Chic, Not Shabby, Luxury Secondhand eCommerce
Pre-owned luxury fashion and accessories eCommerce has proven to be far from threadbare. As the global luxury market cools, bracing itself for slower more sustainable growth, the luxury secondhand market is heating up, evidenced by the recent significant levels of VC capital investment in leading luxury pre-owned fashion consignment platforms.
Valued at about $19 billion, the global luxury pre-owned fashion resale market lands not even remotely near a shabby chic classification. Leather goods and clothing—$4 billion of this market—are growing faster than the luxury industry overall. This coincides with new luxury accessories sales, which grew 29% last year, led for the first time since 2007 by shoes, according to Bain & Company.
Pre-owned luxury accessories and apparel retain and even grow their chic appeal, as was seen this month with rarities like a bespoke Hermès Birkin handbag breaking records at Christie’s luxury accessories auctions in Hong Kong, where a fuchsia pink crocodile skin 2014 Hermès Birkin with 18 karat gold and diamond hardware, sold for HK$1.72 million ($223,000).
As shown in the NetBase Timeline Comparison analysis below, Christie’s pre-auction tension was remarkable, giving a lift to Heritage Auctions, as well. The Potential Impressions metric for Christie’s, over 28.5 million, indicates the estimated number of people who might have viewed an author’s posts. The query is filtered for luxury accessories.
But the world’s most expensive Birkin may be a white Himalayan Nilo crocodile recently listed for $450,000—now marked as sold—on 1stdibs.com, an online dealer marketplace for rare and desirable objects, from fine art to designer furniture, haute couture and other rarities.
Call them vanity accoutrements, but investment in luxury accessories is outperforming the stock market, even spurring Sotheby’s to hold its first haute couture auction in Paris next month. For a sneak peak, you can browse the lot of antiquarian Didier Ludot’s famed 20th century collection.
True to the fashionista herd mentality adage, both Christie’s and Sotheby’s—acutely aware of the brand extension opportunity—are newcomers to the luxury secondhand fashion and accessories market. The auction houses have been spurred by the success of well-heeled Heritage Auctions (from which Christie’s has siphoned staff) luxury accessories business since 2010, if not by the growing flock of profitable luxury pre-owned consignment sites attracting significant funding from leading Silicon Valley VCs and other tech investors.
The NetBase luxury ecommerce competitive analysis chart below displays mentions volume from six top shelf sites across ten luxury fashion brands—Burberry, Chanel, Dior, Gucci, Hermès, Louis Vuitton, Prada, Ralph Lauren, Versace, Yves Saint Laurent. The crosstab chart shows the influence luxury consignment sites like Poshmark, The RealReal and Tradesy have in consigning and trading luxury labels.
Known for its fickle elite clientele, membership at the French site Vestiaire Collective (3 million) is on a par with RealReal (3.5 million), and Tradesy (3 million). While popular across Europe, it is newer to the U.S. but quickly gaining traction and has the prowess to fetch $15,000 for an Hermès bag, authenticated by one of its staff team of heritage authenticators.
Recent VC funding of fashion consignment sites is simmering, indicative of VC and tech confidence in the changing landscape of retail, luxury aspirational buying, consumer predilections and buying patterns. San Francisco-based The RealReal recently added $40 million in new funding, its largest round of funding to date, and is poised to double its $100 million in annual revenue in 2015 and pay out over $100 million to consignors. Tradesy, which grew 650% last year, raised $30 million in January, $48 million overall, for a valuation of over $100 million. Poshmark recently raised another $25 million, and last year Threadflip added $21 million.
ThredUp, known for mass market, rather than luxury, picked up $23 million last year, and is beginning to show social metrics for some luxe brands like Gucci, Prada and Ralph Lauren. According to ThredUp’s 2014 annual resale report, venture capital invested over $100 million last year in the online consignment industry. Notably, the report cites shifting trends in consumer purchasing behavior, an evolving retail landscape, as well as a palpable sustainability buyer consciousness.
As the NetBase Passion Index of consignment sites below shows, Silicon Valley based Poshmark, enjoys both a powerful comparative foothold in the digital fashion resale marketplace, as well as elevated exposure. Poshmark, which originated as an app, sells the full spectrum, including $8,000 Hermès handbags, but isn’t known as a luxe site like competitors RealReal and Vestiaire Collective. Top-selling brands on Posmark include Michael Kors and Tory Burch.
All six of the analyzed fashion sites attribute growth, in part, to the popularity of their white glove offerings, in particular, meticulous professional authentication services for luxury items. Concierge services, including in-home help sorting, selection, shipping and pricing, add prestige to these consignment sites, setting them apart and elevating status for buyers and sellers. Several of these sites also share a growth trajectory in men’s fashion and fine jewelry, as well as international outreach. Consignment model varies by site, with sellers typically getting 60-80% and the rest going to the company.
Coattailing the appeal and success of luxury fashion digital resale sites, in particular, their concierge and white glove services, eBay Valet is expanding its offerings to include high-end apparel. Launched a year ago, eBay Valet originally sold only electronics, handbags, shoes and household items.
Proving that there is nothing shabby about investing in digital chic ecommerce, this year’s $95 million funding to date of Poshmark, RealReal and Tradesy, already nearly matching last year’s total, forecasts steep competition ahead. A sizzling market, digital luxury consignment has garnered the unequivocal confidence of tech investors.
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