How used clothes are worth billions

Vinted, the Lithuanian app that lets users buy and sell pre-owned clothes and accessories, was valued this week at 3.5 billion euros ($4.2 billion), not far below more established European retailers such as Hugo Boss and Sports Direct owner Frasers Group.
The Vinted fundraising underlines the current vogue for vintage and secondhand apparel — including anything from bootcut jeans to Gucci loafers. The market has grown with this year’s listings of US resale platforms Poshmark Inc and ThredUp Inc. There’s a risk, though, that the trend for buying and selling used clothes ends up being a pandemic flash in the pan, one that will fizzle out alongside wearing sweatpants and gorging on unhealthy snacks once economies reopen. That could leave valuations looking as stretched as a “pre-loved” bandage dress.
Led by Swedish buyout group EQT, Vinted secured 250 million euros of investment. Neither revenue nor gross merchandise value (the value of goods sold) was disclosed. But assuming
2-2.5 billion euros of GMV in 2020, the company’s valuation would be comparable to Etsy and Poshmark. Although Vinted is loss-making overall, it has reached profitability in its mature markets. Poshmark and ThredUp both made net losses in their first quarter.
The multiples commanded by these secondhand marketplaces reflect partly the anticipated growth of the resale market. According to ThredUp, this could be worth $44 billion in 2029, overtaking the “fast fashion” sold by Zara, H&M and the like.
The driver behind this expected shift is younger
consumers. Generation Z shoppers are turning to so-called “recommerce” for a variety of reasons, including environmental ones.
The global fashion industry emits about the same quantity of greenhouse gases per year as the economies of France, Germany and the UK combined, according to McKinsey & Co. By 2030 it will need to cut emissions by about half, or it will miss the Paris Agreement’s goal of countries
limiting global warning to 1.5 degrees Celsius.

—Bloomberg