From Governance to Platform Empire: Circularity’s Role in Creating Market Giants
How companies like Vinted are building brand-led circular platform ecosystems while others treat circularity as governance.
Un Espresso per favore!
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Quote of the Week:
We are contributing to a seismic shift in the second-hand fashion market, enabling more sustainable, socially-responsible shopping habits. CEO Vinted Thomas Plantenga
Let´s take a big sip of Ecosystem Espresso
From Governance to Platform Empire: Circularity’s Role in Creating Market Giants
How companies like #Vinted are building brand-led circular platform ecosystems while others treat circularity as governance.
In this EcosystemEspresso I want to lay out 3 core messages:
1| Multi-Life Ecosystems layering business model after business model without attention of first life incumbents
In this quick run down of history you find some highlights that the public mostly is unaware of. It is the highlights of a long journey that now based on the business model pivoting and Zeitgeist is thriving. Originating from Lithuania this circular platform is the leader in re-commerce in fashion in Europe, but is has become already so much more.
Traditional strategy development is more financial planning
Now it is the time of the year 2025 planning ist in full motion or more or less done. It is the "same procedure as every year". The focus is on the usual competitive environment, shares etc. Most strategy and research teams do not have circular platforms, DPP and resale as a service on the radar. Consequently these platforms found a white space in the beginning and could grow without attention. See this long story below:
It might be a left-fielder to you.
Seemingly out of nowhere circular platforms like Vinted poped up and attracted a lot of attention and traffic. Liquidity has been achieved some years ago. There was product market fit long time ago. Now Vinted has become a platform in the growth phase.
Not everything was going smoothly but now momentum is building. The performance is impressive. Even more so reminding ourselves that Vinted was already funded back in 2008. Back in 2017 the revenue was still only € 11 MM. In the last 6 years grew more than 50x.
In most corporates the journey of Vinted would have been too long.
“We were really on the same page in terms of wanting to grow Vinted globally – and not just into a local/national platform for classifieds, which most other investors were interested in.” Angel investor Mantas Mikuckas
Phase 1: Foundation and Launch (2008-2014)
From founding until the first round of funding it tool 4 years. Early in the brand´s history community was essential. It included a community aspect, allowing users to connect and share fashion tips. In a C2C set up this is a logic step.
Phase 2: Expansion and Friction Removal (2015-2019)
The dominance of smart phones was the foundation becoming a strong app based platform. Geo-expansion was the obvious next step.
What is special is shipping and buying protection. A platform thrives on trust and removing frictions. The perceived risk of not getting the quality you click on is super high. These features were the foundation of moving from #Launch into #Growth:
Phase 3: Innovation and Expansion (2020-Present)
Like many digital businesses Covid was an accelerator to the Vinted growth. Innovations followed and a subscription mode was introduced. Vinted has acquired 5 organizations. Their most recent acquisition was Trendsales on Mar 5, 2024.
The investors had to be patient for a long time, but Vinted ultimately delivered. Vinted has raised a total of $616.7M in funding over 9 rounds. Their latest funding was raised on Sep 25, 2024 from a Secondary Market round.
Financial details you can find on the corporate website. Today, more than 2,000 people work from our HQ in Lithuania and offices across Europe. Our team spans countries and cultural backgrounds, just like our members.
Vinted the strong brand
The company’s slogan is “Don’t wear it? Sell it!” Vinted is a powerful brand that is strategically focused on having more people more often provide clothing and other items they do not need any more.
Purpose-led:
The purpose is providing the space to operate in. It is desirable and can support expansion, as the circular economy (the 5R) is also all about #reuse!
Value creation unit - preloved clothing
Core Interaction focused to create safe matching and transactions. Still today although there are so many more categories than clothing, apparel is the focus. The share of people transacting used clothing is still too small. Competition is focused on consumer electronics. It would not have been differentiating to move away from this positioning.
Nevertheless, having so many engaged users is allowing to create the
The expansion still has so much runway that actually getting more people to try is still the strategic focus. While the new categories support retention, the focus on getting people started is driving awareness and activation. Community is for engagement.
Communication is helping understand the simple steps. The UX is supporting a few step listing.
The app scores extremely high with 4,8 on Apple App Store.
Platform strength vs. linear business models: assortment and choice
Vinted provides authentification for luxury products.
#VintedGO - removing friction for buyers and sellers
Vined has made strategic investments and acquisitions for pick up points where people can drop and pick up their products.
Vinted is actively recruiting partner sites for VintedGo.
The benefit is not only direct revenue, but also customer traffic for partners. And even more importantly for Vinted a lot of visibility and reminders. Customers store products in their cupboards while always wearing the same items. The trigger of visibility can get customers to deliver more and more often supply!
In addition to that these points become access points for ecosystem partners and can create additional income and higher operational efficiency.
Vinted Wallet - making transactions secure.
The payment service is provided by a "PSP". Required in online marketplaces. Vinted is doing a good job branding this whitelable offering.
Vinted Wallet: how it works
Vinted Wallet is a secure e-wallet where the seller:
You don’t need to use Vinted Wallet to buy on Vinted. We offer other payment methods too. You also cannot top it up — it’s only there to store earnings.
Source: Vinted
2| Monetizing differently
Platform Monetization - demand side focus
As of 2017 with the arrival of the new CEO Thomas P. Vinted made a bold shift. eBay’s take rate generally ranges between 10% to 15% now, depending on the category of the item sold. This was monetising the supply side. A common platform strategy.
The monetization was moving over to the demand side. Back then eBay was higher. Vinted lowered the take rate dramatically (a quarter). This should lower the barrier to upload and create more and more demand while making the platform appear safe.
The app is putting the monetization front and center. It is creating a lot of demand and loads the brand with safety and security associations.
A very simple UX with very few steps invites users in to simply upload their items.
Very prominently the buyer protection is part of the communication instilling the trust needed to have customers return and make referrals.
Monetizing service steps:
3| Businesses are blind on the circular eye
Circularity is still not the major focus of business around. They are still busy reporting ESG progress. This is important too, but it is less attractive to leaders in charge of the overall business. They seek to grow toppling and bottom line.
ESG appears to be more a cost factor for those. The low hanging fruit have been harvested and now it is getting harder.
There is a structural challenges in most companies. The roles are not yet established to see business opportunities in this field.
Years ago Chief Sustainability and ESG Officer roles were introduced. They led to a organisational responsibility that was mainly in charge of the bigger picture. More recently CSOs have evolved from public relations figures to strategic leaders responsible for ESG performance. CSOs in the financial services industry, for example, now play a crucial role in integrating sustainability across the business and managing capital allocation for ESG projects. Still the focus is around the items below.
The CSO’s Focus Areas:
Change without a new role will not happen - Chief Circularity Officer
Most of the time these people are corporate communication experts. They might not have operational experience and not in the center of today's business model. Hence, their remit and impact is limited to the ESG agenda.
The CCO’s Focus:
I really like this overview from evolvable. It shows the difference vs. the CSO very clearly. This is very much about business model innovation and not a general corporate angle. It is about business:
Chief Circularity Officer: Key Responsibilities
The CCO’s responsibilities are comprehensive and impact every aspect of the organization:
There are first companies that install circularity teams, this will ensure that business can move beyond governance. Ikea, HP are just two of those.
There are great career and personal development opportunities for both current CSOs moving closer into business and digital platform experts following their purpose to create more impact. I would be the latter and eager to enable commitment and acceleration towards the circular frontier.
Outlook to a brand-led circular platform ecosystem world
In Summary:
Join the circular platform revolution: one platform and ecosystem at a time.
Have a great start into the week!
Come back next week please.
Alex