Vinted Business Model | How Does Vinted Make Money?

Vinted is an e-commerce platform that integrates a strong resale component into its e-commerce functionality. The company generates profits through its buyer protection program. 

Vinted business model is based on the revenue from buyers for services such as customer assistance, insurance, and tracking; shipping charges; Wardrobe Spotlight (which can help enhance the visibility of items). 

Vinted offers pre-owned apparel on its online marketplace. Vinted allows users to list an item of clothing that they no longer wear (for whatever reason) using a profile, images, and descriptions and then wait for prospective buyers to find it. 

You may be able to have another Vinted user buy your apparel and pay for shipping when they are willing to pay the amount you’ve established. 

Vinted provides the seller with a pre-paid shipping label, simplifying the shipping process. The seller retains full ownership of the dress after the sale, except for a nominal fee to Vinted.

What is Vinted?

Vinted is an online marketplace where private individuals can purchase, sell, and trade fashion items. The company specializes in pre-owned clothing for women, men, and children.

Vinted Business Model

Vinted makes money by combining set fees and variable fees with advertising options for sellers (called Wardrobe Spotlight and Item Bump, respectively).

Vinted, founded in 2008 by two entrepreneurs from Lithuania, has become a big name in the fashion industry. The company serves over 25 million consumers worldwide and has received more than $562 million in venture capital funding.

How Does Vinted Work?

Vinted is a peer-to-peer (P2P) mobile social marketplace for pre-owned apparel. Vinted, one of the most successful startups in the Baltic republics, allows secondhand to become the primary choice for global consumers.

Vinted offers a marketplace for buyers, sellers, and exchangers of clothing. Vinted’s primary concentration, as the name implies, is on vintage and/or pre-owned apparel.

There are three categories for users to choose from: Women, Men, and Children. You can sell the following items:

  • Dresses, lingerie, skirts, jeans, and sweaters are all acceptable.
  • Footwear includes sandals, heels, boots, and flip-flops.
  • Handbags, fanny packs, backpacks, and shoulder bags, for example
  • An accessory can be anything from watches to sunglasses to belts to jewelry to hats.
  • Beauty products include perfume, hair and nail care, and makeup.

If a person discovers an item they want and the pricing is acceptable, they can simply purchase it. Vinted will then issue a pre-paid shipping label to the seller, making it simple to ship it.

A marketplace operator, Vinted also handles payments and refunds, ensuring that buyers receive quality products on time.

How Does Vinted Make Money?

Vinted makes money by charging sellers a commission of between $1 and $5 (or 19 percent ) for each item of clothes successfully sold through its marketplace. Revenues were approximately $5 million last year. 

Vinted now boasts 12 million users, with an additional 11,000 joining daily. Additionally, the marketplace currently boasts 22.3 million items, with 90 new items added every minute. 

Additionally, the corporation claims that an item is sold on the website every 49 seconds.

Vinted earns money by charging their customers a set or variable rate for each successful transaction they handle through their network.

Payment processing and label creation are examples of fixed costs that are covered by the predetermined amount. A fixed amount of $0.7 is attached to each transaction.

Vinted Business Model

There is also a variable rate of 5%. In addition to the article’s price, the buyer must also pay a purchase charge of $5.

Internet marketplaces typically charge sellers rather than customers. Vinted is completely free to use!

Many other marketplaces, such as eBay, Poshmark, and ThredUp, charge sellers for facilitating transactions.

Additionally, Vinted has two additional revenue streams:

  • Spotlight on the wardrobe
  • Adding new items to the list

Wardrobe Spotlight is a premium tool that highlights a seller’s wardrobe (a list of things they sell) to other customers who share similar fashion interests.

The buyer will see five listings from the seller’s wardrobe in specific areas in their newsfeed for seven days. The seller’s most popular items will appear in three items, and the buyer’s newsfeed preferences will appear in two items.

A premium tool called Item Bump allows merchants to increase visibility for their products, thus speeding up the selling process. 

An “update” exposes a listing to a larger number of potential buyers in their feed and search results for seven days.

Bumping an item costs between $0.5 and $5, depending on the category, its pricing, and the volume of products currently being bumped on the Vinted platform.

It makes money from several different sources, which are detailed below.

Buyer protection fee/service fee

Buyer protection charges are paid to Vinted in exchange for customer assistance, insurance, and tracking services.

The fee is 5% of the item’s price (excluding taxes and shipping), plus $0.70.

The Vinted payment process must remain reliable as a result of this fee.

Wardrobe Spotlight (UK)

The Wardrobe Spotlight service is an exclusive Vinted UK feature that allows consumers to raise their visibility on the marketplace. 

Vinted clients can have items from their wardrobe featured in specific areas in other members’ news feeds for an entire week. 

The rest of the seller’s inventory will also be accessible to these members.

It is also targeted to increase visibility. In other words, it will be displayed to members who have similar body types and brand preferences. Vinted charges a service fee of £6.95.

Shipping costs

Furthermore, the buyer is responsible for shipping costs, which may vary depending on the size of the shipment and the type of delivery service used.

Vinted Business Model

The customer is charged for freight by Vinted, and Vinted is unlikely to profit from the contract. Some claim that it makes money because it can send in bulk and obtain a cheaper courier rate.

Bumping listed items

Boost service is also available for Wardrobe Spotlight so that things will appear in other members’ news feeds.

Bumping is available once daily for a specified number of days or until the item sells. Vinted costs $0.95 per item after a three-day price increase.

What is the Funding and Valuation of  Vinted?

The Crunchbase website shows that Vinted has raised $562.3 million in venture capital funding over six rounds.

Vinted raised €250 million in its most recent Series F financing in May 2021, with a valuation of over $4.2 billion.

Vinted has received funding from notable investors such as Lightspeed Venture Partners, Accel Partners, Insight Partners, Sprint Capital, and Burda Principal Investments.

What is the Revenue of Vinted?

Vinted does not disclose its sales metrics to the general public, just like every other venture-backed company. 

The company revealed its intention to sell over 1.3 billion dollars of clothing across 11 markets after its Series E funding round. A fee of 3% to 8% would generate between 40 and 100 million euros per year.

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Success Story of Vinted

The company Vinted was founded in Vilnius, Lithuania, in 2008 by Milda Mitkute and Justas Jankauskas. Vinted began with a conversation Jankauskas had with a friend at a pub, as is the case with any worthwhile endeavor.

There was talk about launching a website that offered people a chance to trade gently used clothing. 

Mitkute (who would become a co-founder later on) and Janauskas developed a prototype shortly after that.

Vinted Business Model

The platform’s user engagement in its forum-style community grew organically without any marketing efforts on the part of the partners.

He was coding on his project one night when Sophie Utikal, a couch surfer from Munich, asked him what he was doing. Utikal was so inspired by his explanation that she wished to introduce it to Germany.

Jankauskas promised to handle all technical work (he is a software engineer by trade), while Utikal would manage all advertising initiatives.

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Today, Vinted operates in Germany under the brand name Kleiderkreisel, which is one of the company’s most profitable markets. As with Lithuania, the platform grew mostly through word of mouth.

The Czech Republic and the United Kingdom have both adopted this concept. 

The success attracted considerable attention to the firm, which eventually received funding from Lithuanian angel investor Mantas Mikuckas. Mikuckas joined the company as COO shortly after that in 2013.

The company had grown from 10,000 users to over 12 million within a year. It listed 22 million goods across 11 countries where it operated. The firm has expanded to the U.S. by the end of 2015, helped by a €25 million fundraising round.

Vinted’s journey has not been without setbacks, despite those encouraging growth figures. Kleiderkreisel users exploded in protest against the company’s fee-based marketing model in the early 2010s (sales on the platform were free of charge previously, and revenue was generated through ads).

The company was facing bankruptcy by 2016 due to a lack of cash. The company hired Thomas Plantenga to analyze the company’s risk and come up with a mitigation plan.

Vinted closed operations in San Francisco, London, Munich, and Paris, cutting its headcount from 240 to 150. The corporation also chose to concentrate on France and Germany, two important markets.

Vinted’s turnaround was a remarkable success, allowing the company to raise further funds in two subsequent investment rounds. 

In terms of Plantenga, he was named the company’s new CEO in 2017 and has been responsible for the company’s strategic direction to date.

Key Takeaways From Vinted Business Model

Vinted, an online community marketplace based in Vilnius, Lithuania, was launched in 2008. Milda Mitkute came up with the idea for the platform while she was in the process of relocating.

Vinted does not charge its users to advertise their unwanted products or to sell them. Buyers are responsible for covering all transaction and delivery fees.

Vinted also generates revenue through its Wardrobe Spotlight service. Minimal fee users can pay to have their listings appear prominently in search results or buyers’ news feeds.

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