how-does-vinted-make-money

How Does Vinted Make Money? Vinted Business Model In A Nutshell

Vinted is an online shopping marketplace with a strong secondhand component. The company makes money via its buyer protection service. The buyer pays a fee to Vinted in exchange for services like customer support, insurance, and tracked shipping; Shipping costs; Wardrobe Spotlight (helping users boost the visibility of their items). And Bumping listed items.

Origin story

Vinted is an online community marketplace headquartered in Vilnius, Lithuania.

The platform was created by Milda Mitkute and Justas Janauskas in 2008 during the prototype testing of a website where women could trade clothing. The need for a prototype arose after Mitkute found herself with too many clothes while trying to move house.

After recruiting someone to help with advertising and promotions, the site was expanded into Germany where it now operates as Kleiderkreisel.

In 2010, Vinted became available the United States. Two years later, the company launched a mobile app on iOS and Android to partner with the desktop version.

Today, Vinted gives users the ability to buy, sell, and swap clothing or accessories in 12 countries. According to the company, it now has a community of 37 million men and women.

Vinted revenue generation

Vinted revenue generation used to be reliant on charging seller fees for every completed transaction.

However, the company has moved away from charging consumers to list or sell their clothing items. It now makes money in a few different ways that are explained below.

Buyer protection/service fee

The buyer protection fee is paid by the buyer to Vinted in exchange for services like customer support, insurance, and tracked shipping.

The fee is 5% of the item price (excluding taxes and postage cost) plus an additional fixed amount of $0.70.

It is important to note that this fee is a mandatory charge to protect the integrity of the Vinted payment process.

Shipping costs

The buyer also bears the cost of shipping, with prices dependent upon the size of the package and the type of courier service used.

Vinted passes the freight cost to the buyer and likely makes no money from the arrangement. However, some believe it turns a profit because it can ship in bulk and receive a discounted price from the courier.

Wardrobe Spotlight (UK)

Wardrobe Spotlight is a feature unique to Vinted UK, helping users boost the visibility of their items in the marketplace. For a full week, Vinted customers can have items from their wardrobe shown in dedicated spots in the news feed of other members. These members will also have easy access to the rest of the seller’s range of items.

This extra visibility is also targeted. In other words, it will be shown to members with similar body sizes and brand preferences. Vinted charges £6.95 for the service.

Bumping listed items

Similar to Wardrobe Spotlight, users can purchase a bumping service to get their items to appear in the news feed or search results of other members.

The bumping service occurs once a day for a predetermined number of days or until the item is sold. Vinted charges $0.95 per item for a three-day bump.

Key takeaways:

  • Vinted is an online community marketplace founded in Vilnius, Lithuania, in 2008. The idea for the platform came when founder Milda Mitkute needed to offload excess clothing during the process of moving house.
  • Vinted does not charge its users for listing or even selling their unwanted items. Instead, their revenue generation is dependent on buyers who must pay all of the transaction and shipping costs.
  • Vinted also makes money with its Wardrobe Spotlight service. For a relatively small fee, users can pay to have their listings made more visible in the news feeds or search results of buyers.

Connected Business Models

LVMH Business Model

lvmh-group-business-model
LVMH is a global luxury empire with over €46 billion in revenues for 2018 spanning across several industries: wines and spirits, fashion and leather goods, perfumes and cosmetics, watched and jewelry, and selective retailing. It comprises brands like Louis Vuitton, Christian Dior Couture, Fendi, Loro Piana, and many others. 

Kering Group Business Model

kering-business-model
Kering Group follows a multi-brand business model strategy, where the central holding helps the brands and Houses part of its portfolio to leverage on economies of scale while creating synergies among them. At the same time, those brands are run independently. Kering is today a global luxury brand which made over €15 billion in 2017 based on this multi-brand strategy. Within Kering group there are brands like Gucci, Bottega Veneta, Saint Laurent, and Puma. The two primary operating segments based on luxury and sport & lifestyle.

Fast Fashion Business Model

fast-fashion
Fash fashion has been a phenomenon that became popular in the late 1990s, early 2000s, as players like Zara and H&M took over the fashion industry by leveraging on shorter and shorter design-manufacturing-distribution cycles. Reducing these cycles from months to a few weeks. With just-in-time logistics, flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.

Zara epitomized that evolution, as part of the Inditex empire:

inditex-fast-fashion-empire
With over €25 billion in sales in 2017, the Spanish Fast Fashion Empire, Inditex, which comprises eight sister brands, has been able to grow over the years thanks to a strategy of expansion of its flagship stores in the exclusive locations around the globe. Its largest brand, Zara contributed to over 65% of the group revenue. The country that contributed the most to the fast-fashion Empire sales was Spain, with over 16% of its revenues.
zara-business-model
Zara is a brand part of the retail empire Inditex. Zara business model, with over €18 billion in sales in 2018 (comprising Zara Home), and an integrated retail format with quick sales cycles. Zara follows an integrated retail format where customers are free to move from physical to digital experience.

Ultra Fashion Business Model

ultra-fast-fashion
The Ultra Fashion business model is an evolution of fast fashion with a strong online twist. Indeed, where the fast-fashion retailer invests massively in logistics, warehousing, its costs are still skewed toward operating physical retail stores. While the ultra-fast fashion retailer mainly moves its operations online, thus focusing its cost centers toward logistics, warehousing, and a mobile-based digital presence.

ASOS Business Model

asos-business-model
ASOS is a British online fashion retailer founded in 2000 by Nick Robertson, Andrew Regan, Quentin Griffiths, and Deborah Thorpe. As an online fashion retailer, ASOS makes money by purchasing clothes from wholesalers and then selling them for a profit. This includes the sale of private label or own-brand products. ASOS further expanded on the fast fashion business model to create an ultra-fast fashion model driven by short sales cycles and online mobile e-commerce as main drivers.

Boohoo Business Model

boohoo-business-model
Boohoo – sometimes referred to as Boohoo.com – is an English online fashion retailer founded in 2006 by Mahmud Kamani and Carol Kane in the historic textile district of Manchester. Boohoo makes money by selling fashion items for more than the cost of manufacturing, advertising, marketing, and distributing them.

Slow Fashion Business Model

slow-fashion
Slow fashion is a movement in contraposition with fast fashion. Where in fast fashion it’s all about speed from design to manufacturing and distribution, in slow fashion instead quality and sustainability of the supply chain are the key elements.

Real-Time Retail Business Model

real-time-retail
Real-time retail involves the instantaneous collection, analysis, and distribution of data to give consumers an integrated and personalized shopping experience. This represents a strong new trend, as a further evolution of fast fashion first (who turned the design into manufacturing in a few weeks), ultra-fast fashion later (which further shortened the cycle of design-manufacturing). Real-time retail turns fashion trends into clothes collections in a few days cycle or a maximum of one week.

SHEIN Business Model

shein-business-model
SHEIN is an international B2C fast fashion eCommerce platform founded in 2008 by Chris Xu. The company improved on the ultra-fast fashion model by leveraging real-time retail, which quickly turned fashion trends in clothes’ collections through its strong digital presence and successful branding campaigns.

Read Next: LVMHKeringPradaFast FashionZaraInditexUltra-Fast FashionASOSBoohooSlow FashionReal-Time RetailSHEIN.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"