techniques, by Uche Okonkwo, Palgrave Macmillan, 2007,
p. 197
3 The Road to Luxury: The Evolution, Markets, and Strategies of Luxury Brand Management, by Ashok Som
and Christian Blanckaert, Wiley, 2015, p. 360
4 https://www.wsj.com/articles/l8217or233al-ebay-settle-dispute-over-counterfeit-goods-1389816939,
accessed 18 July 2017
5 https://www.theguardian.com/business/2008/jul/01/ebay.hitechcrime, accessed 12 May 2017
6 Cited in From M&S to Mugabe, the main points;10 stories from the UK, The Sunday Times, 6 July 2008
7 https://www.theguardian.com/business/2008/jul/01/ebay.hitechcrime, accessed 12 May 2017
8 Paris court favours LVMH in eBay case, Household & Personal Products Industry, 1 January 2010
9 LVMH Moet Hennessy Louis Vuitton; The Paris Commercial Court fines eBay and rules in favour of
Parfums Christian Dior, Givenchy, Guerlain and Kenzo, Marketing Weekly News. 19 December 2009
10 eBay ordered to pay LVMH 1.7m [euro], Cosmetics International, 11 December 2009
Copyright © INSEAD 1
eBay fought back, arguing that the rulings breached distribution agreements with selected
sellers and posted the following statement online:
We will continue to fight against counterfeits, but will not accept outdated
attempts to restrict unfairly the internet to the detriment of our community. We
will continue to fight for consumer value through e-commerce. 11
But the damage was done. 12 The French court cases fueled media hype surrounding the sale
of fake luxury goods on eBay, bringing the company’s business model under intense legal
scrutiny. Sellers and buyers were left wondering if it would be easier to do business on other
e-commerce sites.
In 2009, the 75 members of the Comité Colbert, including Kering, LVMH, Chanel and
Hermès, launched an anti-counterfeiting initiative in conjunction with France’s national anti-
counterfeiting committee, 13 designed to educate the public about the dangers of counterfeit
goods. 14 But how could the courts punish listing counterfeit goods on eBay without disrupting
the distribution of authentic luxury items not sold directly by the brands? Apart from eBay,
were any other choices available to sellers of “pre-owned” luxury goods?
As entirely coincidental as it may seem, the question was answered by three groups of mainly
French entrepreneurs who started selling second-hand luxury goods and premium clothes
online in 2009. All were based in Paris but were unknown to each other at the time. Sébastien
Fabre along with five co-founders started Vestiaire Collective; Yann Le Floc’h along with a
partner started InstantLuxe; Meryl Job (an American) and her partner started Videdressing.
The Rise of Vestiaire Collective

Of the three, Vestiaire Collective became the most successful. First known as Vestiaire de
Copines (which translates as Girlfriends’ Closet), the Paris-based start-up was founded in
2009 and officially launched in early 2010. Fabre, who had worked for Microsoft before
starting an online dating service, and his business partner Sophie Hersan, wanted to try
something new. They sought technical advice from RL Agency, a web-development firm in
Paris owned by Alexandre Cognard and Christian Jorge. Fabre had ideas about starting an e-
marketing website but this had little appeal to the agency partners who wanted to build a
physical organization. They eventually came to an agreement whereby the agency owners
received shares in exchange for their technology-related role in the firm. For 18 months,
Cognard and Jorge worked part-time on the project, thinking they could fold the fledging
start-up into their agency portfolio and manage it alongside other start-ups that they expected
would join. It was this one-of-many vision that prompted them to ask for only a small
minority shareholding. In hindsight, they could have asked for more. 15
11 eBay defends itself to users after court fight, Retail Week, 11 July 2008
12 LVMH Notes Paris Appeal Court President’s Decision On eBay, Dow Jones, 11 July 2008
13 http://www.comitecolbert.com/assets/files/paragraphes/fichiers/19/Lutte%20CC%20contrefa%C3%A7
on_dp_2012.pdf, accessed 18 July 2017
and Christian Blanckaert, Wiley, 2015, p. 359
15 Based on an interview with Christian Jorge, 25 April 2017
During the gestation period, Fabre invited two other people to join as co-founders. With a
background in private showroom sales, Henrique Fernandes first worked on logistics and
transportation before eventually running Vestiaire Collective’s concierge service as of 2014.
Heading up marketing and communications, Fanny Moizant was the only co-founder with
experience in fashion. According to Fabre, most of the co-founders have kept their shares. 16
Raising Funds
Having invested their own money or their technical experience, the six co-founders self-
funded the launch of Vestiaire Collective. 17 Several months later, French investor Ventech put
€1.85 million into the company. 18 Since then, Vestiaire Collective has raised a total of $110
million in capital funding through private placements from investors including Zadig &
Voltaire, Balderton Capital, Idinvest Partners and Eurazeo. 19 Its 2017 fund-raising effort was
led by private equity firm Vitruvian Partners and secured €58 million in funds as part of what
Vitruvian called its “increasing focus on French opportunities”. One investor was Condé Nast
Publications, publisher of Vogue magazine.
The France-based venture capital firm Eurazeo was represented on its board of directors by
Christian Blanckaert (INSEAD MBA ‘71J), author of a textbook on the luxury industry, 20
former chairman of the French National School of Decorative Arts (ENSAD) and executive
vice president of Hermès from 1996 to 2007. While Vestiaire Collective had not yet become
fully profitable, its operations in France were lucrative. 21 Said Blanckaert, “It takes time to be
profitable. It is a start-up but will be a good return on investment.” 22
Co-Founders Bring Different Skills to the Table

Each of the six co-founders contributed different skill sets to the firm; one described these as
a “panel of strengths that complement each other.” 23 Fanny Moizant had spent a great deal of
her youth in her mother’s clothing shop, where she developed a love of fashion. She went to
work for John Galliano, followed by a stint at the Institut Français de la Mode in Paris. When
the platform was first launched, her own Gucci handbag was one of the first to be sold among
3,000 items of second-hand merchandise collected from family and friends of the six co-
16 http://www.businessinsider.com/how-to-protect-your-startup-founders-shares-2013-2?IR=T, accessed
15 July 2017
17 https://www.forbes.com/sites/viviennedecker/2016/12/26/fanny-moizants-vestiaire-collective-is-a-major-
player-in-the-luxury-consignment-market/#7c8395a035f6, accessed 14 July 2017
18 S&P Capital IQ, Vestiaire Collective SA, Private Company Profile, p. 2.
19 Vestiaire Collective secures EUR 58 million funding to support further international growth, Dow Jones
Newswire, 24 January 2017
and Christian Blanckaert, Wiley, 2015
21 Olivier Marcheteau: Vestiaire Collective accélère aux Etats-Unis, by Fabienne Schmitt, Les Echoes (web
site), 15 March 2017
22 Interview with the Christian Blanckaert in June 2017
23 http://missbish.com/fanny-moizant-upgrades-our-wardrobes-the-missbish-behind-vestiaire-collective/,
accessed 16 May 2017
founders. 24 As the public face of Vestiaire Collective, she relocated to London to lead the
company’s European expansion in 2013, where she also managed global communications for
the brand. She plans to relocate to Hong Kong, 25 where she will manage the company’s
expansion in the Pacific-Asia region. 26
In May 2017, Moizant travelled to Sydney for the launch of Vestiaire Collective in Australia,
where the global platform had grown to 100,000 members: “This is what happened with
Australia: slowly, slowly, month after month, we see a bigger community growing completely
autonomously with no marketing or advertising.” 27 While Australians can only buy on the
platform now, as soon as the Hong Kong hub becomes fully functional (expected in early
2018) they will be able to sell. 28 Meanhile, the Australian site continued to benefit from
seasonal curation, localised editorial content, and partnering with local social media
influencers. 29
Chairman and CEO Sébastien Fabre contributed his specific business skills of matching
supply and demand on the platform, a challenging task since seasonal variations play a big
role in the fashion industry. 30 Sophie Hersan played a leading role on the supply side, taking
charge of product selection (or “curation”) and authentification. 31
As the start-up began to attract more buyers and sellers than expected, Fabre asked the two
agency owners to close the agency and work at Vestiaire Collective full time. Both agreed,
seeing this as an opportunity to build a business from scratch. Cognard became Chief
Technology Officer. Among other accomplishments, he ensured that the platform was mobile
friendly from the start, which proved to be a crucial decision since 70% of transactions are
made by buyers and sellers using smartphones. He also built a proprietary inventory software
tool that gave the start-up a unique hard-to-imitate competitive advantage. This interacts with
the physical inventory process that Jorge developed as Creative Director in charge of the
online user experience and the design of the user interface, both essential to the platform’s
success. 32 Following this implementation, Jorge rapidly moved into the Chief Product Officer
role, where he developed the proprietary business processes responsible for inventory control.
In 2014, he became Head of Logistics, overseeing transport, customer care, quality control
and authentication; with responsibility for the property portfolio of offices and warehouses,
along with contingent security. 33
24 https://www.thebc-club.com/shop/meet-fanny-moizant-vestiaire-collective/, accessed 8 June 2017

25 Margaret Zhang Gets Personal in Sydney Photo Retrospective, by Tiffany Ap, WWD, 15 May 2017
26 Based on an interview with Sebastien Fabre, 3 July 2017
27 Moizant making waves in pre-loved luxury, by Glynis Traill-Nash, The Australian, 13 May 2017
28 Love in the labels, by Kim Wilson, Herald Sun, 15 May 2017
30 https://www.youtube.com/watch?v=XufQLYBGLh4&index=11&list=PLRUyd-
NfMiUBBsEoUM33vBmBR27RTLUDl, accessed 17 May 2017
31 http://observer.com/2016/07/the-clothing-and-accesories-you-should-buy-for-the-rest-of-the-summer/,
32 https://careerfoundry.com/en/blog/ux-design/the-difference-between-ux-and-ui-design-a-laymans-guide/,
accessed 8 June 2017
33 Based on a series of emails with Christian Jorge in May and June 2017
How It Works
When sellers offer items for sale on the Vestiaire Collective platform, an online submission
form has to be completed outlining the brand, condition and price (the site provides an online
calculator) 34 and photos are uploaded (see diagram). Each day about 4,000 items arrive
digitally in the inbox of the curation team, who either accept or issue a polite refusal. Curators
judge each item on attributes related to its quality, appropriateness and timeliness, to
determine its suitability for the catalogue. They typically reject 30% of submissions.
Employees are trained to spot counterfeit products at this point, thereby reducing the risk that
fake goods will enter the catalogue.
In general, curators expect more items to be submitted from some nationals than from others:
the French tend to favour the sell side, the British the buy side. 35 The types of items submitted
vary from one country to another. “Our customers are very happy with the diversity of the
inventory,” said Cognard.
Once a buyer has agreed to purchase an item from the catalogue—40% of products listed for
sale are sold in less than five days—the seller is notified and sent a prepaid postage label that
can then be used to send it to the closest hub in the seller’s region, free of charge. At this
point, the seller may decide not to ship the item if, for example, it has already been sold, or
can ask to delay the shipment. No money has changed hands yet – the transaction is still in the
digital realm.
Vestiaire Collective prides itself on the operational efficiency of its hubs. 36 Cognard has
created a scalable warehouse management system that handles all items once they reach any
regional hub. When items arrive at a hub, a dedicated interface scans the item’s postage label
and generates an internal label with a photo and barcode that follows the item through the
workflow. Based on the label and item criteria (price, type, risk of counterfeiting), the items
34 http://www.vestiairecollective.com/price-calculator-second-hand/, accessed 13 July 2017

35 Based on an interview with Christian Jorge on 13 July 2017.
36 This section is based on an interview with Alexandre Cognard, 16 July 2017
“roll” through different services in the hub, including counterfeit-checking and quality
control. Once it gets the green light, it goes to shipping services.
Curators check that each item match the seller’s description in terms of brand, colour and size.
If an item is damaged in shipment or discrepancies are found in the condition of the item, the
curators will not necessarily cancel the sale automatically. With the agreement of the seller,
they can initiate a negotiation process whereby the item is offered at a lower price. If not, it is
shipped back to the seller.
Negotiations can also be initiated between a buyer and seller without intervention on the part
of a curator if the buyer makes a direct offer to the seller not lower than 70% of the item’s
agreed initial price. In this case, the seller can deal directly with the buyer in a private online
transaction. 37
Each item must be genuine (authentic) and not a fake or copy. Vestiaire Collective’s zero
tolerance of counterfeit goods derives from a 2009 charter against “counterfeiting on the
internet” developed by the French government following the eBay scandals. Said Mozant,
“We didn’t invent second-hand (shopping), but we disrupted that market by building trust.”38
As a signatory to the French charter, Vestiaire Collective regularly invites experts from other
brands that have signed the charter, such as Chanel and LVMH, to train in-house curators in
the detection of counterfeit goods. 39 It in turn can call upon the brand experts to authenticate a
specific item when in doubt. 40 InstantLuxe and Videdressing are also signatories.
Fast Growth
Vestiaire Collective has grown exponentially over the past eight years, although recently the
rate of growth dropped slightly. Between 2010 and 2016, the growth rate was 70% year-over-
year. Fabre said he expected it to level off at 50% in 2017. Since opening, the company has
moved into bigger offices on four different occasions (every two years). It recently relocated
headquarters to a 20,000m² building within Paris (15th arrondissement). It currently employs
250 people in five different cities, Paris, London, Berlin, Milan and New York.
Its community has grown to six million fashionistas in 48 countries. Each month, 200,000
new members sign on to the website, which receives 7.5 million visitors per month. 41 With
6,000 new products added each day, the catalogue has expanded to include more than 600,000
items and 4,000 brands, including bags, shoes, clothing, accessories, jewellery, watches and
vintage wear, for men, women and children. In addition, lifestyle products can be bought in
categories like design and decoration, art and culture, sport and leisure, high-tech products
and even pet accessories. Currently, the value of an average basket of items sold on the
platform is €400. For every item sold, Vestiaire Collective collects an average commission of
25%.
37 http://www.vestiairecollective.com/negotiations/buyer/, accessed 14 July 2017

38 Cited in Moizant making waves in pre-loved luxury, by Glynis Traill-Nash, The Australian, 13 May 2017
39 https://www.economie.gouv.fr/signature-deux-nouvelles-chartes-lutte-contre-contrefacon-sur-internet,
41 https://www.ft.com/content/e2c464ea-9b5e-335a-a6d2-5c262cc5a157, accessed 12 June 2017
Accounting for its rapid growth, Fabre said Vestiaire Collective remains focused on curation.
Sellers who have sold an item within five days or less are more likely to list other items in
their wardrobe for sale, creating a snowball effect on the supply side:
First you curate, meaning you select what you accept. You don’t take everything
and so you are able to merchandise and make sure the catalogue you are building
is sexy enough to engage people.
Staying focused on delivering a high-quality service, the firm has hired more than 100 trained
curators or quality controllers who physically authenticate every sold item before it is shipped
to the buyer, ensuring it is not a fake, knock-off or counterfeit and conforms to the seller’s
description. 42 As part of its recent capital funding, the company plans to hire an additional
120 staff within 18 months. By strengthening its curation department, Vestiaire Collective has
built a strong reputation among its members based on trust.
Taking advantage of this asset, Vestiaire Collective launched a concierge service in 2012,
which is managed by co-founder Henrique Fernandes. Designed for high-value customers
who totally trust Vestiaire Collective, the service frees them from having to deal with the
selling process. In exchange, the firm takes a commission of 35%. So popular has this service
become, growing in volume by 20% annually, that Vestiaire Collective opened a dedicated
3,000m² hub next to Charles de Gaulle airport in summer 2016, where consignments are
stored and shipped once sold. 43 The concierge service accounted for about 10% of the firm’s
total revenues in 2016. 44
In September 2017, Vestiaire Collective plans to open an 8,000m² logistics hub for its
traditional high-volume business in Tourcoing, a town near Lille in northern France. While
keeping its Paris hub, this new warehouse will better serve its growing customer base on the
continent and the UK. 45 To entice the company to the northeast, the city of Lille approved a
subsidy of €275,000, an amount that will be matched by the region. Vestiaire Collective said
it would employ 100 people at the site within four years.
To train staff in its different product offerings and its future growth potential, Jorge initiated a
continuous learning programme dubbed “Vestiaire Academy” in 2017. Particularly helpful for
on-boarding new employees, Vestiaire Academy focuses on the firm’s existing savoir-faire
and its ambitions for the future. 46 The company has hired a greater variety of talent as it seeks
to differentiate itself from competitors by blending e-commerce, editorial content and a social
network aspect featuring seller profiles on the platform. 47
42 Luxury Reseller, Vestiaire Collective, Raises More Than $60M, by Robert Williams, WWD,
24 January 2017
43 Based on an interview with Christian Jorge on 13 July 2017
44 Ibid.
45 Luxury Reseller, Vestiaire Collective, Raises More Than $60M, by Robert Williams, WWD,
24 January 2017
46 Based on interview with Christian Jorge on 25 April 2017
47 https://www.forbes.com/sites/viviennedecker/2016/12/26/fanny-moizants-vestiaire-collective-is-a-major-
player-in-the-luxury-consignment-market/#7c8395a035f6, accessed 14 July 2017
Competitors: InstantLuxe and Videdressing
A former trader for investment bank Exane BNP Paribas, Yann Le Floc’h launched
InstantLuxe driven by a desire to start his own business. On a rainy holiday in 2008, he came
up with the idea of selling second-hand luxury goods on an online platform. But with all the
negative publicity surrounding the eBay scandal, he first had to find a solution to the vexing
issue of counterfeit goods: 48
They were afraid to get a counterfeit bag. The solution was to set up a website
with some experts able to authenticate the bags, the watches, jewellery.
Partnering with an associate who left the firm three years later, Le Floc’h initially raised funds
from business angels. Eventually, he succeeded in attracting venture capital funds in 2010 and
again in 2013; a total of $4.4 million was raised. 49 InstantLuxe became so successful on the
French market that in June 2016, Galeries Lafayette Group bought 100% of the shares for an
undisclosed price. Following the acquisition, Le Floc’h, who remained as CEO, opened
several physical stands within stores owned by the Galeries Lafayette Group, including a
corner stand at the BHV department store in Paris’s chic Marais quarter. With an average
shopping basket of €1,000, InstantLuxe sells second-hand luxury leather bags, jewellery and
watches on its e-commerce platform to customers mainly located in France and Belgium. Le
Floc’h cited a difference in supply and demand within France, as more sellers live in the south
and more buyers in the north. 50
In June 2017, eBay France entered into a partnership with InstantLuxe to jointly operate a
new French site called eBay Luxe. 51 All luxury goods sold on eBay Luxe must be
authenticated by experts employed by InstantLuxe prior to shipping. In the event of returns,
InstantLuxe will reimburse the buyer if the item did not meet the seller’s description. Le
Floc’h has described the partnership as only the first step in a larger project with eBay France.
Videdressing was founded by an entrepreneur who saw the potential for launching an online
platform for users who wanted to buy and sell fashion items. Meryl Job, an American who
had recently moved to Paris, set up the company when frustrated by her attempts to sell her
own designer clothes online. Since 2009, Videdressing has raised more than €6 million from
investors. With an average shopping basket of less than €100, the e-commerce site has
expanded beyond designer clothing to include used jewellery, perfume, and accessories for
men and women. For example, men’s watches range from €5.90 to €60,000. 52 In 2016, Meryl
Job left the business, while her partner stayed on in a non-operational role before leaving a
year later.
48 Based on a number of interviews with Yann Le Floc’h in March 2017.

49 Instant Luxe SA Private Company Profile, S&P Capital IQ, accessed 12 May 2017
50 Based on a number of an interview with Yann Le Floc’h on 21 July 2017
51 http://pages.ebay.fr/luxe/, accessed 4 July 2017
52 http://www.videdressing.com/, accessed 12 May 2017.
Building Market Share
Within this competitive environment, Vestiaire Collective was able to scale up and expand
outside of France faster than its rivals, building the largest market share in the second-hand
fashion market in France, Germany, Italy, Spain and the UK. According to Fabre, a key factor
in its success was its determination to expand beyond French borders. Said Fabre, “We do not
view individual countries as silos since more than 70% of our orders are cross-border.” 53
To expand into the North American market, Vestiaire Collective built a 1,000m² facility
including offices and operational hub in New York in April 2014. Located in the famous
Starrett-Lehigh building in West Chelsea, the American HQ opened for business in September
2015 with a focus on local markets. 54 A second hub was recently added, dedicated to the fast-
growing concierge service. 55
To propel the company onto the global stage, Fabre hired a seasoned retail executive, Olivier
Marcheteau, as Chief Operating Officer in May 2014. A former president of Cdiscount, an e-
commerce site based in France, Marcheteau had been Fabre’s boss when the two worked at
Microsoft France. Marcheteau has responsibility for all departments except creativity, fashion
and product curation. Said Jorge of his former boss, “It was an important hiring for structure
and growth. We needed to reinforce the management team and raise money to spread
worldwide.” 56 Following the successful fund-raising in 2017, Marcheteau explained, “For a
luxury pre-owned marketplace, what matters is to get the most unique and coveted items. To
do this you need to be global.” 57
The Global Competitive Environment

In the United States, Vestiaire Collective was a challenger brand since the market was
dominated by a much larger competitor called The RealReal, founded by Julie Wainwright,
former CEO of Pets.com. She came up with the idea following a brainstorming session
around her kitchen table in 2011. 58 Now employing 800 people, The RealReal expects to have
sales of $500 million in 2017. 59
In addition, a slew of online fashion discounters have risen to prominence on the global
market. Listed on the Italian stock exchange, Yoox-Net-A-Porter Group (YNAP) buys
overstocked or unsold items from previous seasons and sells them online at discounted outlet
prices. YNAP was created following the merger between Yoox Group and the Richemont-
owned Net-A-Porter group in 2015. Dozens of luxury websites are powered by Yoox,
53 As cited in https://www.ft.com/content/e2c464ea-9b5e-335a-a6d2-5c262cc5a157, accessed 12 June 2017

54 http://www.starrett-lehigh.com/2017/07/06/spotlight-vestiaire-collective/, accessed 13 July 2017
55 Vestiaire Collective secures EUR58 million funding to support further international growth, Dow Jones
Newswire, 24 January 2017
56 Based on a series of emails with Christian Jorge in May and June 2017
57 As cited in https://www.ft.com/content/e2c464ea-9b5e-335a-a6d2-5c262cc5a157, accessed 12 June 2017
58 https://www.ft.com/content/5a87a330-ffcc-11e5-99cb-83242733f755, accessed 15 May 2017
59 Luxury consignment for the digital age, by Katie Burke, San Francisco Business Times Online,
18 May 2017
including Jil Sander and Maison Martin Margiela. YNAP increased its sales by 17.7% to
€1.87 billion in 2016 60 and employed nearly 4,000 people. 61
Factory outlets have also undergone a phenomenal surge in popularity among a public that is
willing to travel to the small peripheral towns where they are often located. Some outlets even
offer a free bus service so that people can reach them. There are an estimated 415 outlet
villages all over the world: 201 villages in the US, 137 in Europe, 40 in Asia and 37
elsewhere. The sales concept is somewhat similar to that of online sellers like YNAP, giving
shoppers a chance to buy unsold, over-stocked and discontinued premium products from
luxury brands at a steep discount. 62 The market leader in France, McArthurGlen, recently
opened a third village in the south of the country and expects 2.5 million visitors and revenues
of €100 million in 2017.
Not all people want to buy high-end fashion goods; some want to rent them. Founded in 2009,
Rent the Runway is a successful American-based company that enables women to rent
designer dresses and accessories—it has 70,000 dresses and 15,000 accessories in stock—at a
fraction of the retail cost. By 2016, Rent the Runway had nearly 500 employees and five
million members and had raised $126 million from venture capital firms such as Kleiner
Perkins, Highland Capital and Bain Capital Ventures. 63 A competitor in the North American
space that rents accessories and handbags is Bag Borrow or Steal. 64
Finally, there are pawnbrokers. For the owners of luxury goods the pawnbroker is a source of
liquidity. Pawn shops offer cash loans for a certain period of time against a huge variety of
goods, including expensive jewellery, leather handbags and even fine wine, which their
owners use as collateral. For example, if the idea of a client who owns a valuable Hermès
Birkin Bag is to get fast cash on a regular basis, they must always pay back the loan with
interest in order to have the bag returned. If not, the pawned item will be offered for sale or
exchange by the broker.
While customers can either sell their personal luxury goods directly to the broker or exchange
items, the broker makes money from the interest on the loan. Hence, it is up to the broker to
assess the value and genuineness of the item in order to determine the amount of the loan,
although even experienced pawnbrokers may have been tricked into buying a fake on
occasion, 65 which makes them a cautious breed. It is a thriving business. In 2011, there were
11,000 pawnshops operating in the US, generating sales of $14.5 billion. 66
60 http://www.ynap.com/document/2016-full-year-results/, accessed 14 July 2017

61 S&P Capital IQ, accessed 15 May 2017
62 Les magasins d’usine prospèrent malgré Internet, by Paul Molga, Les Echoes, 13 Avril 2017
63 http://www.marketwatch.com/story/rent-the-runways-jennifer-fleiss-from-finance-to-fashion-2015-10-13,
accessed 8 June 2017
64 http://www.bagborroworsteal.com/, accessed 5 July 2017
65 Birkin Bag in the Box Is Worth a Lifetime of Debt, by Sophia Kercher, The New York Times,
21 August 2017
66 http://www.prweb.com/releases/2012/5/prweb9529413.htm, accessed 23 August 2017
Vintage – Not Simply a Thing of the Past
In May 2017, Vestiaire Collective signed on 42-year-old Chloë Sevigny to be its “vintage
muse”. An actress in the independent film community, New York-based Sevigny has long
been considered a fashion icon there, although she claims that the big Apple has become too
homogenized for her liking. 67 Prices for her range of hard-to-find clothing go from $75 to
$4,500. 68 Videos of Chloë Sevigny, along with other fashionistas such as Poppy Delevingne,
have been uploaded to a YouTube Channel owned by Vestiaire Collective. 69
In the past, Vestiaire Collective was reluctant to overtly court lovers of vintage clothing,
preferring to present itself as a meeting point for users to celebrate the joy of shopping. This
notion has become more nuanced over time as some fashion brands have discovered the value
of their archives. A place to house collections, brand archives have become instrumental to
creative directors such as Raf Simons, who “immersed” himself in the Dior archives after he
was hired by the haute couture maison in 2012. 70 Brands such as Dior which have had the
foresight to collect their precious designs and artefacts in archives, now lend their most
valuable pieces to museums which stage exhibitions around them – a perfect way to extend
the brand message. 71 According to Sonnet Stanfill, fashion curator at the Victoria and Albert
Museum: 72
There’s a dawning realisation that if you want to be a so-called heritage brand,

you have to be able to tell the story through objects. An archive can be useful for
design inspiration, for lending to an exhibition, or for … your own retrospective.
Indeed Gucci opened its own museum in Florence in 2011, at which it displayed pieces going
back to when Tom Ford ran the Italian fashion house between 1990 and 2004. A year after the
death of Alexander McQueen in 2010, New York’s Metropolitan Museum of Art held an
exhibition called Alexander McQueen: Savage Beauty. Attracting over 660,000 visitors who
queued for hours, the show was the eighth-biggest attendance draw in the institution’s
history. 73 Four years later, the McQueen exhibition reappeared at the Victoria and Albert
Museum, and became the most popular show in the V&A’s history, with 1,154,552 tickets
sold. According to Valerie Steele, director of the Museum at the Fashion Institute of
Technology: 74
67 http://www.vestiairecollective.com/journal/chloe-sevigny-vintage-muse/, accessed 12 May 2017

68 https://www.youtube.com/watch?v=iAFHpPKdPn4, accessed 12 May 2017
69 https://www.youtube.com/user/VestiaireCollective/videos,
70 Managing Creativity in Luxury Fashion Houses: Raf Simons at Dior, by Frédéric Godart, David Dubois,
and Brian Henry, INSEAD business case No. 01/2017-6214, p. 2
71 https://www.ft.com/content/7d838ca4-27ff-11e6-8ba3-cdd781d02d89, accessed 15 May 2017
72 As cited at https://www.ft.com/content/7d838ca4-27ff-11e6-8ba3-cdd781d02d89, accessed 15 May 2017
73 Managing Creativity in Luxury Fashion Houses: Raf Simons at Dior, by Frédéric Godart, David Dubois,
and Brian Henry, INSEAD business case No. 01/2017-6214, p. 5
74 Cited in https://www.bustle.com/articles/104414-fashion-exhibitions-like-alexander-mcqueen-savage-
beauty-are-now-more-successful-than-art-exhibits, accessed 16 May 2017
I think the basic reason why the public really loves fashion exhibitions is that they
are much easier than an art exhibition. Everybody feels capable of having an
opinion about fashion.
In a broad sense, second-hand fashion items can be compared to re-mixed music from a
golden age. As British music writer Simon Reynolds noted in Retromania: Pop Culture’s
Addiction to Its Own Past, 75 modern pop stars like Adele have reworked songs from the past
to become “banging” hits of today, enabling old tunes to come back into vogue and be
consumed again. 76 Likewise fashion styles from the past can re-emerge on the scene as a
cultivated retro look.
Co-Founders Return to their Roots

Co-founders Cognard and Jorge decided to leave Vestiaire Collective in 2017. Both wanted to
return to their roots as serial entrepreneurs, either separately or as a team. After breaking the
news to their colleagues and four other co-founders, they headed to a nearby café in Paris to
gather their thoughts. One plan that came to mind was to take a trip to California for a few
months to generate new ideas for start-ups.
Questions for Discussion

1. What are the strengths and weaknesses of Vestiaire Collective’s business model?
2. How can sellers of luxury goods maintain satisfactory pricing levels in the second-hand
market?
3. Do you think the problem of counterfeit products on the internet has been resolved?
4. Why do you think Alexandre Cognard and Christian Jorge decided to leave Vestiaire
Collective?
5. Why do you think Yann Le Floc’h sold all his shares to the Galeries Lafayette Group in
2016?
6. Do you think the partnership between InstantLuxe and eBay France will turn InstantLuxe
into a more powerful competitor in the second-hand luxury market?
75 Retromania: Pop Culture’s Addiction to Its Own Past, by Simon Reynolds, Faber & Faber, 2012
76 https://www.youtube.com/watch?v=O_2Lk_vAdkA, accessed 8 June 2017

Vestiaire Collective The Challenges of Second-Hand Luxury

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Vestiaire Collective The Challenges of Second-Hand Luxury

Uploaded by

Copyright:

Available Formats

IN1432

The Challenges of Second-Hand

Bernard Arnault, founder and chairman/CEO of LVMH 1

Fighting Counterfeit Goods: Preserving Luxury Pricing Online

The Rise of Vestiaire Collective

Co-Founders Bring Different Skills to the Table

24 https://www.thebc-club.com/shop/meet-fanny-moizant-vestiaire-collective/, accessed 8 June 2017

34 http://www.vestiairecollective.com/price-calculator-second-hand/, accessed 13 July 2017

37 http://www.vestiairecollective.com/negotiations/buyer/, accessed 14 July 2017

48 Based on a number of interviews with Yann Le Floc’h in March 2017.

The Global Competitive Environment

53 As cited in https://www.ft.com/content/e2c464ea-9b5e-335a-a6d2-5c262cc5a157, accessed 12 June 2017

60 http://www.ynap.com/document/2016-full-year-results/, accessed 14 July 2017

There’s a dawning realisation that if you want to be a so-called heritage brand,

67 http://www.vestiairecollective.com/journal/chloe-sevigny-vintage-muse/, accessed 12 May 2017

Co-Founders Return to their Roots

Questions for Discussion

You might also like