Latest / Startup Stories with Fexingo: Conversations About Founders, Funding, and Building Companies from Zero / How Vinted Made Secondhand Fashion a Billion Dollar Business
Transcript
- Lucas: So there's this moment in the history of Vinted, the secondhand fashion marketplace, that I keep coming back to. In 2016, the founders made a bet that almost killed the company, but it ended up being the reason they're now worth billions. Luna: What was the bet? Lucas: They introduced a buyer protection fee. A small charge on every transaction, something like 1.8 percent plus a few cents. And the community hated it. Thousands of users signed a petition, the app's rating tanked, and for a while it looked like they'd alienated the very people who'd made the platform work. Luna: But they didn't back down. Why? Lucas: Because without that fee, Vinted had no revenue. You see, they'd built a peer to peer marketplace where buyers and sellers transact directly, and there was no commission on sales. So the company was growing like crazy but making zero money. The fee was their first attempt at actually becoming a business. Luna: It's a classic startup dilemma, isn't it? You get traction, but then you have to figure out how to monetize without breaking the trust. Lucas: Exactly. And what's interesting is that the fee did more than just generate revenue. It also created a fund for buyer protection, so if an item didn't arrive or wasn't as described, Vinted would step in and refund the buyer. That actually improved trust, which is crucial for a marketplace where you're buying from strangers. Luna: I remember reading that they later doubled down on that, making the fee even more transparent and offering 24-7 support. So they turned a potential disaster into a core feature. Lucas: Right. And that decision is a big reason why Vinted has become one of the most valuable startups in Europe. As of this year, 2026, they're reportedly valued at around four and a half billion euros, with over a hundred million members across Europe and North America. Luna: It's wild to think this all started in 2008 in Vilnius, Lithuania, with a student who had too many clothes and not enough closet space. Milda Mitkute, right? Lucas: Yeah, Milda and her then-boyfriend Justas Janauskas started it as a forum and a simple website for people to swap clothes. No payments, no shipping, just meet up and trade. And it spread by word of mouth, mostly through Facebook groups, until they realized they had something bigger on their hands. Luna: And they made a deliberate choice to stay consumer to consumer, right? They didn't want to deal with professional sellers or inventory. Lucas: That's exactly their moat. They've always resisted letting businesses list items in bulk. The rule is that you can only sell items that have been in your own closet. That keeps the supply authentic and the prices low, because there's no middleman adding a markup. It also creates this community vibe that's hard for competitors to replicate. Luna: But doesn't that limit their growth? I mean, platforms like eBay or Poshmark allow professional sellers, and that's how they scale. Lucas: It's a trade-off, but Vinted's bet is that the trust and the user experience are worth more than the volume you'd get from pros. And the numbers seem to back that up. Their gross merchandise value, the total value of goods sold, has grown at a compound annual growth rate of over fifty percent in the last few years. That's insane for a company that was basically plateauing in the mid-2010s. Luna: What changed? They had that fee controversy, and then what? Lucas: A couple of things. They raised a big round of funding, around 128 million euros, which let them expand aggressively into France, then the UK, and eventually the US. But more importantly, they doubled down on the user experience. They rebuilt the app from scratch, made it super easy to list an item with just a few photos, and they put an algorithm in place that surfaces items you're likely to want. It's almost like a social feed for clothes. Luna: I've heard people describe Vinted as addictive, which is an odd thing to say about a secondhand clothing app. Lucas: It's true, though. They gamified the whole thing. You get notifications when someone likes your item, you can make offers, and there's this thrill of finding a bargain. It taps into the same dopamine loop as social media. And that's a key lesson for any marketplace: you're not just building a platform for transactions, you're building a habit. Luna: Let's talk about the economics a bit. I know they charge a fee to the buyer, but what about the seller? Is it really free to sell? Lucas: For the most part, yes. There's no listing fee and no commission on the sale. The seller just pays a small fee if they want to promote their item to boost visibility, but that's optional. So the revenue model is almost entirely dependent on the buyer protection fee, which is now around three to five percent depending on the country, plus a small fixed fee. And they also offer an optional shipping label, which has a small markup. Luna: That seems like a razor-thin margin. How do they make money at that scale? Lucas: That's the billion-dollar question. Their take rate is probably around five percent of GMV, which is low compared to, say, Etsy or eBay. But because the GMV is so massive, over four billion euros last year, that's still a lot of revenue. And they're now profitable in some markets, which is a big deal for a marketplace that started with no revenue at all. Luna: But they had to go through all those years of losses, right? I recall they lost money until recently, and even now, profitability is uneven across regions. Lucas: Right. They're profitable in their mature markets like France and Germany, but they're still investing heavily in newer ones like the US and Spain. The path to profitability is about reaching critical mass in each market, where the network effects kick in and the cost of acquiring users drops significantly. Luna: Speaking of network effects, their growth in the US has been slower than in Europe. Why do you think that is? Lucas: Competition is one thing. You have Poshmark, ThredUp, and even Facebook Marketplace, not to mention the cultural perception of buying used clothes. But there's also the operational side. In the US, shipping distances are longer, and the population is more spread out, which affects the logistics and the cost of shipping. They've had to adapt their model, like offering flat-rate shipping options. Luna: But they're still growing there, right? They reported a significant increase in US users last year. Lucas: Oh yeah, they're growing, but it's a different battle. In Europe, they basically own the secondhand fashion space. In the US, they're fighting for market share. It's a good reminder that a successful model in one region doesn't always translate perfectly to another, especially when you're dealing with different logistics and consumer habits. Luna: It's also interesting to think about the broader impact on the fashion industry. Vinted has basically made secondhand first-hand for a whole generation. I've seen data that says a third of Gen Z now buys used clothing, and that's partly because of apps like this. Lucas: And that's a huge cultural shift. Vinted has turned sustainability from a niche concern into a mainstream value proposition. They're not just selling clothes, they're selling an identity, a way of being smart with your money and your environmental footprint. For a lot of people, it's like a game where you win by not buying new. Luna: We should also mention the role of the community features. They have these forums and groups where people swap styling tips and discuss fashion. It's not just a marketplace, it's a social network for clothes. Lucas: That's a huge part of the stickiness. People come for the bargains, but they stay for the community. And that's something that's really hard for competitors to copy. You can replicate the features, but you can't easily replicate the culture that emerges from millions of people genuinely enjoying the experience. Luna: It makes me think about the lessons for other startups. What's the biggest takeaway from Vinted's story? Lucas: For me, it's the willingness to make a controversial decision that you believe in, even when your users are screaming at you. That 2016 fee could have killed them, but they had a clear vision of what they needed to build: a self-sustaining business. They took the short-term hit for the long-term win, and it paid off. Luna: And also the importance of staying true to your core idea. They could have easily pivoted to include professional sellers or moved away from the community aspect, but they didn't. That focus is rare. Lucas: Exactly. And it's a good reminder that not every startup needs to invent a killer new technology or disrupt a trillion-dollar industry. Sometimes, you just take an old idea, like selling used clothes, and you make it so easy and delightful that everyone wants to do it. Luna: I think that's also why the show is so useful. These stories give us a playbook for thinking about product, trust, and growth, even if we're not building a fashion marketplace. Lucas: Absolutely. And if you're finding value in these conversations, whether it's for your own startup or just to understand the business world better, a small contribution to the show would go a long way. A couple of dollars a month, like a coffee's worth, genuinely helps keep these episodes coming. You can do that at buy me a coffee dot com slash fexingo. It's a simple way to say this is useful, and it keeps the show ad-free. Luna: Yeah, we really appreciate anyone who's able to support that. It makes a real difference. Lucas: But back to Vinted. I want to talk about their recent move into other categories, because they're not just about clothes anymore. Luna: Oh, you mean the expansion into electronics and home goods in some markets? Lucas: Exactly. They've started testing categories like furniture, books, and even consumer electronics, on the same consumer to consumer platform. The idea is that the trust and logistics they've built for fashion can be applied to other high-volume, secondhand items. Luna: That's a bold move. It's essentially turning Vinted into a general secondhand marketplace, not just fashion. Lucas: It's still early days, but if it works, it could dramatically expand their total addressable market. The global secondhand market is projected to reach over three hundred fifty billion dollars by 2027, and fashion is just a slice of that. They're positioning themselves to be the default platform for buying and selling used stuff, not just clothes. Luna: That's ambitious. But it also raises the question of whether they can maintain the same level of trust and user experience across so many different categories. A used couch is a lot different from a used pair of jeans. Lucas: That's the challenge, for sure. But if anyone can pull it off, it's a company that's already figured out how to make strangers comfortable buying from each other. Their ability to manage trust at scale is arguably their core competency. Luna: And if they pull that off, they're not just a fashion resale app, they're a serious competitor to eBay in the secondhand space. Lucas: Right. And the fact that they're profitable in core markets gives them the firepower to experiment. It'll be interesting to watch over the next couple of years. Luna: Before we wrap up, any final thought on what other founders can learn from Vinted? Lucas: I think it's the reminder that the best businesses are often built on a simple insight that other people overlook. In this case, that regular people are willing to sell their own stuff if you make it easy enough. And that trust is the ultimate currency in a marketplace. If you can solve that, you can win.