How Does Vinted Make Money? Business Model of Vinted


How Does Vinted Make Money

Vinted is a popular online marketplace for the buying and selling of used clothing, housewares and accessories. The company has a few ways of generating revenue that are part of the circular economy.

Vinted primarily makes money by charging a service fee to its buyers on the platform. The company also makes money from advertising on its platform and charging sellers to promote their items.

Founded in 2008 by Milda Mitkute and Justas Janauskas in Vilnius, Lithuania, Vinted is known as an online marketplace for buying, selling, and swapping used clothing. It has been called the first tech unicorn of Lithuania.

The company started as a site for Lithuanian women to trade their clothes. It initially grew organically via word-of-mouth and without a business strategy. After nearly going bankrupt in 2016, the company hired strategy consultant Thomas Plantenga to adjust the business model. Plantenga is now CEO. The company currently boasts over 65 million users across 15 markets in North America and Europe.

What is Vinted & How Does It Work?

Vinted is a peer-to-peer marketplace operating in the C2C or circular economy. In a circular economy, goods move from consumer to consumer rather than moving from consumer to landfill. Vinted registered over 34 million downloads globally in 2021.[1] Though available in Canada and the United States, Vinted is currently most popular in Europe. In 2019, there were 180 million products live on the Vinted platform.[2]

Vinted is a marketplace that people use to buy and sell clothing, accessories, and electronics. Prospective sellers on the platform can download the app for free. Sellers are encouraged to add a profile picture and verify their accounts using Google or Facebook to prove that they’re a real person.

Once verified, sellers can add a short bio if they wish. They can select which carriers they would like buyers to be able to use for shipping sold items.

Sellers are allowed to sell items that fall into the following categories:

  • Clothing, footwear, and accessories
  • Children’s toys, furniture, and childcare equipment 
  • New cosmetics, beauty products, devices, and gadgets
  • Tech accessories, including headphones, smartwatches, and phone cases
  • Textiles and home accessories.
  • Entertainment, including video games, video games consoles and accessories, books, games, puzzles, music, and video

The platform prohibits certain items from sale, including counterfeit goods, samples, promotional items, medical supplies, and drugs.

Sellers must photograph and upload their items for sale separately under the correct category and brand. Sellers also must describe their item and its condition. Buyers are allowed to cancel and return the sale if the item is in worse condition than the listing has indicated.

Sellers set their own price for each item they list but Vinted recommends a percentage of the retail price based on item condition. Vinted recommends that sellers search the Vinted catalogue for comparable items before setting their prices. After setting the price, sellers choose a shipping package size based on weight:

  • Small (1 lb and under)
  • Medium (2 lbs and under)
  • Large (5 lb and under)

After setting a price and posting their items for sale, sellers can pay to bump their items or boost the visibility of their item catalogs. Sellers can also sell multiple items as a bundle for a set price.

Buyers can purchase items at the listed price. Buyers and sellers can also negotiate on price. Either buyer or seller can make an offer price to the other party.

One of the benefits of Vinted for eco-minded users is that using the app to buy and sell goods is a greener way to shop and keeps clothing out of landfills longer. The average American throws away 37 kg of clothing per year.[3] Sellers and buyers with a passion for environmental issues are attracted to platforms like Vinted to make money off their used items and buy new-to-them items at a lower price point.

Unlike other used goods marketplaces like Poshmark or Depop, sellers on Vinted do not pay a processing fee.

Vinted has faced scrutiny in recent years from European data protection authorities for its use of private data and for its data retention practices. In 2021, French consumer group UFC-Que Choisir filed a class-action lawsuit against the company for misleading business practices.[4] Vinted came under fire again in 2022 by Poland’s consumer authority, which charged the company with providing inadequate information in its terms and conditions.[5]

 

Business Model of Vinted

Vinted is an online marketplace that connects sellers and buyers. Like many marketplaces, it is free to post items. Vinted’s business model incentivizes buyers and sellers to join the app to sell or trade their used clothing, accessories, and household items.

The app takes care of payment processing and shipping for its users. Vinted also handles refunds. Users who join the app primarily to sell may be enticed to also buy goods at a lower price point than in a retail store.

Vinted primarily makes money via its Buyer Protection fee. Buyers are charged a fixed fee of $0.70 and an additional 5% of the item’s price.

Vinted’s Buyer Protection policy is meant to cover refunds if the item doesn’t arrive as described, arrives damaged, or doesn’t arrive at all. Vinted also makes money through advertising on its platform, and by offering sellers paid options to boost the visibility of their items. They can do this through two options for sellers to boost their product visibility: Closet Spotlight and Item Bump.

Vinted has an enticing value proposition for sellers. The business model of many second-hand goods apps like Poshmark or Depop is to charge the seller a fixed and variable fee on each sale, but Vinted charges the buyer instead. The ability to sell for free may make Vinted a more attractive marketplace for a seller. Having more sellers translates to more products available on the app, which in turn attracts buyers.

In July 2022, there were 1.5 million visits to Vinted.com, an 8.83% increase over the previous month. [6] That same month, Vinted’s visitors were 53% female and 47% male, and 30.43% of visitors were aged 25 to 34. [7]

Whereas eBay requires sellers to manage their own shipping, Vinted provides sellers with a prepaid shipping label to print. Selling on Vinted is marketed as an easy process for sellers.

Because Vinted is a C2C marketplace, any individual sales experience is only as positive as the buyers and sellers involved. One rude person could turn a buyer or seller off the platform. Other platforms have lost customers as they’ve become popular enough to draw inflated prices and dropshippers.

Dropshippers capitalize on clothing trends by finding similar items on cheap e-commerce platforms, marking up the pricing, and shipping the item directly to the buyer. Since many customers are drawn to resale apps and websites because they value ethical and ecological shopping, the encroachment of dropshippers threatens the brand promise of many of these sites. Some apps like Depop have responded by banning dropshippers from their platform.

While Vinted’s current low-price points are attractive to prospective buyers, it risks dilution of its brand if it becomes a popular place for dropshippers and wholesalers to sell. This could have a significant impact on revenue.

The online resale and consignment market is highly competitive, and Vinted faces competition from many businesses, including Facebook Marketplace, Tradesy, Rebag, Depop, thredUP, Poshmark, and The RealReal. Vinted has distinguished itself by being one of the only apps to charge a transaction fee to the buyer rather than the seller.

Vinted is a private company and does not release their financials. While the company posted annual revenue of $263 million in 2021, the company also likely has considerable expenses.[8] These include things like staffing, hosting, platform, and development expenses.

Due to the lack of data on Vinted’s financials, it is unclear how profitable Vinted’s business model is.

 

How Does Vinted Make Money?

Vinted makes money in three different ways. These include fixed and variable buyer’s fees, advertising on the platform, and promoted listings.

Buyer Protection Fees

Vinted primarily makes money via its Buyer Protection fee. Buyers are charged a fixed fee of $0.70 and an additional 5% of the item’s price. This is a unique monetization strategy among consumer marketplaces as most charge fees to the sellers.

However, charging a reasonable protection fee as a way to guarantee quality and satisfaction on a platform selling used goods likely increases buyer confidence. That could make some more likely to buy on the platform. The lack of seller fees might also attract some sellers to Vinted from other services that currently charge a considerable amount of money to sell.

This strategy also likely helps keep prices low on Vinted since sellers don’t need to include platform and seller fees in their pricing structure.

 

Closet Spotlight

Closet Spotlight boosts five items from a seller’s closet for seven days in a row in member newsfeed and catalog search results. At least two of the items will match members’ newsfeed preferences and catalog filters. The other three items will be the most favorited items in a seller’s closet.

Users who pay for Closet Spotlight can see weekly statistics on how many people saw and interacted with their items. A Closet Spotlight can also increase the number of follows the closet receives. Vinted estimates a three times higher probability that a follower will buy from the seller over a random closet. \

The Closet Spotlight fee is $6.95.

 

Item Bump

Sellers can pay to bump the visibility of one of their listed items for either three or seven days. There is no standard fee to bump items. The bump price will only be visible to the seller at time of payment. Sellers pay approximately $1 for a three-day bump.

This allows sellers to only bump their most expensive items rather than to spotlight their whole closet. This gives sellers more choice over how to deploy their ad spend.

 

Advertisements

Vinted offers local advertising to businesses in Vinted’s markets. It is unclear how much Vinted makes on third-party advertising. The company does not list how much they charge for each type of ad on their site or how they calculate the fees.

As Vinted attracts many local sellers and buyers, the site may be an attractive advertising partner for local companies.

 

Vinted Funding, Valuation & Revenue

Vinted is currently a private company whose financials are not publicly available. For that reason, it is also unclear what the company’s valuation currently is.

However, Vinted had raised $562.3 million in venture capital funding during 6 funding rounds. Their latest funding was raised on May 12, 2021, from a Series F round. Notable investors include Accel, Insight Partners, and Burda principal investments. [9]

The company’s last disclosed valuation was $1 billion to $1.1 billion when it raised money in 2019.[10] While the company has continued to raise money, it has not disclosed its valuation.

Vinted’s last reported revenue was $32.9 million in 2018. [11] Whether the company has increased their revenue since 2018 is unclear.

 

Is Vinted Profitable?

As Vinted is still in the midst of expanding their markets and increasing their revenue, it is likely the company is not yet profitable since it is prioritizing growth. After the company’s last funding round in 2021, it acquired Rebelle, one of its direct competitors.

The fact that the company only raised money to fund an acquisition and hasn’t raised money since suggests that it is generating enough revenue independently to extend its runway for a while after each funding round. It could also indicate that the company has become profitable, but that cannot be confirmed.

The acquisition of Rebelle is likely to boost the company’s revenue while reducing its need to compete via advertising which could increase Vinted’s profitability.

 

Conclusion

We hope this article has been helpful in understanding how Vinted makes money and what their business model is.

Vinted has made a name for itself in the fashion industry by offering users a unique experience while also providing them with opportunities to sell their own items.

With the popularity of social media platforms and secondhand marketplace sites, the industry is only going to get bigger as people become more comfortable with buying and selling used items online.

In the future, we hope that Vinted will continue to grow and expand its business model by exploring new opportunities in merchandising and data analysis. We think that the company is well-positioned to take advantage of these trends and make them work in its favor.

Thanks for reading!

Sources

  1. Statista
  2. TechCrunch
  3. BBC
  4. Connexion France
  5. European Data Protection Board
  6. Similar Web
  7. Similar Web
  8. AIMGroup
  9. Crunchbase
  10. CB Insights
  11. Craft