What: Vinted's transformation from EUR 20.4 million loss to EUR 17.8 million profit demonstrates the potential success of alternative business models in the challenging second-hand market.

Why it is important: The contrasting financial performances in the second-hand market highlight how strategic pricing and revenue diversification can create sustainable business models in a sector where traditional commission-based approaches have struggled.

The second-hand market is experiencing a significant shift in business model effectiveness, exemplified by Vinted's remarkable turnaround to achieve a EUR 17.8 million profit. The company's strategy of eliminating seller fees has proven successful, with revenues increasing 61% to EUR 596.3 million. This approach contrasts sharply with competitors who maintain traditional commission structures, many of whom continue to face profitability challenges. Vinted's success is built on alternative revenue streams, including advertising, shipping, and payment services, while maintaining a focus on marketplace growth. The company's valuation has increased by EUR 1.5 billion to EUR 5 billion over three years, reflecting market confidence in its model. This transformation comes as the broader industry sees increasing adoption, with competitors like eBay and Etsy adjusting their fee structures to compete, though many still struggle to achieve profitability despite growing consumer interest in sustainable and value-conscious shopping options.

IADS Notes: The second-hand market's current dynamics reflect a complex interplay between business model innovation and profitability challenges. Vinted's breakthrough to profitability in April 2024, achieving EUR 17.8 million in net profit with a 61% revenue increase, stands in stark contrast to other platforms' struggles, with analysts not expecting profits from companies like RealReal until 2028. This divergence in financial performance comes despite strong consumer adoption, as evidenced by December 2024 research showing 84% of shoppers planning second-hand purchases. The market's evolution is increasingly driven by both economic pressures and sustainability concerns, with November 2024 data showing 41% of consumers opting for repairs over new purchases. Vinted's success through its no-seller-fee model demonstrates how strategic pricing and revenue diversification through services like advertising and payments can create a sustainable business model in a market where traditional commission-based approaches have struggled to deliver profitability.

Second-hand fashion creates only third-rate profit