Luxury Resellers Are Giving Fashion a Second Life

Jaclyn Shanfeld became a fashion entrepreneur by accident. After snapping off a heel while rushing to a bar mitzvah in Beverly Hills, she hobbled into the local Fred Segal boutique and panic-bought a pair of Yves Saint Laurents—that turned out to be too small. After a few hours of podiatric torture, Shanfeld slumped in a chair to ponder her fate: She’d just dropped $900 for designer shoes that didn’t fit. Return them? Sorry, Segal didn’t take shoe returns. What about dropping them in a consignment shop? “They’d sell them for $398 and take a 50 percent commission,” Shanfeld scoffs, “which would have left me enough money to buy lunch. It was a fiasco.” It was also the birth of Shop-Hers.com, a peer-to-peer resale site that deals exclusively in luxury apparel—gently used, like Shanfeld’s YSL heels. Women join by submitting their sizes and measurements, then a custom algorithm matches buyers up with similarly sized females with items to sell. And while big-city consignment shops take anything from 50-75 percent of a sale price, Shanfeld assesses only 18 percent. Business, she says, is booming. “We’ve been up for seven months and we’re growing faster than I ever imagined—almost 50 percent a month,” she says. Shop-Hers.com isn’t alone. It’s one of a growing number of luxury resale platforms to appear online of late. Their names—Fashionphile, Covetique, LuxuryExchange—are redolent of runway desires. But while the merch might be used, this is not your mother’s consignment shop. The newest clique of luxury resellers offers choice goods, personalized service, reasonable fees and deep discounts, like the Dolce & Gabbana cocktail dress that Shop-Hers.com recently listed for $250. At SnobSwap.com, another newcomer consigner, the used Burberry bags are 70 percent off retail, and buyers can pay with cash, barter or a combination of both. “It gives people more flexibility,” says CEO Elise Whang, who started the site last April when law school debts cut into her shopping but her career still mandated that she dress well. With SnobSwap’s budget-friendly setup, “you can get your fashion fix, monetize your own wardrobe and swap with like-minded people,” Whang says. Threadflip.com, yet another newcomer to the segment, also boasts jaw-dropping discounts. Say, a Coach python skin belt for just $57, shipping included. Not unlike Shanfeld, Threadflip founder and CEO Manik Singh started the site after his wife, trying to dispose of a pair of designer boots she never wore, didn’t want to deal with the aggravations of traditional consignment. Threadflip takes a modest 20 percent commission on the goods that users post themselves, but it also offers its White Glove service for women who have lots of items to sell but don’t have time to do it. “We’ll send you a box for your item, manage the whole sale and send you a check,” Singh says. Even with the steeper 40 percent commission, “we’re seeing lots of activity.” Indeed, the new generation of luxury resellers has discovered that with a few full-service touches, they can even draw customers who have the money to shop on New York’s Madison Avenue. Part of it is semantics: Much like Mercedes successfully turned “used” cars into “certified, pre-owned” ones in the early 1990s, online designer resellers shun terms like “used” and “secondhand” in favor of “vintage and collectible” and even “pre-loved.” But the greater value they add is selectivity and customer service. For example, luxury-resale pioneer Portero.com, founded in 2004, showcases only coveted goods like Gucci furs and diamond-studded Rolex watches. It also offers a personal-shopping service, just like a high-end department store. “If you’re looking for a Fendi or Chanel bag from a certain year, we’ll help you find it,” says operations director Alexis Clarbour. And business? “It’s phenomenal,” she says. “We’re having our best year yet.” (Privately held Portero, like most of these sites, declined to release financial results.) Also occupying luxury resale’s high ground is Vaunte.com, which differentiates itself by selling the closets of prominent female executives, all of whom are profiled on the site. It means that every Louboutin heel, every Hermès scarf has a provenance that enhances its desirability. Vaunte has sold over $1 million worth of goods since its launch in November, according to CEO Leah Park. “This,” she says, “is the last frontier of fashion.” It may well be. While there are no statistics specifically for luxury resellers online, traditional brick-and-mortar consigners saw their business grow by 12.7 percent in 2009, the latest figure available from the National Association of Resale Professionals. “Every time the economy slows down, it’s an opportunity for this business,” says the trade group’s executive director Adele Meyer. “And once people start shopping resale doesn’t mean they stop once the economy improves.” Designer resellers are also expanding with venture capital behind them, like the $14 million that TheRealReal.com raised in April. “This is a niche category,” observes Jason B. Cohen, evp of luxury brand consultancy The O Group. “Enterprising entrepreneurs have discovered some white space, and are finding ways to make something really terrific.” Luxury apparel consignment itself is nothing new. Encore, a resale shop in New York where Jacqueline Onassis dumped her unwanted Dior and Chanel, opened in 1954. So why are fashionistas suddenly flocking to its e-tailing equivalent? Observers point to several reasons, starting with a lingering recessionary hangover. While number crunchers at the Fed might tell us that the American economy has recovered, it doesn’t mean that consumers are confident enough to pull a shopping spree at Gucci. “When I walk up and down Rodeo Drive, people are not in the stores,” Shop-Hers’ Shanfeld says. “Women don’t have the kind of money they had in the past to buy $3,000 handbags. But we still have the desire to be fashionable and to have luxury goods.” Whang agrees. “There’s been a change in mind-set,” says the SnobSwap founder. “Consignment shopping used to have a stigma to it, but as the younger generation—who have learned from the recession—move into the workforce, they’re more open-minded about recycling and reusing, and fitting that into their lifestyles.” Threadflip’s Singh adds that most women wear only 5-10 percent of what’s in their closets, and are looking for ways to turn unused luxury accessories into cash—either as a way of economizing, or as a way of financing the purchase of more luxury goods. “We’re giving people a way to monetize what has traditionally been a static asset,” he says. “A big industry is being disrupted here. Traditionally, the only way to refresh your closet was to go to the local consignment shop and have a poor experience, or go to eBay.” Ah yes, eBay. “The World’s Online Marketplace,” as eBay bills itself, now does business in over 30 countries and closes some 1 billion transactions every single day. Yet it’s an ecosystem that’s grown too large and undifferentiated, say critics, to adequately manage the unique demands of luxury buyers. As Whang puts it: “You just don’t feel right about buying a pre-owned Chanel bag that’s also on the same site as used-car parts.” There’s a darker reason here, too. Not only is eBay simply too large to manage customer-service complaints with a personal touch, the site has a reputation—deserved or not—for counterfeit merchandise. When Louis Vuitton Moët Hennessy hauled eBay into a French court in 2008, the luxury brand charged that a staggering 90 percent of the Dior perfume and Louis Vuitton bags selling on eBay were fake. The site countered that it has a global staff dedicated to spotting counterfeits and that most dubious merchandise is removed before auctions close. But consumer wariness remains, and that anxiety is the fertile soil from which this new crop of luxury resellers has sprouted. Simply put, nobody’s going to plunk down $30,000 for a used Hermès Birkin bag unless there’s a guarantee behind it—the kind that eBay cannot provide, and the kind that most luxury resellers do. SnobSwap.com contracts with a third-party authenticator that reviews all posted items. Portero.com offers its Portero Promise—a five-pronged customer-service pledge that includes a money-back guarantee of authenticity. “We wouldn’t still be in business if we had any issues surrounding that,” Clarbour says. Shop-Hers.com requires all sellers to ship their items to its headquarters first where Shanfeld has all the items authenticated. But what’s more interesting is who does the authenticating: employees of the nearby luxury-brand boutiques. Shanfeld’s unusual and hard-won arrangement raises another of luxury resale’s delicate questions: Are these sites hurting the business of the very luxury brands they trade in? Adweek contacted Chanel, Hermès, Louis Vuitton and Dolce & Gabbana, but none responded by press time. For her part, Shanfeld says no. “We’re not cannibalizing brands—we want to work with brands,” she says. The Shop-Hers founder incentivizes boutique sales clerks to help her with authentication by offering them something in return: a ready resale market to recommend to customers who might be iffy about spending full price. Put another way, she says, “We offer last year’s bag so shoppers can afford this year’s bag.” It’s certainly an interesting argument—that resale indirectly fuels full-price traffic. The O Group’s Cohen agrees with the point in concept but maintains that the effects are more nuanced. On the one hand, he says, “a well-structured secondary market is a great complement to luxury brands by increasing their reach, and consumers might be more willing to buy [full-price] luxury knowing that they can sell off their purchases later.” But Cohen also says that a slightly used, deeply discounted designer bag “might also discourage some aspirational consumer from buying a new piece.” He adds that traditional discounters—the Loehmann’s and factory outlet villages—may find their market share under threat. Maybe so. For now, though, online resellers prefer to take a longer, and certainly more benevolent, view of consignment’s morphing into the digital age—that it drops luxury’s exclusionary pretense, increases access and celebrates individuality. “Maybe that customer couldn’t afford the Chloé bag at the store, but she has the opportunity to purchase one from us,” says Vaunte co-founder Christian Leone. Whang says that sites like SnobSwap offer a sorely needed retort to chains like Uniqlo and H&M. “With so many fast-fashion stores, everybody’s wearing the same thing,” she says. Resale, she says, “gives people something exciting to talk about—‘I found this vintage Chanel bag for this price!’ It’s a conversation starter. It’s part of the excitement of shopping.” And what is fashion anyway, if not that?

Brand Marketing

Luxury Resellers Are Giving Fashion a Second Life

The burgeoning market for 'pre-loved' goods

Robert Klara

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Robert Klara