admin Last week, Vestiaire Collective took its stance on fast fashion one step further. The Parisian resale platform extended its ban on clothing from the category to now cover over 30 brands, with the likes of Zara, H&M, Urban Outfitters and Gap among those newly blacklisted. The move followed a similar ban initiated by the company in 2022, and built on a three-year plan to entirely remove all fast fashion from the platform’s offering.
While in its announcement Vestiaire recognised that making such a decision would spark debate, it stated that it was a “necessary step” to reduce fashion’s environmental impact. Naturally, with the ban came questions and concerns – namely, what would now happen to the unwanted clothing of these brands and could this potentially lead to more waste?
Speaking to FashionUnited, Hanushka Toni, CEO and founder of UK resale platform Sellier, affirmed the uncertainty that comes with banning related products, noting that discussion tends to surround whether or not the move ultimately limits the lifecycle of clothing and therefore contributes further to fashion waste. However, she countered: “Critics of this approach suggest that by offering resale for fast fashion brands actually increases the chance of overconsumption, rather than reducing it.”
Customers return to favour better quality
In Toni’s eyes, this is just one of multiple benefits that come with cutting fast fashion out of external circular options. She explained: “Brands are under increased pressure to improve their sustainability credentials and aid in working towards a more responsible future in fashion. The hope is that by making fast fashion labels more difficult to resell, resale platforms are steering customers towards fashion choices that are either built to last or have inherent resale value.”
Another question that springs to mind is the potential loss in business that resale brands could face in the wake of cutting out such a large chunk of the industry. It explicitly contrasts the growing pressure experienced by resale brands to deliver on profitability in a challenging macroeconomic environment and an industry that Toni said is “infamously plagued by diminishing economies of scale”.
Yet, Vestiaire appeared to show little concern in the way of potential losses. Upon announcing the extended ban, the company noted that following the first cut, it had actually seen 70 percent of members impacted by the ban return to the platform to “shop for better quality items and invest in second-hand”.
Toni noted on tackling this shift: “If companies are able to improve their unit-economics by increasing their average order value without losing revenue and keeping commission favourable, this will bolster the bottom line. This is an approach that has been adopted by The RealReal. After years of consistent losses, their current turnaround strategy focuses specifically on prioritising higher ticket items to increase profit margins and reduce losses.”
Iconic items bring ‘healthy profit margins’
Back in early 2022, the US resale platform reported that it didn’t expect to turn a profit until 2024 as it was working on improving unit economics and scaling the business. Its ongoing turnaround plan is currently being led by CEO John Koryl, who joined the company in January 2023, and has since carried out major changes at the firm, including decreasing its workforce, shuttering its beauty division and, as aforementioned, refocusing on higher-margin consignments, which he said earlier this month was “delivering significant progress in (its financial) results”.
Meanwhile, for Sellier, which since its inception has intentionally positioned itself as a luxury brand, a “low volume, high margin model” is already ingrained into the very foundations of the platform. Through this, the company puts an emphasis on what it calls “superbrands”, formulating an “ultra-curated stock” consisting the likes of Chanel, Louis Vuitton and Hermès, from which iconic items are said to bring in “healthy profit margins”.
On the concept, Toni said: “Our focus is in giving our customer a really deep luxury offering, which from a business side allows us to grow our revenues with less operational complexity than platforms with lower average order values. This approach has been incredibly successful for us – we have been profitable since launch and reported growth every year and on course to make 14 million pounds this year.”
To ensure the longevity of such success into 2024, Sellier will be setting its sights on regional expansion throughout the UK, where Toni said the luxury market is worth 48 billion pounds, with pre-loved being a growing part of the industry. She concluded: “We will be focusing on areas that are currently underserved but with strong demand for luxury brands, which outside London are fairly inaccessible.”
