When it comes to Vinted, you are getting the best of the best when arriving at resale value. In addition, the firm can generate profit from its customer protection system.
When a buyer purchases a product from Vinted, they pay for services such as insurance and tracking, customer assistance, shipping charges as well as Armoire Spotlights (which can provide visibility enhancement of products). The company has more than 25 million global customers and has raised over $562 million in funding.
What is Vinted?
Vinted is a commercial online marketplace where people can sell, buy and trade fashion products. The cooperation specializes in used clothing for men, women, and children.
The company generates revenue by combining fixed and variable fees that come along with advertising choices for retailers (respectively called Item Bump and Armoire Spotlight).
Back in 2008, Milda Mitkute discovered herself struggling with too many clothes, most of which were unworn while there was no place to store them. So, the idea started to emerge after she discussed this issue with her friend, Milda. Then, her friend now becomes co-founder Justas Janauskas.
The company was first launched as a personal project for the founders’ families and close friends. The platform’s growth was fueled solely by users participating in the forum-style community that the platform was built around. In Lithuania, Vinted was a big hit right away because people heard about it quickly. Next year, the company began selling under the name Kleiderkreisel in Germany, which promptly became a high-growth market for the company. Like Lithuania, it started growing mostly by word of mouth.
Following its success in Germany and Lithuania, the firm expanded into the Czech Republic. Mantas Mikuckas joined Vinted as the first angel investor in 2011 and eventually became COO. Mantas aided the company’s expansion into international markets throughout the years that followed. Despite the fact that the company is present in approximately 15 overseas marketplaces, France has the largest following for the Lithuanian unicorn.
During Vinted’s Series A financial support in 2013, Accel invested €5.2 million. After five years, the corporate had begun to attract investors. There have been six funding rounds for this fashion leading company, and they have raised $562.3 million so far. Lightspeed Venture Partners, Accel, Burda Principal Investments, Sprints Capital, EQT, and insight Partners are the company’s top investors. Therefore, Vinted’s business model and how it generates revenue from the sale of second-hand clothing are explained in this article.
How Does Vinted Work?
Vinted is a peer-to-peer digital retail market that allows customers to order, sell, and trade clothing. The primary focus of the entity, as the name suggests, is vintage or/and second-hand fashion.
Individuals may sell clothing in the categories of Men, Women, or Children. Items that can be sold include:
- Sweaters, jeans, lingerie, skirts, or dress
- Shoes,e.g., Flip-flops, heels, sandals, or boots
- Bags, for example, backpacks, fanny packs, handbags, shoulder bags, and more
- Accessories, including hats, belts, sunglasses, watches, or jewelry
- Beauty products such as makeup, perfume, nail care, or hair
If users discover an item they like and the price is acceptable, they can easily purchase it. Then, this platform will give the retailer a prepaid shipping label which is convenient for them to send the items.
As the marketplace operator, the platform also handles payments plus refunds and ensures consumers can receive their products in good condition and on time.
Because the products themselves can be listed and sold without any charges, you basically keep everything you earn. At the same time, Vinted provides purchase protection such as access to its customer support team and even getting free refunds.
What is The Vinted Business Model?
To be the number one choice over the universe of making second-hand items, Vinted has set out to accomplish this. According to Consumer Lead at the company, Natacha Blanchard, the goal is to speed up the shift from a take-make-waste economy to a more circular one. Thus, what exactly is Vinted?
The platform actually is a C2C e-commerce or re-commerce marketplace, where people can sell, buy, or swap their pre-loved, pre-owned clothes and other accessories for fashion – it sounds like an excellent answer for the overfilled clutter and wardrobe. It is as easy as purchasing a new shirt from other e-commerce sites.
Vinted or Vinties, as praised, upload additional information and photos of the item to the platform. The seller receives a prepaid shipping label for the product as soon as the buyer completes the purchase of the product through the company website. In other words, the buyer is responsible for the shipping costs.
The sustainable business model of Vinted is built on the principles of the Circular Economy. Rather than being used just once and decided to dump in a landfill, the apparel made can be shifted from person to person as needed. 87% of the whole fiber input used in clothing is burned or thrown away in a landfill, which is likely a shock to you.
Online marketplaces like Vinted are at the heart of how we do business. With this proprietary platform, it connects sellers and buyers, handles payment processing, and in some cases, even shipping.
It also allows vendors to build public profile information with data points and other reviews, enhancing trust. However, it varies in that it costs purchasers a fee in exchange for its Shipping cost, Advertising model, and Buyer Protection Services.
This enables customers to get their money back if something goes wrong with their goods and even get help from Vinted’s customer service. Furthermore, it raises supply on this forum by allowing sellers to offer their items for free.
How Does Vinted Make Money?
When buyers make a deal through Vinted, they pay both a fixed and variable fee. The platform also makes money by advertising its program.
The fixed fee is equal to $0.70 per transaction and covers fixed costs such as providing the shipping label or payment processing.
In addition, there is a 5% variable fee. Buyers who purchase an article for $100 must also pay an extra $5 in purchase fees.
Surprisingly, online marketplaces usually charge sellers, not buyers. Indeed, Vinted is completely free to use!
Other marketplaces like ThredUp, eBay, and Poshmark charge sellers for facilitating transactions.
The majority of their revenue streams are as follows:
Services of Buyer Protection
When customers order from Vinted, they must pay a customer protection fee. This fee is mandatory for all buyers. During shipping, there can be a lot of problems for buyers. For example, they might get damaged items or lose things; the things they get might not be what the sellers said they were; they might be fraud; and more. The buyer protection fee of Vinted ranges from 3 to 8 percent of the item’s price, plus $0.42 to $1.11. The platform helps compensate retailers for commission-free sales by requiring purchasers to pay buyer protection fees. As a result, this is among the most important ways a company generates income.
Promoted Listings
Promoted listings are also a way this platform generates revenue. This firm does not cost sellers any sales service charges or commissions. Instead, it can earn income by providing various marketing strategies to sellers.
Promotion is a fundamental approach for increasing victory in any business. The promotional tools assist sellers in increasing the visibility of their listings. Vinted’s Item Bumps and Armoire Spotlight service are two of its most important promoted listing methods. The platform will promote a seller’s listing by purchasing bumps on Vinted’s behalf until an item is sold.
- Armoire Spotlight
Sellers’ listings can be promoted for seven consecutive days with the help of armoire spotlights. Each armoire spotlight costs $9.66 in wardrobe spotlight fees. Additionally, sellers can pay to have their armoire (types of items they provide) promoted to other individuals who share their fashion tastes through this feature.
Five listings from a seller’s armoire will be featured in a customer’s newsfeed for a period of seven days. The most popular items of sellers will be included in three of the items, while the newsfeed preferences of customers will be taken into consideration for the other two. Sellers who wish to promote their listings must pay the fee.
- Item Bumps
The cost of bumping listed items is $1.32 each. As a result, the promoted listing is an important source of revenue for the company. A paid feature, Item Bump, guarantees sellers more exposure for their goods, speeding up the sale process. For a period of seven days, a listing that has been “bumped” is demonstrated to more prospective buyers in their search results and feeds.
Payment for bumping items can range from $0.5 to $5, depending on the item type, price, and how many other items are being hit on the Vinted forum.
Third-Party Ads
Advertising is another major Vinted revenue stream. The newly listed pages and the newsfeed of the company website are places where third-party ad networks may display a variety of advertisements.
Costs For Shipping
Shipping costs are the responsibility of the buyer when purchasing from the platform. Shipping costs would vary depending on the type of shipping service used by purchasers. Also, it depends on the shipment size.
Conclusion
Vinted has developed a system of low cost and high trust; simultaneously, it has grown and changed the industry. Because our recent way of buying things is not sustainable at all, the entity wants to make it as easy as possible to buy things sustainably.
Instead of throwing away clothing that no longer fits, you can make a sale of it through its platform marketplace. Therefore, we hope that this article is beneficial to understand the Vintage business model and clarify how this business earns revenue.
