Shop a Swag – Online Luxury Consignment

Online luxury consignment is an interesting business.  Sellers are able to make a profit from their used or depreciating assets and buyers are able to purchase desired items at a discount to the original retail price (And they can call it vintage…as Mugatu from Zoolander would say, “Vintage is so hot right now”).  The idea of buying someone else’s previously owned and worn shoes may not appear appealing and can even be considered insulting to high-fashion as it is the exact opposite of haute couture, or custom-made and fitted, high fashion women’s clothes.  Despite this notion, the demand for secondhand goods is growing and a number of online luxury resellers have emerged to provide a marketplace for pre-owned merchandise.  Studies have attributed the increasing demand and growth to the economic recession, in which individuals turned to secondhand luxury goods instead of full-priced, new luxury goods.  According to First Research, the pre-owned merchandise store industry in the U.S. includes about 18,000 stores with combined annual revenue of approximately $13 billion, and of that about 25% of sales are from clothing, 13% from antiques and 10% from furniture and collectibles.  According to America’s Research Group, 12% – 15% of Americans will shop at a consignment/resale shop during a given year.  While there are few statistics available for online luxury resellers, one can infer that they are achieving impressive user acquisition and top-line growth.

Although luxury consignment is an attractive concept, there are many challenges facing this business.  First, given the business model is fee based, in which a small fee is received for every transaction, large scale is needed to be financially sustainable.  The low barriers of entry in this market have resulted in a highly competitive space that can make it difficult to achieve the scale needed to be profitable.   Additionally, online luxury resellers will be challenged to differentiate themselves from the many other consignment sites.  And how are they able to differentiate themselves so that they aren’t steamrolled by Amazon or ebay?  ebay also offers a lower transaction fee than many of these newcomers.  Ebay’s transaction fee is between 8% – 12% compared to the 20% fees charged by most of the online luxury resellers.  Many also boast their ability to provide a quick, easy and liability-free shopping experience as their point of differentiation, but that is already the norm and has been adopted by the majority of e-commerce sites as well.  The other major challenge is online luxury resellers’ sensitivity to concerns around quality and authenticity of the products as well as vendor trust.  Any reason to doubt the credibility of the products or sellers would result in a loss of members.  As a platform or peer-to-peer marketplace, it is impossible to verify the authenticity of a product without incurring additional costs to facilitate the products for sale and requiring a fashion expert to confirm that a piece is an original and not from a Chinese street market (e.g. Xiushui Silk Street…but definitely visit here in Beijing because it’s very popular among tourists!).

There are a few things setting apart some of the existing online consignment sites from the others.  The most obvious is visual design.  An effective visual design is simple and helps the user easily navigate the site.  The ease of browsing, filtering options and presentation of products on a page are essential to the user’s experience (Check out Vestiaire’s).


And if you’ve read my previous posts, you already know what I’m about to say next…Yes, the need for sharing features that provide an engaging, real-time social experience for the users  (I also discuss this in Like Prada, Repin Prada then Shop Prada).  For example, Threadflip allows its users to share its products on Facebook, Twitter and Pinterest as well as comment or “love” the product.  Users are also able to follow sellers.  These features transform the marketplace into a community.


Poshmark’s Posh Parties take an innovative approach to providing its users an engaging, real-time social experience while shopping.  Posh Parties are virtual buying and selling parties.  To give you a better idea, it is similar to Gilt in that it features products under a specific category or brand for users to shop.  Digital curation makes it easy for users to shop online because it provides for an easy way to navigate through items that the individual likes or doesn’t like.  The “parties” are organized by Poshmark users or hosts and are posted in real-time.

These Posh parties create a sense of curiosity and urgency with its users, bringing them back to check on upcoming parties (every party is different and are created every day) and possible brands or categories that they like.  Posh parties also increase user activity for sellers as sellers look to collaborate with other sellers to sell more of their items and create new categories to attract buyers.  Moreover, parties increase visibility of products compared to a single product that will most likely be lost in the feed.

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Finally, there must be an app for the site.  Individuals need to be able to access the site from their phones and tablets so that they are able to check for their favorite products and brands and compare prices at any time.  So much of the buying on these sites are driven by impulsive behavior (I can confirm this); therefore, it only makes sense to find a trigger for that behavior…

Check out a few of the leaders in this market who have successfully met the challenges discussed above.



Poshmark received $12M Series B last year led by new investor Menlo Ventures, bringing the total amount invested in Poshmark to $15.5 million since 2011.  Poshmark has been focused on expanding its mobile fashion marketplace beyond iOS.  On iOS devices alone in the United States, it has ~250,000 women with active personal “boutiques” to sell items of their own closets and more than 1 million items have been sold on Poshmark since the start of this year.



Vaunte is a luxury consignment platform with a fashion editorial element.  The site features celebrities, designers and socialities and allows its users to shop various products from those individuals’ closets.  Vaunte takes a 30% commission for photographing and shipping seller’s items.

Vaunte has also expanded to provide new items and is looking to grow its consignment platform to include “non-starlet” users.

I also talked a little more about Vaunte in my previous post Like Prada, Repin Prada then Shop Prada.



Vestiaire Collective was launched in 2009 as a place for consumers to buy and sell pre-owned, authentic luxury goods.  Currently, the site has a network of approximately 1.5 million members worldwide and has a number of product categories such as women, men, kids and life and living.

Condé Nast announced at the beginning of this month a $20 million investment in Vestiaire Collective.



Threadflip boasts that its sellers make between $400 to $2,200 a month.  Threadflip takes a 20% cut on all transactions and 40% on its White Glove transactions.  The White Glove service involves Threadflip helping assess, professionally photography and post the seller’s product on the site.  The service also handles shipping and customer service.  The average White Glove seller makes approximately $500 per shipment.

Threadflip has raised $8.1 million in seed funding from First Round Capital, Baseline Ventures, with participation from Dave Morin, Forerunner Ventures, Greylock Discovery Fund, and Andreessen Horowitz Seed Fund.

The RealReal


As of the first quarter of 2013, The RealReal was growing by 1.5 million visitors a month and had about 750,000 members.  The company also shipped more than 20,000 luxury items to customers and was growing by 20 percent month over month.  The average consigner at the RealReal, meanwhile, is raking in about $6,000 a year.

In April, the online shop raised $14 million in a Series B round of funding.


Most importantly, check out Tom Haverford’s (from tv show Parks and Recreation) Rent-A-Swag!  If you haven’t seen the episode (Season 5, Episode 6) or the show already and are dying for a good laugh, check it out.  Here’s an awesome clip from the episode:


Share with me your thoughts on online luxury consignment @tiffanydstone or comment below!


Sources:, First Research, NART

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