Luxury resale is a huge segment of the luxury fashion industry, estimated to be between $10 billion and $20 billion dollars. Here, STYLEGUIDE presents a conversation held by CNBC's financial journalist Christine Tan, and Maximilian Bittner, CEO of Vestiaire Collective, the largest luxury resale platform in the world. This interview was broadcast on July 19 on an episode of CNBC’s Managing Asia program. From gamification to blockchain, Christine and Max discuss the booming luxury fashion resale market, Vestiaire Collective's plans to scale up the business and revolutionize luxury resale through technology and data solutions, as well as the company's plans to expand into the burgeoning markets in Asia, especially in China, Japan, and Southeast Asia.
Christine Tan: Founded in Paris in 2009, Vestiaire Collective is the world's largest luxury resale platform. Just how fast is luxury resale growing compared to the general luxury market?
Max Bittner: The resale market is an absolutely ginormous market. Overall, the luxury fashion industry is over 200 billion, and luxury resale segment is somewhere between $10 billion and $20 billion. The growth has been outstanding. I've only joined the business six, seven months ago. The overall kind of tailwinds in favor of it -- whether it is generation Z being much more open because of their constant need for instant gratification or new pictures on Instagram, while at the same time, being much more relaxed to Uber and the likes of the uberization of everything -- with a much bigger focus on sustainability -- are both huge drivers. I think we see them in numbers.
Christine: So, what's driving this resale boom exactly? Is it just purely Generation Z? What's the trend now? What's driving the momentum?
Max: I think we've seen a big boom of fast fashion, I think consumers have become smarter about the way they spend, and what they spend for. I think there's a bigger shift now towards quality products, towards luxury; but luxury is expensive. If you think about investing in a $1000, $2000 bag, I think people knowing that there is a resale market where they can sell products, knowing that they can maybe sell the same product in 6,12,18 months for 60, 70 percent feels much more comfortable versus spending three, four times and buying three, four bags which are much cheaper, but then (they’d) not being able to use it. So, it's really about equality of luxury products -- buying things you really want, buying maybe that bag with the summer color that you wouldn't buy otherwise because you'd rather go safe with the black bag but knowing that you can resell it. It's kind of making a smart investment in some sort of way.
credit: Vestiaire Collective
Christine: As the newly-appointed CEO of Vestiaire Collective, given your previous experience with ecommerce site Lazada, after having founded and built it up over the years, what are your plans to take this luxury resale platform to its next level of growth? What are you working on?
Max: What I actually fell in love with was the incredible engagement between the consumer and the products. I always joke in some sort of way -- I think you can get as much of an emotional connection between the consumer and product as you can get with girls and luxury fashion. I think the only equivalent would be boys and football, in some sort of way, and seeing that engagement kind of makes me want to expand the stuff that wasn’t from Lazada, the stuff that wasn’t from Alibaba around social commerce. When you have an incredible emotional connection with the product, with the brand, with the designer, with that one special bag, there's so much you can build around it: you can engage with consumers, you can engage with sellers, you can gain to find the whole experience, you can create a community about that. I thought that was really something I wanted to build on top of the experience that I've had with Lazada.
Christine: One of the things as CEO was to really restructure the entire commission system, to reduce costs for both buyers and sellers. What was the motivation behind it? What were some of the changes you made?
Max: As a platform, the most important part is that you encourage both buying and selling, and I think what is unique about this year is that we have a huge overlap of buyers and sellers. So, people who buy also sell, people who sell also buy. And, our goal is to make these transactions as effortless as possible, while at the same time, we are reminding people that we as a platform, we added value and the value is the authentication. A big question in second-hand is, are there fakes or are they authentic? At Vestiaire, over the last 10 years, we built that incredible expertise and know-how to give people the comfort that these bags are real. So, you know, the effort we put into that was very important to remind consumers. So, what we've done with the commission structure, we’ve reduced the commission structure to be competitive.
Christine: By how much?
credit: CNBC International
Max: On average, about five, six percent, and we shifted some of the burden from the sellers to the buyers by introducing authentication fee to make sure that they know that we are doing this work for them.
Christine: So, it's been two months since you made the changes. Have you seen any impact on sales?
Max: It's been fantastic. I think what we've really seen is: the lower price points and the very high price points have made the biggest changes on the commission structure. So, the lower price points would be anything below $100,150, and above would be about $7500 where we cap the commission.
Christine: So sales have picked up as a result?
Max: Yes, absolutely
Christine: By how much?
Max: I would say, on the lower end, sales have more than tripled. Before that, it was just not that competitive. Now, we see a huge amount of traction, and the reason behind that is that people don't just sell that five, six €700, €1000 bag, they have the rest of their closet. They have the Mango dress, the Sandro dress, a pair of shoes, which just don’t cost that expensive. But, when they do their wardrobe detox or whatever you want to call it, they want to sell several things at the same time. And we, as a platform, should provide the full offering of not only selling individual items but a bigger part of the wardrobe.
credit: CNBC International
Christine: At the moment as I understand, the product images are still being taken by the sellers themselves, which may not exactly be the best practice. How exactly do you unify and upgrade the experience?
Max: I think it's important for people to remember that we are a platform. We are a C2C platform, so buyers and sellers are individuals like you and me. And the core part of the C2C platform is that, as a seller, you are the one taking care of the pictures, you are the one taking care of the content with which you described the product. And by law, we have to show the products. As of today, we can't take stock pictures from websites of the brands. We have to take pictures of products in the current state. I think there's a lot of work for us to be done to install best practices here, the instructions we give to sellers about how the products can look. It's both in our interests and the sellers' interests to continuously improve the quality of the pictures, because we see the conversion rate. I think what we are targeting is really trying to figure out also (is how to) work with brands: how we can improve the quality, in what light do the luxury brands also want to see their products? It is really in their interests that their products are presented in the most glamorous way. It's been six, seven months I've been (at Vestiaire Collective); I think there are a lot of opportunities for us to improve that.
Christine: So, it has been a challenge?
Max: It’s absolutely challenging for the industry. It's one of many challenges. If everything would be easy, I wouldn't need to be there, and I'm super excited about that chance.
Christine: You used this term called “gamify” to really encourage sellers to do the right thing. What exactly are you doing in this area?
Max: I think gamification is not just (for) sellers, it's also for buyers. Gamification, for me, is that it shouldn't be us as a platform putting a burden on the sellers, saying, “You have to do this.” It's much more around using characteristics. And when I talk about gamification, I can give an example: the price. If you wanted to sell one of your old handbags, let's say you've had it for four or five years, you want to get the best price that you can possibly get, because all of us like making a bit of money. But, let's say, for example, we recommend you a slightly cheaper price and you say, “I don't know if I want that, I want to get €1500 more.” So, gamification is really making these kind of processes fun, guiding you through an experience, guiding you through decision-making, trying to explain to you that, making an effort with the pictures is important, giving you examples.
Christine: Sounds like a lot of work.
Max: Not really, if you do the product right, that's a bit of an art form, right? Let's say you order a Grab or Uber cab, you see the car on the map, it kind of makes it a bit more real, it gamifies the experience. Another example would be how often do you check your bank balance on your banking app? Apparently, people check it up to three, four times a day.
Max: So, that is basically making that experience fun.
Christine: So, it's really basically trying to entice buyers and sellers to get things done?
Max: Exactly. I think the ultimate goal is really to give you a sense of the value that sits in your wardrobe. If your wardrobe has clothes worth €1000, €2000, €10000, how can I give you the sense of that value, how can I give you the sense of how that value develops? Let's say you own that beautiful Fendi baguette bag which everyone had in the 1990s when Sex and the City was very hot; and now it has come back. They re-launched it in the beginning of this year. So, we saw a massive traction of old Fendi baguette bags. If I can communicate with you as a seller and say, now's the time to sell the products off. The prices increase 50, 60, a hundred percent, that's from me getting gamification.
Christine: You know your handbags well.
Max: It's my job (laughs).
Christine: You're not the only luxury resale platform on the planet. You have smaller rivals like Depop, like TheRealReal, like Vinted, not to mention Farfetch which is also launching its own resale platform as well. How do you differentiate Vestiaire Collective from the competition that's out there?
Max: I think Vestiaire Collective is very, very different from the names that you've mentioned because we're truly a C2C platform, which means our overall assortment is much bigger. I think we really think of ourselves as a fashion community. We really think about buyers who can be sellers, and sellers who can be buyers, and we really want to encourage the interaction between them and in the future, also with the brands. So, it's really around feeling as part of a community, where the joint goal is to drive circularity, the joint goal is to find the right owner for the right product and its different existence in the life cycle. So, the community feel is really what makes us different.
Christine: So, you don't see them really as rivals?
Max: I see them more as brother in arms.
Christine: Brother in arms?
Max: Or sisters in arms, because the business was built around circularity. It's really about the continuous movement of goods and (having) different owners at different times. We see ourselves as kind of evangelists of this kind of purchase behavior. For us to fight over what is still a very small piece of the pie, I think (that) would be the wrong kind of way to look at it. I see my rivals as the big fast fashion companies. I think that's really what we're doing. We're jointly on the same mission to educate people on buying second-hand, and selling second-hand has a huge impact on the planet.
Christine: In terms of capital-raising, you just led and completed a €40 million round of financing which will be going into new technology solutions. So, what new tech solutions are you working on to scale up the business and revolutionize luxury resale?
Max: The technology that we're focused on is really anchored around three big pillars. The first one is engagement: how do we engage the consumers, how do we engage the sellers? The second one is about community: it's really about how we can give people a voice, give brands a voice, give products a voice, and have people give each other advice, and really making the whole shopping experience much more social. And the third one is really around the ecosystem that which we're in: we really want to work much closer with the luxury brands. We want to get a much better understanding of what happens after the primary sale of a product -- how can we create the circularity? How can we work with brands and retailers to encourage that ongoing flow and circularity? And also building tech around these three pillars which are easy to use and not complicate it -- that's really coming back to the gamification idea.
credit: CNBC International
Christine: Speaking of tech, there is a lot of talk about blockchain technology, a lot of talk about AI. Is it something you're looking to deploy in your business?
Max: Absolutely. When you're thinking about increasing the complexity of your business, authentication is absolute key -- making sure the product is not fake. Our job as a technology company is to challenge ourselves by saying, “How can we make the process as a platform more efficient?” That is what technology is for, so blockchain is one of many potential solutions to continuously improve authentication in some sort of way.
Christine: So, give me an example. For instance, a Fendi bag, you would be able to trace the different levels of ownership throughout the years? Where and when this bag was bought?
Max: The example would be that our brand would have some sort of a digital footprint tied to this individual bag, whether blockchain or other sort of technology. And so, they share with us the technology, or we provide them the technology, or they provide us the technology of how we can identify as an additional safeguard that this bag is what the seller claims it is.
Christine: Any plans to use that new funding to secure to open new markets here in Asia?
Max: Absolutely, Asia is by far the fastest growing market that we have right now. We only launched last year, we're only present so far in Hong Kong, and in Singapore. We very recently opened new markets in Southeast Asia and other markets in China -- not with a local presence but as an ability for these customers to source or buy these products but not being able to sell yet. The fundings are absolutely there (for us) to continuously expand.
Christine: What new markets are you looking to open in Asia?
Max: Asia is a tough one, because very quickly you start asking the big C question, which is China. China is the most exciting market globally, especially luxury fashion with the elephant in the room. At the same time, we also know what a difficult market it is, having known Alibaba very well during my time at Lazada. There are very, very credible competitors out there, companies who are in many ways leading ecommerce, pioneering ecommerce globally. So, China is a very exciting market, but it's not an easy market. So I think one step at a time.
Christine: Apart from China, what new markets in Asia are you targeting?
Max: Southeast Asia is obviously the market which is I know the best. Japan is an amazing market -- it's a big supply market. In Japan, there's actually the biggest supply of second-hand luxury fashion globally. In our business, it's really around global arbitrage. For us, it's not really about Japan or China being individual markets by themselves, but some markets are more for buyers, and some markets are more for sellers. And our job is really (being) the only global resale platform which is connecting these buyers and sellers in our fashion community.
Christine: Any numbers you can give me about the sort of growth you're looking at in Asia?
Max: The good thing about a private company is that you remain private to the point where you're not private anymore. I think that our growth has been absolutely fantastic. We have eight million members on the website today, we have three million MAUs, or monthly active users on the platform. Our job is to increase the numbers, increase the transactions. But for me, like I said earlier, the beautiful thing about Vestiaire is that I really see it as a community first and foremost, versus ecommerce websites. So, for me, it's engagement the number one KPI which is relevant for me: it's about how I can create content that gets buyers excited, sellers excited, and at some point, get the brands excited to create that circularity. That's really the primary KPI that I look at the business. It's very different from Lazada. Lazada was always the GMV-driven business. But for me, the success over the next two, three years would be to build tools to engage the consumers and really drive that second-hand revolution.
credit: Vestiaire Collective
Christine: Vestiaire Collective has, to date, secured more than €116 million in terms of funding, in terms of financing and capital-raising. Are you hoping for the same outcome as Lazada which got bought, eventually, over by Alibaba?
Max: (Laughs) No, I don't want to sell the company for quite some time. It took me some time to find a new job in the first place, and I was pretty miserable not having a job. Like I mentioned to you before, I love building great companies, I think Vestiaire's my new true love, and I hope not to sell.
Christine: Vestiaire Collective is founded by two women in France, Fanny Moizant and Sophie Hersan. You're now the CEO. How closely do you work with them in terms of decision-making and the direction you're taking the company?
Max: I work every day with them. Sophie sits in the office next to me. Fanny is based in Hong Kong, but I interact with her on a daily basis. The way we work together is extremely complementary. I'm new to the luxury fashion business, I'm new to fashion, full-stop. I'll be very honest: selling mobile phones in Jakarta is a very different experience than selling a multi-thousand dollar Birkin bag to luxury consumers. So, for me, learning from them but at the same time, to bring my experience of what it means to scale a platform, what it means to set up the right tech, for me to bring in the right user and customer experience, is for us to work very closely together. I think what Vestiaire Collective is and what Sophie and Fanny have done, is they've built this incredible brand. They really put fashion DNA across everywhere in the business. In some sort of way, between them and us, it's a daily dance: what is the fashion part of the business, and what is the tech part. We don't want one side to get too strong, because it's really complementary. So, in some sort of way, it's the yin and the yang to make this company tick.
Christine: So the three of you always see eye to eye?
Max: No, absolutely not.
Christine: What do you disagree on?
Max: We probably disagree on many things that are small. I find and believe that disagreement is the greatest kind of driver of growth, because if we agree on everything, at some point, you don't challenge yourself in any given form. I'm very focused on challenging, even if only to play devil's advocate. And they should absolutely challenge me. I'm new to the business; I've a lot to learn in the industry. If we do everything that I want, the platform would be in horrible shape, very soon.
Christine: You have a lot of experience when it comes to ecommerce. You built up Lazada here in Asia. You founded it and built it up over the years. You left shortly after you sold off to Alibaba. How did you end up working at Vestiaire Collective?
Max: To be honest, it was a big coincidence. I left Lazada about a year ago, and I tried retirement for about two, three months. I think at some point, my wonderful wife couldn't take me anymore, (laughs) and wanted me to go back to work. And there was just a mutual introduction. The investors of Vestiaire Collective were looking for someone who could help the business get to the next stage, someone who had built a platform before. And so, it fitted together quite well with my personal ambition, I wanted to work again. I love ecommerce; I love the social commerce part.
Christine: Are you happy to put your earlier other experience to good use?
Max: Absolutely, yes. I think, for me, it was also a good choice. My wife is French, so moving to Paris worked extremely well. So, I think everyone is happy.
Christine: Your leadership style, has it changed over the years?
Max: It has.
Christine: Any valuable lessons you've learnt from your earlier years?
Max: I think I'm maybe a bit less impatient. I think as a young founder with Lazada, you are incredibly driven and I think, with experience and with some white hair, you start not to worry too fast. You let the process take place in some sort of way. You also give much more time to the team -- the way you communicate with the team, the way you coach the team. So for me, what I try to tell myself on a given basis, is the culture of the company, the way people work with each other, the way the team is set up, so I invest much more time than I probably did in the beginning with Lazada, and I think that's worked very well.
credit: Vestiaire Collective
Christine: And finally, Vestiaire Collective has about eight million members across 50 markets. As the newly appointed CEO of the luxury startup platform, how much could you scale up the business? What impact do you want to make?
Max: Our vision is, as always, very, very big. We want to make a difference. We want to fundamentally change the way you think about consumption, the way I think about consumption. It's really about changing people's mindset of how big an impact they could have with their daily actions. A lot of consumers worry about the planet and they worry about what it is that they can do. Many people have certain traits of behavior -- they don't try to use plastic bags, they don't try to drive too much. But the biggest impact they can actually have, and it is one of the biggest problems in the world, is retail and the way people consume. Everyone has a full closet, everyone knows there are a lot of clothes in their closet they don't wear, everyone should really be open to enter that circularity. There's no greater, more exciting goal that we, as a team, could possibly have.
Christine: Max, thank you so much for talking today.
Max: Thank you very much for taking the time.
All credits to CNBC International, Christine Tan and Vestiaire Collective.
Featured Image credit: CNBC International