Unicorn company Vinted’s “V-shaped recovery” story, recovering from a monthly deficit of 100 million

V-shaped recovery

In 2016, Thomas Plantenga, hired to help second-hand apparel retailer Vinted out of trouble V-shaped recovery, decided to stake the company’s future on a TV commercial. When he made this $800,000 bet, the company was losing $1 million a month and had no cash left for a year. There wasn’t.

At the time, Plantenga had just been hired to save the eight-year-old Vinted. Founded in 2008 by a Lithuanian university student, the company has quickly grown into a platform for people from 10 countries to buy and sell used clothing. However, the company’s business, which provides free services to users, was in the red, with advertising barely covering server costs.

Unicorn company Vinted's “V-shaped recovery” story, recovering from a monthly deficit of 100 million

Vinted tried to introduce a 20% sales commission in 2014, but it sparked a user revolt and saw its traffic almost halve overnight. Dutch-born Plantenga had never been to Lithuania, but he accepted a five-week stint as a consultant after an offer from an investor he knew. But 18 months later, he was the company’s CEO.

“Vinted had the best retention and engagement I had ever seen,” says Plantenga, now 40, who closed most of his offices outside Lithuania and laid off half his staff. , tried to turn the company around by cutting fees by 75%.

However, the company’s troubles continued even after that. Plantenga’s final proposal to Vinted’s three co-founders was perhaps the most shocking. “I advised them to spend all their cash on commercials.”

V-shaped recovery: high-stakes bet

V-shaped recovery: Vinted had previously run a commercial in Germany, but it ended in failure. Still, the exhausted founders decided to take one last gamble. “It’s better to do something big and bold than die a slow death,” said one of the founders.

Unicorn company Vinted's “V-shaped recovery” story, recovering from a monthly deficit of 100 million

V-shaped recovery: In Vinted’s office at the time, a Soviet-era factory with rain dripping from the roof, Plantenga and his founders waited nervously for the numbers to come up. As soon as the commercial aired, the number of app downloads skyrocketed.

Seven years later, the company is one of Europe’s largest consumer marketplaces, with 100 million users worldwide and revenue topping $600 million (approximately 93 billion yen) in 2023. Last year it achieved its first full year of profitability, posting a profit of at least $20 million (approximately 3.1 billion yen). Vinted then raised $140 million (about 21.9 billion yen) at a valuation of $1.1 billion (about 172.5 billion yen) in 2019, becoming the first unicorn in the Baltic states.

Circumstances unique to Europe

Vinted’s fee cap is 8%, which is significantly lower than the 20% fee charged by competitors like Poshmark in the US. “Listing items can be uploaded in three clicks and there are no fees for sellers. They see the market from the seller’s perspective,” says Louise Deglise Fabre of research firm GlobalData.

Unicorn company Vinted's “V-shaped recovery” story, recovering from a monthly deficit of 100 million

Vinted also uses a flashy advertising campaign and a clever sign-up process to keep customers well stocked and entice customers to shop.

Another important point is the delivery service, which meets the unique demands of European cities where most homes do not have front porches. Vinted offers cheaper delivery to a general store near your home than delivery to your home. General stores in European cities are filled with trash bags full of used clothes with Vinted labels (Europe’s young, environmentally conscious customers don’t care about the appearance of the packaging).

Vinted’s long-term ambitions include online marketplace powerhouse eBay. GlobalData estimates that the company sold $11 billion worth of clothing last year. On the other hand, Vinted’s current annual sales of $600 million (approximately 94.1 billion yen) are less than half of Japan’s Mercari, which recorded sales of $1.1 billion (approximately 172.5 billion yen) last year.

Serial entrepreneur aiming for IPO

But Plantenga is eyeing an initial public offering (IPO) for Vinted. An IPO has been a lifelong dream for the serial entrepreneur, who launched his first business, a boat rental marketplace, in 2010.

The business, which he started with a classmate from Eindhoven University of Technology in the Netherlands, was not a huge success, but it later caught the attention of classified advertising company OLX, and Plantenga became head of emerging markets for OLX in Argentina. The company has grown its business in Kenya and Dubai, and has now become a classified site giant with sales of $1.6 billion (approximately 251 billion yen).

Unicorn company Vinted's “V-shaped recovery” story, recovering from a monthly deficit of 100 million

Plantenga later launched another classifieds site called Sell It with OLX co-founder and Vinted investor Fabrice Grinda, which they sold to a Spanish competitor in 2015. By then, he had earned a reputation as a young entrepreneur, and one day he received a call from Elodie Dupuis, an investor at Insight Partners, asking him to turn around Vinted, a company he had invested in. It was.

Before Plantenga joined, Vinted had raised $60 million from major VCs like Insight and Accel and launched a popular mobile app in 2012. However, its popularity did not translate into financial success. After Plantenga’s shock therapy, Vinted’s number of users and listings increased. However, the business was still on life support. Plantenga took over as CEO from his exhausted co-founders in November 2017, after working for a while without a contract. All of Vinted’s co-founders have now stepped back from the company.

Expansion into luxury apparel

The pandemic-fueled e-commerce boom has put Vinted in a battle with rival Etsy for the UK, Europe’s largest e-commerce market. The company has infiltrated this market by increasing its ad spend and tweaking its shipping options.

Plantenga continued to expand its business, expanding into Denmark and Finland. He uses mathematical formulas to plot which countries to target next, optimizing advertising and streamlining shipping to activate every user in each new location. It is said that

Unicorn company Vinted's “V-shaped recovery” story, recovering from a monthly deficit of 100 million

But for now, one market that doesn’t fit into his equation is the United States. The market is fragmented by eBay, Poshmark, and specialized marketplaces like GOAT for sneakerheads and Rebag for Birkin lovers.

Still, Plantenga did not stop trying, and once tried to enter the United States, but failed. Now, having put his ambitions for the U.S. market on hold, he is now aiming for a higher class of customers than Vinted, and is eager to capture a slice of the high-end apparel resale market. He recently spent $30 million to acquire German competitor Rebelle. Liber, which has strengths in high-end fashion, has its own authentication team to fight counterfeits.

“Vinted is a marketplace for ordinary clothes for ordinary people, but we can also rapidly grow our business in the luxury segment. Fashion items priced over 1,000 euros (approximately 1,60,000 yen) is currently the fastest growing segment,” Plantenga asserts.

However, his personal style does not look like that of a CEO of a luxury goods company. When Forbes visited Vinted’s headquarters in Vilnius, the capital of Lithuania, he showed us around the company wearing an old T-shirt with holes in it. What their office doesn’t have is a shelf for clothes.

“We’re a tech company, not an apparel company,” he said with a shrug for V-shaped recovery.

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