Luxury fashion resale is having a moment.
Thanks to companies like the California-based Fashionphile, consumers can buy $2,000 Chanel handbags and $800 Manolo Blahnik stilettos for a fraction of the price.
Founder and president Sarah Davis was just a law school student when she launched Fashionphile as an eBay store in 1999. Since then, the brand has grown into the largest reseller of luxury fashion and accessories in the U.S. with in-person locations, selling stations in 11 states, and a thriving ecommerce platform. Retail giant Neiman Marcus bought a minority stake in the company in 2019 and has integrated the resale platform in its product offerings. There are now six Fashionphile selling studios in Neiman Marcus stores where potential sellers can have their luxury items appraised by appointment.
With more than two decades in the luxury resale market, Davis has her finger on the pulse of what has become an industry valued at $24 billion. In a Real Talk stream event on Wednesday, the founder talked to Inc.'s Brit Morse about the secret behind Fashionphile's success and lessons she learned. Here are some highlights from the conversation.
Be good to your customer, and she'll tell her friends.
What if there's a niche audience for your product? Davis said she knew that would be the case for secondhand luxury handbags, accessories, and fashion. Davis said the brand at first didn't know how to direct its marketing efforts, other than spreading general awareness. But the solution ended up being right in front of them. Word of mouth was an effective way to grow Fashionphile's customer base.
"It's an odd, kind of very narrow niche. We thought the best way to market to our customer would be to be really good to our customer, and she'll tell her friends," said Davis.
Value your relationship with your selling customers.
The online experience of selling luxury items is a key component of Fashionphile's brand, as well as competitors like The RealReal, Poshmark, and Depop. Nearly 85 percent of Fashionphile's buying and selling is done online. Fashionphile buyers can book a virtual appointment online with a seller who will appraise their item, ask for an online quote, or book a white-glove pickup.
When it comes to drawing in customers for pre-owned luxury items, Davis said that part of the equation isn't too difficult. Most high-end luxury brands steer clear of discounts and sales. After all, scarcity is the main lure.
"I joke internally that it's not that hard to sell a Gucci bag for less than retail, or a pair of Chanel flats for less than retail. Some of these items don't discount ever. You're not going to find a Chanel sale," she said.
Which is why Davis said the brand values the customers who sell on the platform, whether they come in person to Fashionphile's brick-and-mortar selling stations or sell online. The loyalty of devoted sellers makes it possible for Fashionphile to keep a wide selection of items in stock. To accommodate the varying preferences of its sellers, Fashionphile offers selling stations for those who find it an easier option than photographing and shipping the items themselves.
"What's really hard is: How do you get more authentic brands, and branded items? How do you get more pre-owned Rolexes and Van Cleef necklaces and Cartier love bracelets and Chanel flats? Which is why it's important that we have a good relationship with our customer and make it as easy as possible," she said.
Heirloom pieces are now investment pieces.
Luxury handbags and fashion were once considered heirloom pieces. People would pass down vintage Rolex watches or Chanel handbags to children and grandchildren. But thanks to the luxury resale market, consumers are no longer holding on to items for posterity. They're seeing such high-value items as investment pieces.
"If I gave my daughter my old Chanel flap, she would sell that thing so fast," said Davis. "She's going to sell my Chanel flap and buy herself a Gucci fanny pack. I mean, let's be honest, we think about things differently now."
But some luxury items aren't meant to be resold. Davis offered up the example of a Rolex watch your father gave you as a graduation present. "Don't sell that to us. Keep that," she said.