Reselling swank is big business
Demand for lower-market ‘gateway’ items in decline, but market for pre-owned luxury items is booming — to the tune of $25B a year
CARLSBAD, CALIF.— Tucked away in a nondescript office park here, the luxury resale business Designer Vault recently opened a chic, chandeliered, appointment-only showroom to market what it claims to be the largest collection of vintage Chanel in America — more than 1,500 handbags and accessories worth an estimated $2 million (U.S.).
Less than five kilometres away, the headquarters for Fashionphile, which has boutiques in Beverly Hills and San Francisco, has floor-to-ceiling shelves and walk-in safes brimming with highend designer purses, wallets and jewelry by Louis Vuitton, Prada, Dior, Cartier and many others. The bustling operation and abundant inventory is prompting the company’s move to a new 30,000-squarefoot warehouse in July.
Welcome to the booming business of reselling swank.
While demand for lower-market, socalled “gateway” designer bags — Coach, Michael Kors, Kate Spade, Tory Burch, et al. — is in decline in the U.S., premium luxury resale is one of the fastest growing segments of the retail industry, generating from $16 billion to $25 billion a year, according to several studies.
Sales are being fuelled by a seemingly insatiable and recession-proof desire for exclusive leather goods, brands that retain much of their original value and the ease of online sales, consignment, authentication and global shipping.
“We’re bursting at the seams,” said Sarah Davis, 44, co-owner of Fashionphile, which has been in the pre-owned luxury business since 1999.
From an aspirational first-timer looking for the cache of a designer bag without the baggage of a full-retail price, to luxury houses unloading their freebie logo trinkets, to the brand-driven affluent consumer class in China, resale shoppers are increasingly turning to upscale e-commerce companies for their treasure hunts.
“People buy and sell for all sorts of reasons. Sellers, of course, are looking for cash, which many turn around and use on another bag,” said Christina Samoylov, the 27-year-old owner and founder of Designer Vault.
“People who buy vintage, where there’s only one anywhere, are making a statement. They’ve got a unique sense of style,” she said. “Today, people are more money-conscious and I think with all that’s going on (online), it’s much easier to afford luxury.”
Most goods for sale here are shipped to New York, San Francisco, Los Angeles and China. The owners of Designer Vault and Fashionphile estimated that as much as 95 per cent of their sales are conducted online.
“We ship out at least 300 bags a day,” said Fashionphile’s Davis.
Earlier this month, the company’s website touted its resale prowess: “This week’s payout: $707,083.29; Items paid this week: 1053.” In a press release, Fashionphile reported year-over-year growth of more than 50 per cent in 2015 and record sales of $3 million in February.
The company’s slogan, “Shop. Sell. Repeat,” is an indicator of the constant flow of goods that come through Fashionphile’s “procurement department,” which logs in about 120 items a day for consignment or resale, from Rolex watches to Balenciaga bags to one-of-akind Chanel surfboards.
On a recent Monday, an employee was inspecting a newly arrived lipstick-pink Hermes Birken bag. Among the most coveted luxury items on the market, a brand-new Birken from Fashionphile can sell for more than the retail price from Hermes itself.
“There’s demand and no supply,” Davis said. “These are limited-edition items, VIP only, wait-list only.”
Earlier this month, Fashionphile’s website displayed nearly two dozen Birken bags, ranging from $7,950 to $21,500, including a lipstick pink Epsom Candy Birken 35 for $12,500.
Over at Designer Vault’s newly minted Parisian-like salon, owner Samoylov displayed a sampling of rare, limited-edition Chanel pieces that at first glance looked more like novelty items. They included a black and gold Lucite jewelry box handbag, complete with makeup mirror ($5,000); an oversized, clear Plexiglas Chanel perfume bottle on a chain shoulder strap ($11,500); and a giant pearl that opened up as a small carrier, or minaudiere, on a chain ($25,000).
The products’ uniqueness factored into their value, as did their previous owners or wearers — Rihanna, Kim Kardashian, Miley Cyrus and others.
“When celebrities are seen with something on the red carpet or in a movie, it definitely raises the price,” Samoylov said.
The idiosyncratic Cyrus, for example, wore the perfume bottle bag, filling it with — what else? — Froot Loops.
“That was it,” said Samoylov, “everyone had to have it.”
“Today, people are more money-conscious and I think with all that’s going on (online), it’s much easier to afford luxury.” CHRISTINA SAMOYLOV OWNER AND FOUNDER OF DESIGNER VAULT
Both Samoylov and Davis seemed destined for the luxury business.
Samoylov was a self-described tomboy growing up in Ohio who also happened to have a cat named Oscar de la Renta.
Her merchandising degree from Los Angeles’ FIDM Fashion Institute isn’t what got her into resale. It was a pair of Prada boots, which her husband — whom she met while working as a personal shopper at Tiffany’s — had tossed into the trash.
She wound up selling them on eBay for $80 and “it kept spiralling and I kept consigning,” she said.
Davis, who is from South Pasadena, started one of the earliest resale sites by happenstance while still in law school. Early success was fleeting; she lost her domain name and had to start over with Fashionphile. She’d eventually bring on a CEO, who helped expand the company’s reach.
What these two entrepreneurial women didn’t plan on was becoming private investigators. Fraud in the luxury retail industry is so pervasive, and knock-offs have become so sophisticated, the woman have had to rely on a complex system of verification.
Each of them described in detail how their authentication teams check for holograms (on Chanel and select other brands), the leading — or white space — around the logo lettering, specific fonts, the thickness of lettering, ink boldness, crispness of printing, precise leather and lining colours, stitching, correct clasp or closure for that model, patina or sheen on the hardware, date codes and more.
“Here’s our graveyard,” Davis said, pointing to a small box of handbags determined to be fakes. They represented a fraction of her inventory.
These days, in the world of big-ticket items, having a stockpile of authentic goods is like money in the bank.
“We have something better than money,” Samoylov said. “We have product.”