A startup working to bring offline brick-and-mortar consignment shops into the e-commerce age, Snobswap, has raised over a million dollars in seed funding to expand what it describes as its “luxury online mall.” While today, these mom-and-pop shops would have to set up their own online stores using a platform like Shopify, for example, or perhaps market their items via social media, Snobswap helps them get online as well as curate their inventory to find those items that will sell best.
Investors in the new round include Dingman Angels, NextLevel Management and other angels, including the founders of simplehuman. Prior investors, including Simplepitch, also participated. (The company had previously raised $700,000 in angel funding.)
When we first looked at Snobswap last year, the startup was still experimenting with a peer-to-peer model along with its retailer partnerships. But, explains co-founder and CEO Elise Whang, they soon realized that focusing on stores was a more scalable service.
This model also allows Snobswap to differentiate itself in a market where there are a number of competitors, ranging from those that sell your items for you to smaller eBay-like marketplaces where you sell directly to others on your own.
Competitors include names like Threadflip, ThredUP, The RealReal, Vaunte, Shop-Hers, , Bib + Tuck, Material Wrld, Poshmark, Tradesy, Fashionphile, Luxury Exchange, Portero, and others. It’s a lineup that’s screaming for consolidation. (And exits, as with the recent sale of Twice to eBay, or Walk In My Closet’s or Covetique‘s departure.) But by working with shops to list their items, Snobswap is offering a different type of service from most.
For shoppers, however, the result is the same – they have access to secondhand luxury goods at more affordable price points that if buying new. Popular brands on Snobswap include Chanel, Christian Louboutin, Cartier, Louis Vuitton, Céline, Tory Burch, Coach, and Alice & Olivia. And, through a recent partnership with personal loans provider Affirm, shoppers can choose to finance their purchases at checkout. That alone has increased sales by 30 to 40 percent this month, notes Whang.
Today, Snobswap features items from close to 100 shops on its site, and is planning on reaching 200 to 300 over the next 12 months. The market for its expansion is big, however – there are over 25,000 consignments stores in the U.S., 40 percent of which are addressable, based on Snobswap’s interest in high-end items. The company has claimed only 1 to 2 percent of this market today, which Whang characterizes as a “huge opportunity” for future growth.
“Nobody is solely focused on brick-and-mortars, as we are. They’re either like TheRealReal’s model – like an online consignment boutique…then there’s those like Tradesy, which is p2p. We’re in a space that’s unique and focusing on providing an online platform for brick-and-mortar boutiques,” says Whang.
“We’re confident that our model will create true value for our customers by connecting them to professional sellers – true experts in retail,” she adds. “And to give these businesses on Main Street a national platform to reach a wider audience…also provides them long-term business value.”
The company makes money by charging the shops a 10 percent commission on sales, and other fees including an initiation fee and fees associated with its marketing services. The shops, which come from over 55 cities across 20 U.S. states, are also carefully vetted to ensure they know how to authenticate luxury items and have quality customer service.
Since Snobswap moved away from the peer-to-peer model, its inventory has grown 13 times, and is now growing at 25 percent month-over-month. Order sizes are also up by around 50 percent, going from $200 to now $325-$450. The site has seen 1.5 million uniques, and repeat business is now accounting for 40 percent to 50 percent of its sales. And while Snobswap isn’t detailing revenue specifics, it says that it’s now growing at 20 percent to 25 percent month-over-month as well.
With the additional funds, the company may expand its small, nine-person team in D.C., and will continue to develop its iOS application, which is arriving soon.