Following this week’s news that resale specialists Cudoni and Dotte have collapsed, Louise Deglise-Favre, Apparel Analyst at GlobalData, said, “The collapse of luxury accessories resale specialist Cudoni – the day after childrenswear resale platform Dotte permanently closed its marketplace – should come as a warning sign to other resale platforms. While GlobalData predicts that the global apparel resale market will continue to thrive in the coming years, growing 85.5% between 2022 and 2026 to reach $338.3bn, resale companies must prioritise finding profitable revenue streams to continue competing within the market.”
Resale platforms mostly derive revenue through seller and buyer fees, however this is usually not enough to cover the cost of their operations. Many rely on investment, and the current economic slowdown and inflationary climate have made investors more cautious, making it harder for smaller companies, such as Cudoni and Dotte, to secure funding, with both citing the inability to raise further capital as a major factor in their failures.
“Even resale giant Vinted is not immune to profitability concerns. In 2021, Vinted reported losses of €118m, five times more than the previous year despite a 65% increase in revenue. This was mainly due to a sharp increase in marketing spend to drive awareness and accelerate growth, however it has since taken active steps to diversify its revenues to support this, allowing sellers to make listings more visible through “bumps” and “closet spotlights” for additional fees, as well as allowing third-party companies to advertise on its app. While there remains doubt over how profitable resale can ever be, companies must take note from Vinted and find ways of generating fresh revenue, or risk falling out of this booming market,” Deglise-Favre concludes.
