Thibaud Hug de Larauze, Co-founder and CEO, Back Market
Samina Virk, Chief Executive Officer, North America, Vestiaire Collective In conversation with: Phil Wahba, FORTUNE 


Brainstorm Tech 2023: The Rise Of Resale 

Conferences

Thibaud Hug de Larauze, Co-founder and CEO, Back Market
Samina Virk, Chief Executive Officer, North America, Vestiaire Collective, Phil Wahba, FORTUNE 

So sustainability is top of mind for consumers today as is saving money and many fast growing companies have emerged to serve those two dual needs in the retail market. Genz consumers particularly conscious of styles and saving are preparing are propelling the second hand clothing market in the US with forecasts calling it for it to double by 2026 to $82 billion. And the electronics especially refurbished Apple products are also highly coveted. So in our next discussion, we will hear from two leaders in the so called rec commerce space who are driving the circular economy forward. And it's those of you who are listening carefully to Al Gore's presentation and Wild pre presentation. Their fund has invested in both companies that are going to be represented on stage with us. So here to unpack this step forward in the circular economy are Tibu U Davos, the founder of Black Market and a certified B Corp company operating in renewed tech marketplace. And we also have Samina Vig, who's the US CEO of VIS Collective, which sells a lot of really great stuff secondhand. So guys please join me in welcoming them to the stage. All right. So now we're going to talk about fun stuff, like buying cool stuff on the internet. Um, so let me ask, I guess a semi cynical question. Do consumers really care about circularity all that much or is it just something that they can latch on to as they look for an excuse to shop and not feel bad about it? Why don't we start with you? So I would say that over the last few years, consumers have become more and more aware and I think we've all like actually become more aware of environmental impact in fashion. I think it's become a topic that's quite big. But I will say that from a fashion circularity point of view, it's still gaining traction. So, what we've found is sustainability is one of the reasons that people are shopping that year collective. But it also is, you know, it's one of the top five reasons. So we haven't gotten it to number one yet, but it's absolutely, it's much more of a deciding factor now than ever before. And how about you old Apple model that people want refurbished or are they really think? Ok, that's one less new product that Apple will have to manufacture and end up in a lamp cell eventually. So honestly, the first driver to conception when it comes to purchase refurbished I on back market is the price saving, they're saving 50% off, you know, like $1000 product is the main driver and then you've got the safety and the all the warranty that you get on top of the transaction. So the bed of the price discount press, the safety is the main driver then comes sustainability. But you know, it's, it's not the major driver. It's like a feel good effect that you have and I have to say and I have to moderate my comments a bit as well, like on younger generation, that's more important. So Genz, you know, those are real when it comes to sustainability. And so when we ask people like, why did you buy back market? And so it's price warranty and then sustainability. But when it's Genz, it's not 15% of the people that said it's because of sustainability, it's 45%. So it's way more. So the kids are all right as the old expression goes. So, so mean that question for you, lots of retailers have been trying to have been diving into retail on their own. How does that affect your business? So from our perspective, the circular fashion economy is a large one. So we think that we all need to be playing in secondhand fashion. And in fact, we the core of the collective's business model is a peer to peer marketplace for luxury and designer fashion. But we've also started working with different brands to help enable resale for them. And one of the reasons is that, you know, we've set up the logistics, we have the in place. It's a very easy transition. So in 2021 we started working with brands to do that and we worked with a number of brands like my Teresa, we just launched a new partnership with Chloe. And so, you know, for, you mentioned the numbers on the secondhand fashion market, there's no signs of slowing down. In fact, you know, I think it's over 100 billion globally, the resale market and it's continuing to grow. So I think there's room for all of us to play whether it's peer to peer marketplaces, brands, consignment, consignment stores as well. So I think the advantage there is, there's quite a bit that we can still all do to contribute. So I want to ask a bit about, you know, whether your businesses mirror the underlying markets. So obviously, resale is popular. But if at one point that means less demand for new products, then the fashion brands might produce fewer units and then there's less for you a little bit down the road. I mean, am I thinking this and same thing on your end? So am I thinking of thinking of this in the wrong way or? Well, I think that there's a lot of opportunity for how we sit alongside brands. So for example, you know, we've done a few different surveys with our consumers. We've worked pretty closely with BCG and we found that over 60% of our second hand buyers discovered a new brand or bought a brand for the first time and of that 62% over 50% of them would buy the brand again. So I think, you know, when you look at it that way, it's actually exposing brands to a much bigger audience. It is true though. I think there's a balance of secondhand and first hand, but they all contribute to one movement which is buying more intentionally and buying quality over quantity. And I think that, you know, when you look at the luxury and designer space, that is the core foundation of that segment. So I do think we can sit alongside it. And how about you? If the tech companies have a slower year, your product intros, does that down the line affect you? And it's actually what's happening right now there is, you know, decrease year on year on a new product, but this is the mission of black market. I'm not going to lie, you know, we want to, we have to get to net zero. And if you want to do that, then you have to lower the production of tech product because the production of tech product is responsible for 80% of the tech global emissions. This is not cloud computing, you know, it's the production of hardware product that creates co two emissions. So you want to bring that down, you need to extend the life of those products. This is the, this is the why we've created back market. And so the way we track our success is by tracking the number of customers choosing refurbished or used or renew. And we will want to grow that number to the maximum such as what happened in the car industry. Actually, 30 years ago, you know, 30 years ago, like only 10% of the car in the US and Europe were being sold used today. It's 75%. So the change really happened on that, on that industry and we're trying to make that change happen as fast as possible when it comes to tech and it needs to apply in fashion and any other industry because the co two emission comes from the production of the product itself and its transport, transportation too and and along the way, transportation, et cetera. But the biggest chunk, 80% is the production. Yeah, I'm, I'm a little surprised by that because you know, you, you talked about young people but often young people, sure they want a bargain but they also want the newest thing. So uh you know, our our tell us a little bit about your younger customers. Like what, what uh attention back to the price advantage, right? When you are like 18 years old or about to get, you know, like be a student, like you can't really afford to pay like 1000 $500 to get the last iphone 14, there is most likely not many chances that you'll get a good credit. You know, even if you've got the capital ones of this world in the US. So it's really being pragmatic, you know, you just can't afford it for the vast majority of them. So the price saving is, is, is still the number one driver, right? And, and, and the fact that we're also giving a discount if you're trading your old model, that makes the economic equation even more attractive to them. So this is the number one reason and it's perfectly fine, you know, I don't want people to be, oh, I'm going to be a sustainable activist just if we can change the world without having, you know, to make efforts, I mean, the least effort as possible, the better. And that's for everyone. I guess I wanna switch gears a little bit to how you make people want to go to your site because I won't name names. But there are some marketplaces out there as they've grown, have ended up diluting, you know, uh a marketplace that is so called upscale. You end up seeing a lot of things that are not upscale, dodgy sellers, etcetera, etcetera. And then you're sort of like, well, what's the difference between that marketplace and that marketplace and that marketplace? And it becomes harder to gauge you as well. You can't sell every single tech product under the sun. So, can you tell us a little bit about the parameters for you're looking to grow and you want critical mass. But at the same time, you can't be a gigantic garage there. So, what's your philosophy? So, you know, I think the core of our business model has stayed the same from when we launched, which, you know, we originally launched in Paris in 2009. And we've since grown globally and we're a managed peer to peer marketplace. So we're connecting buyers and sellers around the world. But we have sort of two checkpoints. One is as a platform, we cure anything that goes live to sell. So we actually have a team that looks at every submission looks for any flags and then approves what goes live. So I think that helps to maintain quality. And then after an item is sold, we authenticate luxury items. So we are doing authentication in person and we've, you know, really been focused on the designer and luxury space. And since we've started, you know, those four sort of core pillars that we've had have been sort of fashion taste is what we call that trust authentication curation, making sure that we're, it's a true managed marketplace and then community and sustainability. So I think, you know, we, we do want to grow and we are growing and the US is one of our newer and one of our fastest growing markets. But for us, there's a lot more room to grow in secondhand within the luxury and designer space. And in fact, you know, one of the things we started doing is we just being B Corp and sort of keeping an eye on sustainability. We've decided that we'd like to ban fast fashion from our platform. So we're actually taking steps to go through, through three ways where we um start removing any fast fashion or don't accept it to really make sure that we're not, we're keeping that balance of craftsmanship. Ok. And how about you? Are there areas of electronics that you're like? Yeah, no, we don't want that on our site. And how do you control that? So disposal to be sure that we don't want because the again, the game is to extend the life of the product as much as possible. Um And for now, the challenge of black market is more on the supply side and demand side. Everybody wants cheap tech products, affordable products, you know, with a one year warranty. And plus if you, if you want to add more, then the challenge is on categories like, you know, like vacuum cleaners, like home appliances, those supply networks, they don't really exist, you know, like a trading programs, they operate perfectly in the US and in Europe when it comes to smart phones, when it comes to, you know, leading programs from computers, etc, but it's not on every vertical. So we've created a platform, a trading platform that operates the same way. So you can trade in anything that you have and not using anymore. So if you're leaving your apartment moving to somewhere else, just do the 33 clicks things and you can get rid of anything and have the best price tag out of it. So right now, we focus on bringing that accessibility by taking the inventory that customers don't know what to do with because we know that there is going to be a demand downstream with this inventory. So this is really more about that. OK? And neither of you ever takes possession of what's sold on your site, right? Like that's not our core model is peer to peer market. OK? And we're a market list as well, but A B two C market list, it's only professional seller that can sell through because for us is the only way to make sure there is, you know, we found our and the warranty could be, I mean, OK, I want to open it up to questions if there are any, I'll keep going until somebody raises their hand. If so a micron will come to you. But I, one question I have for you is as you look at other resale sites, marketplaces, what are, what do you see some of the most common mistakes? Uh whether or not they're competitors of yours that you say? OK, well, that, that's a lesson for us that we don't need to learn, we can learn from you, see it from afar. I can start if you want for me. But it's really appropriate for a tech, maybe it applies to fashion as well. But it's, it's really like seeing short term versus middle and long term. So our job is to create trust is to make people like embrace the value prop shifting from buying new to buying refurbish. It is really like a big step. Then the experience you need to deliver out like, you know, the customer is going to be disappointed and speak badly about it. So if you think about short term, you might allow the supply of not good quality being listed on the platform and this is where it goes sideways because your customer are not happy with the customer experience that they have. So I've seen that on many marketplaces that I don't want to name and drop because you know, they're pretty stand out and everybody knows them. But this is why it's so important for us to curate and to have algorithms that create dynamically on the quality in order to always deliver on the customer experience. And you know, some some of the publicly traded ones have had a few bumpy patches. So as you build in the US, what are lessons? Well, I think, you know, actually it's very similar to the challenges that, that you just called out in electronics and fashion too, right? And you called out one of the biggest problems that we could have is if you have a marketplace. The benefit is that you have a breadth of inventory. So it enables discovery, but you can get some of that kind of extra stuff you don't want. So I think for us, the curation process ensures that in fashion, there's obviously the element of authentication and trust. And so that's where sort of two step curation plus authenticating luxury really comes into play. You know, and I think focusing on sort of luxury designer and not necessarily wanting to be everything for everybody, I think is also helping to focus our business model as we grow. Ok. Well, let's talk a bit about growth. I mean, both of you are relatively new names for American consumers, you're both French companies. So let's hear it for French entrepreneurship, you know, going against the stereotype, but it's, you know, so, so tell me, well, let's start with you. Where does growth come from for this collective? Well, I am not French but the company for us growth, we're really looking, I'm overseeing the US market and for us growth is really going to come, continue to expand in the US. So, you know, I mentioned before, we started in 2009, we've expanded in Europe, the Aipac region and then we launched in the US. And last year, we actually acquired one of our US competitors, Tracy. And so from our perspective, that was sort of a great way to accelerate our growth within the US market. And so for the next year, you know, that's mainly my focus. How do we increase that momentum that we've had and continue to increase our brand awareness among us customers and sort of grow this global community that we have and make sure we have more American buyers and sellers as part of that first, the challenge. So we created a company nine years ago in France. Uh We first expanded in Europe and then went straight to the US. But it's been five years now that we've been in around the US and the US is the number two market now. So it's been growing way more rapidly than, you know, many, many other markets we're operating in 18, including, you know, markets like Japan and South Korea. And so for us in the US, it's really about, you know, making sure we are giving the right set of threats, but it's the same everyone globe actually, it's not different than, or Japan people want a good price product that's reliable with the proper warranty and the right user experience. So this is what we do everywhere and this is what we keep on doing in the US, the same way as we do in Europe. OK. So, so to wrap things up, I'm going to ask you each, what do your sites not do yet that you want them to do? So, a customer experience question for you? Oh, that's a good one. What would I want them to do that. They're not doing well. I think that as we start to build up our sort of us market and we have more Americans buying and selling. I think we have an opportunity to curate even further. So we are curating right now, but just making sure that we're putting even more steps that the right product is coming with the right customer. So kind of the next step in personalization as we grow. And for me, it's back to mission of black market to extend the life of tech products. This is what we do. This is why we're here. So we've created the marketplace to sell and to buy trust, trust quality product, a refurbished product. We've also created the way for people to trade in whatever they have and they're not using anymore. So we are scaling that on many other categories in order to make it like, you know, three clicks away from wherever you are. And the last but not least is the repair. We are already working on a third market page which is a repair market space to adjust, enable people to fix their battery. You know, we all have a smartphone in this room if the battery is dead, like, you know, for now you're just getting rid of it because it's, it's not that easy to just replace it and fix it. So I want to make it super easy and convenient for people to just do that repair book and screen, like just repair product. This is the other way. Well, on that note, join me in saying Messi to semi and to and thank you for joining us. Thank you. Thank you very much.