Vestiaire Collective's CFO on why resale is more sustainable than rental
And their brand placement on Emily in Paris. Plus, did Rent the Runway try to acquire By Rotation as they expanded into the US market?
Just in time for Vestiaire Collective’s 15th birthday this week, I caught up with their affable Chief Financial Officer, Bernard Osta, for a casual chat about the profitability of sustainable fashion models, their partnerships with luxury brands, and their choice to invest in a paid placement on Emily in Paris.
Earlier this month, Bernard hosted a roundtable discussion on running cross-border marketplaces at the Sifted Summit in London. I would love to share the insights but it was Chatham House rules, though he was happy to discuss Vestiaire Collective’s sustainability model afterwards for Top Lender.
I enjoyed meeting him and learning about their approach—and I hope you enjoy the discussion too!
This interview has been edited for clarity.
Georgia: Would you mind expanding on why Vestiaire’s model is sustainable?
Bernard: I think there are two main data points you should have in mind. The first one is that the environmental cost of a second hand transaction is 90% lower than that of a first hand transaction. This is a data point we've made public in our impact report. We've published an impact report for the past three years1, and when we talk about environmental costs, it's not only the greenhouse gas emissions, but it's water usage, it's water pollution, it's land usage, it's waste production, and so on.
And there is a very precise methodology that has been prepared and validated by Price Waterhouse Coopers, which we've used that's very important. You're not talking about a 20% reduction. No, it's a 90% reduction.
The second point that is very important. Some people may say secondhand is cheaper so it actually drives more consumption. No. The reality is that 80% of the transactions completed on Vestiaire Collective replace a first hand purchase, so people come on Vestiaire instead of buying new. So, when you think about this on top of the 90% reduction (in environmental costs), the (positive) environmental impact of Vestiaire is massive.
Georgia: In the UK, we’re seeing the rental platforms like HURR and By Rotation expanding into resale and repair to try to get to profitability. Do you see that chipping away at your market share at all?
Bernard: I think that any initiative promoting sustainable fashion is welcome. I can only encourage any initiative. However, from an investment perspective, I have a lot of reserve when it comes to the rental business, because it's asset intensive activity, and renting it means that you need to store the goods, that you need to wash the goods, and I have not seen a lot of business models that have proven to be scalable in a profitable fashion.
Obviously, traditional mom and pop shops that will manage it as a family business, this can work well. And you can have one store, you can open new stores, because if you do it well, it works well, but it's not scalable from the way I think about it. Developing an online model is extremely challenging. So when you tell me they are moving to resale, I'm not surprised, because resale is, de facto, a more profitable business model.
Georgia: Do you have an interest in repair at Vestiaire or is that completely separate to the model?
Bernard: We have announced in the past few months a partnership on repair2. I think that's an area which is of some interest, but our predominant and core focus is on our C-to-C business, where we think that the potential is just huge.
It's a very nascent market. Vestiaire, founded in 2009, was a pioneer. So it is still a very new thing. Penetration of secondhand within fashion is at only 5% so from a corporate strategy perspective, our focus is very clear. It's on resale, not repair, not rental.
Georgia: I'm interested in the brand partnerships that you've done working with companies like Hermés…
Bernard: No, we don't have Hermés, unfortunately. We have Gucci, Burberry, Chloé, to name a few.
Georgia: Ok, so how does that relationship work if you're not managing inventory? Is it just a branding exercise?
Bernard: So it's branding, but it's also solutions that we bring to the brand partners. So in the example of Gucci, very specifically, if you have any Gucci goods that enter into the program, it's selected handbags and selected goods.
You can either go in the store or online. If you go in the store, give the handbag, they will look at the state, they will look at the model, and they will give you a voucher.
We will buy the bag in those instances. It's very hard. We buy the product because we are selective about what we will take and we know we'll manage to sell it, and we manage the sale ourselves.
Georgia: So, you do have some managed inventory?
Bernard: Yes, but it's only in the context of those partnerships.
Georgia: Is that dual-funded by Vestiaire and the brand? Do they put in for the marketing as well?
Bernard: They do put some marketing in the program, but the purchase is funded by Vestiaire.
Georgia: That's interesting, because I've been wondering how luxury brands feel overall. Obviously, they have a vested interest in newness and exclusivity, so particularly for brands like Hermés that have a Birkin that is very hard to get...
Bernard: For a company like Gucci, when they do it in store, or even through the web form for them, it's great to see their customers getting value, getting “Gucci value”, a Gucci voucher, or a Chloé voucher from the goods that they own.
It highlights great value of the goods the brands sold them, and it obviously creates a loyalty effect that has huge value to them, and in the process, Vestiaire is a facilitator. In the process, some people discover Vestiaire. In the process, the Vestiaire brand is validated by those industry leaders so they are clearly win-win partnerships.
Georgia: Do they advertise that on their websites?
Bernard: They do. Sometimes visibly, sometimes less so.
After our interview I realised I wanted to ask more about the Emily in Paris partnership as everything I’d learnt was during the private round table discussion, so I followed up with Bernard over email.
Georgia: Fans of Vestiaire Collective and Emily In Paris observed that the user experience portrayed in the show is fictional (the in-store boutique, the white lab coat, and the funds dropping into Mindy's account immediately). How successful has the paid placement been in your view despite the creative portrayal of Vestiaire Collective? Was the objective to drive customer awareness internationally to help Vestiaire achieve profitability in the lead up to an IPO?
Bernard: It was great to be featured in Emily in Paris. Very well executed and the feedback has been excellent. It clearly helps from an awareness perspective. And was fun to do!
Thank you, Bernard!
I thoroughly enjoyed the opportunity to hear Bernard speak about how the Vestiaire Collective business has developed over the past fifteen years. Our discussion was thought-provoking.
Here are my thoughts, and analysis on the profitability of the various circular fashion models we discussed.
On environmental costs
It’s promising to see that more and more brands are publishing impact statements. Vestiaire’s methodology is interesting. I have linked their three annual reports in the footnotes, where you can read more about the PwC methodology Bernard referred to if that floats your boat. (It is interesting!)
It’s worth noting that Vestiaire worked with Vaaya for the 2024 report and developed new calculations including a cost-per-wear metric to help customers understand and change the way they consume fashion.
Dounia Wone, Chief Impact Officer of Vestiaire, says this new metric adds an essential dimension to their environmental reporting and “reveals that mindful fashion choices benefit both the planet and your finances.”
Recent sustainable brand closures have shown that sustainability itself is not enough of a motivator to change shopping behaviour. The cost-per-wear metric indicates that second hand luxury fashion cost-per-wear is more economical than fast fashion. Hopefully this insight from Vestiaire will help to motivate more sustainable shopping choices.
I applaud their efforts in building these methodologies and their transparency about their own data and where they can improve.
On profitable circular fashion models
Vestiaire Collective versus Rent the Runway
Vestiaire Collective has seen huge earnings growth in the past 12 months (see EBITDA in key stats below) and is on track to hit profitability any time now. When Bernard described how he has not seen a scalable rental model, he may have been referring to the Rent the Runway (RTR) model which is resource intensive as they offer rental subscriptions, manage inventory on behalf of brands, and process dry cleaning once items are returned. (This view doesn’t take account of purely peer-to-peer rental models like By Rotation).
In recent years RTR performance has struggled, and the company went public with a lacklustre IPO in 2021. RTR restructured in early 2024, cutting a further 10% of its workforce after letting a third go during the pandemic.
CEO and co-founder Jennifer Hyman, said these changes were designed to pave the way to profitability in 2024. Yesterday, Hyman announced on LinkedIn that they plan to “usher in a wave of newness and innovation” including an initiative to “swap” your entire wardrobe. Further changes are planned including “more innovation, more community, more ways to engage, more special events, especially IRL” in the lead up to their 15th birthday in November.
This means that both Rent the Runway and Vestiaire Collective, which both turn 15 this year, are reportedly close to profitability despite their different models. However, it is clear that RTR has had to make more significant changes to their business model to do so.
Having said that, Vestiaire’s initiatives like brand partnerships, which involve managed inventory, and their repair partnership show similar innovation has been required to grow their user base and create their path to profitability.
Parallels for UK-founded rental platforms: HURR and By Rotation
In the UK, it has been a similar story. HURR announced in October that they have hit the significant earnings milestone of £100 million since their launch in 2018, as reported by WWD.
Although they are a peer-to-peer rental platform, HURR also manages rentals for over 130 brand partners including Net-A-Porter, John Lewis and GANNI. The earnings milestone is a huge accomplishment, however, there is no mention of their path to profitability in this announcement so their performance storytelling is still focussed on scaling and evolution of their model.
To get some insight into their approach I revisted a 2022 podcast interview where HURR co-founder and CEO, Victoria Prew, spoke to her entrepreneurial friend, Sharmadean Reid. On the Business Class: Money Minutes podcast, Prew described the HURR structure as:
“a hybrid model of peer-to-peer community where people can rent and lend their own wardrobes. We power managed rental for 130 fashion brands. And we have SaaS to power fashion rental on behalf of retail brands and big high street stores.”
Prew said this approach to build the business was strategic rather than organic, and key partnerships were considered to bring in cash as an early stage start-up to scale the business as quickly as possible. They scaled their brand partnerships from four to 130 in under two years. Prew described the ability to leverage the reach of big fashion brands to promote awareness of HURR as low-cost but high-reward. This reflects the discovery and validation of Vestiaire via brands like Gucci, that Bernard described.
Prew said:
“I passionately believe the future of fashion is a platform that does lots of things under one roof. The key to partnership is making it as easy for the (130 managed) brands as possible, so we do everything end-to-end: dry cleaning, picking, packing, dealing with what is a very complex reverse logistics business.”
In this sense, HURR faces the same challenges around asset intensive activity that RTR does and that Bernard described as more difficult to scale profitably than the resale model. This doesn’t mean that HURR can’t build a profitable business, though. We’ll have to see what they achieve.
Since the 2022 podcast, HURR has released a credit pass called HURR Flex to encourage their community to rent more often to “elevate their everyday” for work, holidays and the weekend instead of simply renting for special occasions. Prew mentioned recently on a social media post that they have invested in growth marketing expertise in 2024.
To be fair to HURR, they are much earlier in their journey than Vestiaire Collective, so they have a way to go to reach profitability, a feat that has taken Vestiaire 15 years to (almost) achieve. Evolving their model as they scale as both RTR and Vestiaire have done makes sense.
HURR’s main peer-to-peer competitor in the UK is By Rotation (ByRo). (It’s very much the time of circular fashion birthdays as ByRo celebrate their 5th birthday this week. Is autumn the time to launch a start up?).
By Rotation founder and CEO, Eshita Kabra-Davies, also spoke earlier this month at the Sifted Summit, on expanding a start-up internationally. ByRo entered the US market in early 2023. In her talk she covered their model, how they manage cost and their profitability.
Eshita described By Rotation’s model as:
“a seed-stage peer-to-peer marketplace, also designed like a social network. So people on the By Rotation app can lend and rent designer fashion, and increasingly premium lifestyle goods like RIMOWA suitcases or Louis Vuitton backpacks, with each other.”
Eshita described their positioning as going further than what’s out there in the rental market, and similar to other sharing economy platforms like airbnb and Uber.
In a similar vein to Bernard, she described the perceived negatives of the resource-intensive platforms. My guess is she was referring to Rent the Runway here:
“There are a couple of listed companies in the US that do fashion rental. They are all very inventory heavy and they are all about logistics. They are not really a sharing economy and scalable solution. They’ve never expanded beyond their home country. For me, when I founded By Rotation, it was very clear to me as a global citizen that the company that I wanted to found had to be a global solution and had to be one that was a completely circular solution to the problem of waste, particularly in the fashion industry. By nature we had to be global.”
ByRo has focussed on partnering with the right local influencers to build credibility and awareness in a market that was primed for a new market entrant with a peer-to-peer solution.
“We started doing our market research in September 2022, and we did a soft-launch in Feb 2023. The premise of our platform is really just a social network. We’ve got into a very good position within a year and a half where the app is growing organically through network effects.
While we are VC backed, we’ve only raised about $3.5 million, which is not a lot of money. We’ve got over half a million users in the UK and the US. We’ve got a shared wardrobe worth over $70 million, with 150 thousand peer-to-peer listings. We’ve done this very organically. Year-to-date, there’s been no spend on marketing whatsoever, so the bulk of our cost for expanding into the US has all been for engineering for features such as rent-by-location.”
I’m curious about how they define marketing versus other promotional activities because they have clearly done a lot of PR work, thrown parties and influencer dinners, flown members of their core team to New York to host IRL sales and move offices, all of which must require a level of spend. Perhaps they are categorising this under PR, not marketing. Either way, I would like to know more about this claim.
Eshita went on to hint that because their investment focus was engineering, it has been all about the hustle for everything else:
“For the rest we had to be completely resourceful: beg, borrow, steal. We don’t steal but we had to rely on the resources of our existing community and networks in the UK to then get a lot of influential people and early adopters in the US to start using the By Rotation app… We’re now profitable in the US. And again, we’re growing organically.”
Eshita also suggested that ByRotation’s peer-to-peer approach itself helped them to launch into the US market, because it wasn’t provided by the incumbents.
“We spent a lot of the time during Covid, educating people why it makes sense to rent and lend things to each other to make money, save money, make new friends, save the planet at the same time.
When it came to expanding to the US, the market was already primed for this concept of fashion rental. What they didn’t have was “listed-company-that-I’m-not-going-to-name-2.0 or 3.0”, and that’s what we brought to the market”.
Later in the talk, Eshita hinted at unnamed competitors again, which makes me wonder if she was referring to RTR or another competitor again here. If you’re from the US and have an insight please share your take in the comments!
“When we were expanding abroad we had some company that will not be named approach us and essentially try to acquire us because they were worried that we were entering their market. When you try to disrupt an entire space you have the incumbents getting worried that you’re entering their market and shaking things up.”
The peer-to-peer approach with a focus on minimising costs seems to have worked well for By Rotation, which suggests the inventory-light approach that ByRo and Vestiaire promote is the most efficient and sustainable model for circular fashion. We’ll have to see if ByRo is able to achieve profitability in the UK market, and continue to scale in both markets profitably over the next few years.
Phew, so there’s a lot to think about as far as workable models are concerned. They all seem to be on a path to making things work in their own way, but some businesses will have a higher burn rate than others as their operational costs are much higher, and might run out of runway before they achieve profitability. As RTR has found, this can lead to serious team restructuring and pivots to the business model.
Now, back to my chat with Bernard.
On Repair Partnerships
Bernard mentioned they have recently announced a repair partnership, which is with SOJO, who are the leading brand repair partner in the UK. This received press coverage at the time, such as this Harper’s Bazaar piece and the service is live here on the SOJO website. However, Vestiaire appear to be downplaying the partnership. I can’t find any information on their repair service on their website, and a content marketing article on their site announcing the launch has been deleted.
Perhaps it was just a trial.
Or perhaps, because it was positioned primarily as a tailoring service to ensure new purchases fit perfectly rather than a repair service, you receive information about it in the after sales flow.
On Emily in Paris
Ah, I wanted Bernard to be a little more candid in his response but it was completely my fault for not asking him in person! Hey, I am new at this. Live and learn.
So, I’ve looked at what is out there in the public domain, and this Glossy article covers it for me.
The article explains that Vestiaire Collective operates in 70 countries. Emily in Paris is available in 190 countries, including those of significant interest for Vestiaire across North and South America and Asia. So “the brand’s appearance on Emily in Paris positions it in front of a global audience already engaged in the fashion-forward narrative of the show.”
“This partnership isn’t just about visibility; it’s about positioning our brand within a cultural phenomenon that resonates with our target demographic,” said Samina Virk, U.S. CEO of Vestiaire Collective. “By being featured in a show like ‘Emily in Paris,’ we’re able to reach consumers who are highly interested in luxury fashion but may not be fully aware of the benefits of shopping pre-loved.”
The placement was a paid for, although the amount has not been disclosed. A representative said that, “as we grow our presence in the United States, we are always in partnership conversations, both paid and organic, with brands that can help us grow our awareness. It was important for us to pick a show that felt authentic to our brand, and Netflix presented us with a concept and storyline that was relatable and would resonate with our core demographic”.
According to the article, Vestiaire’s CEO has paused IPO plans until the company is profitable, so the awareness drive may have been a creative approach to accelerating traction in the US market and breaking even this year before an IPO in 2025.
So, I think this means that the authenticity of Mindy’s encounter with Vestiaire Collective doesn’t matter so much. What mattered was that Emily in Paris, despite its incoherent plotlines, described as “beautiful stupidity” by Slate, it’s a show that provides a bit of fun and escapism for fashion-lovers. And connecting with that audience was the aim. So, mission accomplished.
Vestiaire Collective Key Stats
Revenue: €157m3
EBITDA: €77m (with a €41m euro gain in 2023)
Profitability: Aim to break even in late 2024
Gross margin: 35%
Investors: Eurazeo, Kering, Conde Nast, Bpifrance, Generation IM, Goldman Sachs & Bank of America
2023 Performance
10.4m listings
2.3m orders
800k buyers
High repeat rates with AOV of €350
If you got this far, thanks so much for reading. I am fascinated by how different entrepreneurs are tackling the future of fashion and this exploration of some of the circular models being built was enjoyable. Let me know what you think in the comments or on Notes, and like or subscribe if you enjoy these deep dives.
Vestiaire Collective Impact Reports: 2022, 2023 and 2024. The PwC methodology Osta refers to is the “monetization” method which creates a monetary measure of environmental impacts and combines them to assess overall environmental costs. This is explained on page 7 of the 2023 report. PwC’s UK Sustainability team contributed to the 2023 report as acknowledged on page 44 of this report. PwC “value coefficients” were applied to Vestiaire’s life cycle impact assessment data to determine their environmental costs for monetization. You can read more from page 47.
Sojo and Vestiaire Collective announced their repair partnership in June 2024: https://vestiairecollective.sojo.uk/
The Glossy article reports that revenue grew 25% in 2023, a slow down on the previous two years. The Vestiaire CEO, Max Bittner, has said their IPO will be delayed until they are profitable.
This is a great deep dive into Vestiaire! I love their circular messaging and marketing campaigns, but I've never been able to bring myself to make a purchase because of the buyer service fee.