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).

vestiairevestiaire2

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.

threadflip

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.

photo 1 photo 2

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

poshmark

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

vaunte1vaunte2

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

vestiaire

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

threadflip

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

therealreal

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: http://www.youtube.com/watch?v=DBcgtEW3KCk

 

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

 

Sources: http://techcrunch.com/2011/06/15/google-ventures-backed-copious-launches-a-social-marketplace-for-the-facebook-era/http://techcrunch.com/2012/12/04/poshmark-nabs-12m-series-b-led-by-menlo-ventures-to-expand-its-mobile-fashion-marketplace-beyond-ios/http://venturebeat.com/2013/08/01/threadflip-gets-more-social-to-sell-the-billions-of-dollars-hiding-in-womens-closets/http://techcrunch.com/2013/09/22/poshmark-growth-downloads-sales/http://www.betakit.com/27perry-launches-consignment-marketplace-to-bring-local-merchandise-online/http://www.bizjournals.com/sanfrancisco/blog/2013/08/threadflip-online-consigners-chase.html?page=allhttp://www.luxurydaily.com/conde-nast-invests-20m-in-online-luxury-resale-site/, First Research, NART

Turn the Page to Etsy Pages

A few blog posts later… we have Etsy Pages!  In my “Like Prada, Repin Prada then Shop Prada” post I had discussed the need to allow users to be able to follow, collect, share, compare and shop all in one eCommerce platform.  It’s exciting to see a personalized eCommerce website fully integrate these functionalities.  Etsy Pages, having only launched this week, is already a step forward from Pinterest Product Pins and Amazon Collections.  See below for a glimpse of Etsy Pages:

Home Page

Etsy Pages

News Feed

Etsy Feed

Food Pages

Etsy Pages 2

Cake Related Products For Sale by Etsy Users

Etsy Pages 3

An Overview of Etsy

Etsy, launched in June 2005, is an e-commerce website that allows its users to buy handmade or vintage goods as well as establish their own online shops to sell their handmade products.  The company charges users a flat listing fee (of 20 cents per items), and takes a commission of 3.5% off all items sold.

As of this August, Etsy had a 44.2% increase in items sold and a 43.2% increase in dollars of goods sold compared to last year.

The stats:

  • $109.1 million of goods (after refunds and cancellations) were sold by our community in August, 8.13% higher than July
  • That represents 5,483,399 items sold for the month, 9.44% higher than July
  • 2,804,300 new items were listed in the month, 3.46% higher than July
  • 1,065,767 new members joined the Etsy community, 6.13% higher than July
  • 1.8 billion page views were recorded on the site in August (including web and apps)

[For the full August report see here]

In 2012, Etsy reported a 70% increase in sales compared to 2011, totaling $895.1 million in gross merchandise, and a 83% growth in the business to include buyers from 200 countries.  Etsy currently lists 18 million items for sale and sees 60 million unique visitors each month.

Etsy Pages

Just like Pinterest, Etsy buyers are able to create their own collections (Pinterest calls them boards), but Etsy also allows its users to shop the items in their collections.  Now this, I LIKE!  Just as startup online fashion sites allow their users to instantly shop clothing and accessories featured in their online fashion editorials, Etsy provides a one-stop shopping experience for its users through its pages.  There’s clearly a trend here…

Etsy Pages allows its users to favorite a product and follow a seller’s shop or a brand, in which they can receive tailored product recommendations.  Etsy has collaborated with brands such as Apartment Therapy, Lucky, West Elm, Martha Stewart Weddings, Swiss Miss, Food52, and Babble to add pages to a designated section of the marketplace that displays recommended products from these brands.  Etsy has also recently partnered with Nordstroms to feature a wedding collection from emerging artists and designers.  Additionally, individuals can subscribe to receive editors’ top picked items.  Yes, Etsy has picked a fight with Pinterest!

Some may question how Etsy will be able to steal the 70 million pinners from Pinterest.  Pinterest may have more than two times Etsy’s users, but what most people don’t know is that Google and Etsy are two of the most popular sites pinned and that DIY & Crafts (the primary focus of Etsy) is the second leading pinned category after Food & Drinks.  So is Etsy really stealing pinners or are they bringing home users and shoppers?

Pinterest popular pins

Pages will allow sellers to easily gain more visibility as people browse their Etsy feeds, re-post products and share their collections.  An interesting statistic from Pinterest that speaks to the optimistic future of Etsy Pages is that over 80% of pins on Pinterest are actually re-pins rather than brand new content.  This type of user activity will be key to brands as they choose their preferred selling platform.

power-of-pinterest-infographic

And as previously mentioned, Etsy Pages creates an incentive for buyers to relocate their presence from Pinterest to Etsy as users are able to shop instantly the products displayed and buyers are able to easily expand their presence through re-posts and followers.  Etsy’s most valuable proposition may be that it allows its users to shop every product in their collection.  It will be difficult and might I even say impossible for Pinterest to achieve this as many of its pins are pictures from blogs or unshoppable sites.  And although Amazon Collections also allows its users to shop every product displayed, it lacks the social and personalized experience that Etsy provides (Also discussed in my “Like Prada, Repin Prada then Shop Prada” post).  Amazon Collections appears more as an online warehouse, while Etsy Pages’ News Feed, like Pinterests’, is engaging and is updated in real-time with new recommended products from brands, Etsy’s sellers & buyers and friends.

I envision that in the next few months, Etsy will expand its categories to include areas that are currently covered by Pinterest but not on Etsy Pages (current Page categories include weddings, fashion, kids, design and lifestyle) and will partner with more retailers and well-known designers to add to its collection of brand pages.  I don’t see Etsy digressing away from its focus on handmade goods, rather I see it building upon its original concept and introducing more brands and relevant products to its users.  I believe Etsy will continue to create an online discovery experience for its users, introducing not only emerging artists and designers but also more popular brands and individuals.  We can also expect an increase in the number of sellers or new personal shops on Etsy as the Pages’ user base grows.  Etsy Pages will enable Etsy to quickly increase its user reach and grow its sales.

“To launch Pages, we’ve hand-selected brands and bloggers who celebrate Etsy’s items and makers, and boast strong editorial chops when it comes to curating for their audiences. With a mix of perspectives — from home decor, kids, weddings and more — and a global spread, we’re excited to kick off Pages with such a talented group! As they grow their following on Etsy, the partners will also help spread awareness of our unique marketplace by using Pages’ tools to post their curation to their own communities. And we’re excited to continue to add new Pages in the coming months.”  —Etsy Blog

Share with me your thoughts on Etsy Pages and eCommerce Platforms @tiffanydstone or comment below!

 

Sources: http://www.etsy.com/http://techcrunch.com/2013/09/17/etsy-debuts-pinterest-like-curation-platform-for-brands-pages/http://gigaom.com/2013/09/17/etsy-takes-a-cue-from-pinterest-with-new-curation-feature-for-brands-and-bloggers/http://upstart.bizjournals.com/companies/rebel-brands/2013/09/17/etsy-launches-curation-platform.htmlhttp://www.babble.com/mom/10-pinteresting-pinterest-stats/popular-pins/

Beauty Army Enters the Battle

Beauty Army knows what you want and lets you pick.

Beauty Army (https://beautyarmy.com/) is a personalized beauty sample subscription service that allows you to select up to six luxury beauty samples each month for $12.  The company launched in January 2012.  Unlike other beauty subscription services (e.g. Birchbox, NewBeauty TestTube, GLOSSYBOX, Beauty Box 5, Ipsy)  that deliver the same variety of beauty products to all of their customers, Beauty Army tailors each box of samples to its customers’ beauty needs and tastes.  Some services, such as Birchbox, now include a few samples that are selected based on the user’s preferences in addition to the pre-selected samples chosen for a wide range of styles, skin types, and colorings; however, these other offerings still do not offer their customers the full luxury of choice as Beauty Army does.  Additionally, many services would have to alter their unique selling proposition in order to transition to a choice-based subscription.  For example, Birchbox defines itself as a discovery service, in which experimentation of different brands and various products is at the heart of the business.  To rid the surprise aspect of its boxes would be equivalent to Facebook charging its users to be on its site.

 

How Beauty Army works:

1. Complete a personal profile using basic questionnaire

Beauty Army

Beauty Army2

Beauty Army3

2. Based on a customer’s responses to the questionnaire, a set of 9 personalized beauty samples are populated and displayed for him or her to select up to 6.

3. The customer can update his or her profile for new selections or choose to skip a month whenever he or she wants.

 

Beauty Army’s value proposition is its use of big data to personalize product recommendations and allow its customers to choose his or her samples.

Why does big data analytics offer a competitive advantage for Beauty Army?

Big data analytics is the process of identifying unknown correlation or hidden patterns by analyzing large data sets.  Not only will big data analytics allow Beauty Army to personalize the customer’s subscription experience, but also allow the company to improve its accuracy of product recommendations over time based on the attributes gathered from the customer’s prior subscription preferences and the brands.  Additionally, big data analytics can be used to improve future sample offerings by identifying the more popular brands and the favorable brand attributes.  Another general advantage from being able to understand large data is the ability to provide transparency of the selection process and order status of a subscription as well as help a company and its brands optimize their marketing spend.

How else does Beauty Army compete?

Beauty Army also offers its own eCommerce shop, where customers can purchase full-size versions of the samples that they have received and liked (Good to Know: ~40% of Birchbox’s subscribers will purchase full-sized products on its site).  And like Foursquare, Beauty Army offers a badge reward system, in which you are a granted a certain badge and a reward for fulfilling badge requirements.  For example, to gain the recruiter badge and a free kit, a user will need to recruit 3 friends.  Reward programs are a great way to increase a customer’s involvement with the business and establish stickier customer relationships with individuals who are price-sensitive in a highly competitive industry.  See below for a snapshot of the badges available:

Beauty Army4

Beauty Army also offers gift packages (e.g. $36 gift bundles of 3-month subscriptions) and supports the Beauty Bus Foundation,  an organization that provides beauty and grooming services and pampering products to chronically or terminally ill men, women and children and their caregivers.

 

By the Numbers…

-Members: ~120,000 (Birchbox had ~45,000 members after one year since its founding)

-Paying Subscribers: ~4,500

(According to CEO Lindsey Guest, since launching in January 2012, Beauty Army has been doubling users and subscribers monthly)

-As of May 2013, +125 portfolio brands and accumulated 1.76 million consumer data points

-As of June 2013, revenue of ~$800,000

 

See Broke Beauty Blogger (http://www.brokebeautyblogger.com/p/subscription-box-list.html) for a list of beauty subscription services and their offerings.

Sources: Beauty Army website, Birchbox website, http://www.crunchbase.com/company/beauty-army#src3http://techcrunch.com/2012/10/18/beauty-army-health-and-wellness/,

Like Prada, Repin Prada then Shop Prada

Recently, a number of online retail businesses have emerged to compete with the pioneers of the industry (i.e. Vente-privee, Gilt Groupe, Ideeli, Etsy, Hautelook,…).  A few of the new players in the past three years include Fab.com, One Kings Lane, Bonobos, lyst, shoptique, Vaunte, styloko, Nuji and Joss & Main.  As a result of the exploding online retail space, my time online has increased, I shop more and I receive more budget alerts from Mint.com.

I typically browse these sites when I’m bored or when I am desperately looking for something at a discount.  Recently, I’ve developed an obsession with afternoon tea and have been diligently scanning website after website for a steal on tiered cake stands…But I don’t spend time on these websites the way I do with Facebook or Pinterest, and I’m not engaged in discussion or sharing with my friends what trendy items I’ve just purchased, suggesting that online shopping is not a social activity for me.  I believe there is a disconnect between the bloggers/pinners, retailers and customers.

I believe the ideal online shopping experience can be created through a combination of features from Pinterest, Vaunte and Amazon.  I’d like to be able to shop the products in the photos that I’ve collected in my photo collages at bargain prices (or even have the option to buy them at retail price) and share my purchases with my friends or followers.  Currently, people repinning or liking a photo on pinterest or instagram does not translate into a purchase (most pins are taken from another blog and have no source), and people frequently respond to posts with “where can I get that???” (See the below pictures for examples).

Where can I get this??? Where can I get this??? Where can I get this???

I’ve also included Vaunte in the combo because I like that the company has blended editorial content with an ecommerce platform.  Just as you would browse through a fashion magazine for amazing steals and celebrity outfits, you would be able to view these deals and trends via the featured celebrity’s closet on Vaunte.  And moreover, you are able to shop the celebrities’ closets.  Vaunte bridges the gap between identifying a favorite fashion piece on a celebrity or in a magazine and being able to purchase it.

Finally, I would like to be able to compare the price and quality (used or new) of my favorite handbag across multiple sites like that on Amazon.  I believe price comparison helps convince buyers that they’ve found a great deal and eliminates the need to browse other sites, increasing customer retention and activity.  And of course, users should be able to share their purchases with their friends and followers so that others can also discover these fashion steals and purchase them.  I believe the integration of all these functionalities–follow, collect, share, compare, shop and then share again–would create a more sustainable revenue stream and establish the ultimate online retail platform.

This past week, Pinterest introduced price alerts or “Product Pins”, which is its first step to bridging the gap between pinning and shopping. But Amazon Collections has taken it one step further by allowing individuals to be able to “collect” or “like” and immediately shop the product from multiple sellers.  However, Amazon Collections lacks the social network experience, in which I am able to connect with my friends over an item or purchase, view others’ purchases or follow a hashtagged category such as #AfternoonTea (Amazon Collections has limited categories for browsing).  Additionally, Amazon Collections looks more like an online outlet, which is not very engaging for the user.

Amazon Collections

I’m excited to see what these online retail businesses will look like in the next few months!

Share with me your thoughts @tiffanydstone or comment below!