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. Over a few drinks in a bar, Mitkute and Janauskas discussed the creation of a website where users could buy and sell their pre-loved fashion items with others.

Janauskas was initially skeptical that the idea would be successful, but after consulting a few female friends, the software expert agreed to take part in what was then a hobby project. After launch, Vinted started to grow organically with the co-founders having to do very little marketing.

Expansion plans for the platform began one night when Janauskas was coding while hosting a couch-surfing guest in his home. The guest, a German from Munich named Sophie Utikal, pressed Janauskas for more details about the business. After becoming passionate about the potential of Vinted, Utikal proposed that it expand into Germany. Utikal took care of the advertising and promotional efforts, while Janauskas registered a German domain name and worked on platform localization. The site now operates in Germany as Kleiderkreisel and, like its counterpart in Lithuania, grew organically through word-of-mouth.

Angel investment

After repeating the process in the Czech Republic, Vinted started to attract the attention of investors. One of these who left a lasting impression on Janauskas was Lithuanian angel investor Mantas Mikuckas. In an interview with Tech.eu, he noted that “We were really on the same page in terms of wanting to grow Vinted globally – and not just into a local/national platform for classifieds, which most other investors were interested in.”

After securing capital from Mikuckas, Vinted professionalized its activities, employing extra staff and paying more attention to social media and marketing. In January 2013, the company raised a further €5.2 million from Accel to fund its expansion efforts and product development. That same year, Mikuckas joined Vinted as its COO.

United States expansion and brush with bankruptcy

In 2015, Vinted announced a €25 million Series C funding round led by German media group Hubert Burda. This was used to expand into the United States and then into the United Kingdom. By the following year, the platform boasted 12 million users in 11 different countries.

Like many companies that expand too fast, too soon, Vinted burned through most of its cash and faced potential bankruptcy in 2016. Strategy consultant and eventual Vinted CEO Thomas Plantenga was brought in to steady the ship, with the company reducing its overseas presence and instead choosing to focus on the core markets of France and Germany.

Today, Vinted gives users the ability to buy, sell, and swap clothing or accessories in 15 countries. According to the company, it now has a community of 50 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 pays the buyer protection fee 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 charge £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.

Who owns Vinted?

Vinted’s ownership status is not publicly disclosed. However, various firms have taken equity stakes in the company across a total of seven funding rounds to date.

These include:

EQT Growth.
Accel.
Burda Principal Investments.
Insight Partners.
Lightspeed Venture Partners, and
Sprints Capital Management.

Reports also suggest that co-founder Milda Mitkute owns a significant share of the company.

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.