Posted on Jan 13, 2023, 8am
After platforms such as Vinted and Vestiaire Collective made it possible to democratize second-hand shopping among the general public, it is the turn of BtoB startups in the sector to focus on brands. Objective: support them in the transition to the circular economy.
Among them, the start-up Lizee announces a funding round of 9 million euros (including 2 million in debt) with Lyra Ventures, MAIF Impact, Speedinvest and Circular Innovation Fund (joint venture between Cycle Capital and Demeter). Historic investors Alante and Ring are also back in the pot.
The start-up develops white-label software to allow fashion, sports and DIY brands to lease their products or sell them second-hand. “An object will have several economic models, the whole technical challenge behind it is to follow this product, who rented it, who bought it and make predictions”, explains Anna Balez, co-founder of Lizeewhose software also equips logisticians and warehouse operators.
An unexplored sector
The lion’s share of its customers is mainly located in sports (Decathlon, Go Sport, etc.) everyday clothes.
For brands, the stakes are high: attracting and retaining a younger audience, with less purchasing power, sensitive to ecology and new uses. Without forgetting the need to embrace a growing sector. The second-hand market is expected to grow 15% to 20% a year over the next five years, notes the Boston Consulting Group. On usage, the Natixis Payments observatory notes that the number of purchases of second-hand clothes increased by 140% in 2021 compared to 2019.
“Brands hate seeing their products on Vinted,” adds Anna Balez, who, with her software, offers new customer services at second-hand prices. Same observation with fame, a nugget whose focus, with software also in white label, is the resale of used cars. “By relying heavily on experience, the brand is not afraid to do harm and the end customer has access to a better quality service,” says Aymeric Déchin, co-founder of Faume.
The start-up has just raised 7 million euros with Daphni (2 million debts), and is closing partnerships with French clothing reconditioning warehouses (quality control, ironing, sewing, photo shoots, etc.). So far, the young offspring supports around thirty brands, mainly in fashion.
Difficult to generate margins
In the circular economy, margins are hard to come by, which is why most start-ups target mid- and high-end brands (Isabel Marant, Sandro, The Kooples, Maje, etc.) pasta. Reconditioning, in particular, comes at a cost. “When you sell new products, you have a significant amount of inventory. However, we have a multiplicity of operations for the same product resold twice cheaper”, explains the businessman.
Unlike the BtoC, which is already crowded, the BtoB is still little discussed. “It is a market where brands imitate each other a lot: the few key brands will attract most of the market”, analyzes Shabir Vasram, partner at Daphni.
Avoid the green wash
Brands, therefore, offer themselves a more virtuous image, but for start-ups, the difficulty is to win new customers without being used as a greenwashing tool. “It’s a threat that clearly exists. One player, for example, wanted the post-resale voucher for a product used by a customer to be valid for just one month, leading to overconsumption. We put our veto”, rewinds Thibaut Boiziau, co-founder of Freepry, which targets both small independent stores and big brands like Galeries Lafayette or Printemps.
Unlike its competitors, already present in Europe, the start-up is first looking to break into French territory and expand its service offer and should soon offer the repackaging of products thanks to partners.
On the other side of the Atlantic, two startups managed to emerge and gain scale, such as Trove sur l’occasion, financed by US$ 122 million, or the unicorn Rent the Runway. The latter, specializing in the BtoC rental of evening dresses, is one of the rare start-ups to manage to democratize this use in fashion.
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