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If you’re a fast-growing scale-ups in tech, e-commerce or digital media, you’ve probably heard of Emerce eDay Scale-up Café. At the trade show, promising scale-ups are given the opportunity to participate in meetings with top businesses, and gain advice from leaders. Silicon Canals was an official partner of the event and we had an interaction with one of the fastest growing scale-ups, The Next Closet, at the trade show.
Thalita Van Ogtrop is the founder of The Next Closet, which is an online marketplace for second-hand designer fashion products. The scaleup has now expanded its services to Belgium and is doing rather well. In an exclusive interaction, we asked the founder numerous queries to gain insight on what the company is all about, and what’s the next big thing for it.
What is The Next Closet?
As mentioned above, The Next Closet is a second-hand marketplace for designer fashion products. Ogtrop says that it can also be viewed as a sustainable marketplace where it’s easy to sell the items one doesn’t want anymore, online. Additionally, since the apparels, clothes and accessories being sold on the platform are mostly designer items, being second hand they can be bought at a considerably lower price.
How’s it going at the moment with The Next Closet?
As per the company’s founder, it was growing quarter over quarter, which we might add is no small feat for a scaleup. It apparently managed to exhibit 300 percent growth last year with rapid quarter over quarter growth and Ogtrop is positive that it will again hit the same growth percentage this year.
The Next Closet has secured two and a half million euros in funding. While it might be a modest amount, it seems that it will be enough for now to fulfil the company’s agenda of becoming the biggest scaleup in its niche of high-end designer clothes marketplace, in the Benelux. However, the company executive does say that for doing well in Europe and expanding to other countries will certainly require more capital.
Where does the scaleup make its money?
While hosting an online platform for sales and services might seem like an easy task, earning money from it is a completely different ballgame. The most common method is to extract a commission from every successful sale, but the percentage of this commission can make or mar a business. The Next Closet has decided that users of its service can take away up to 80 percent of the items they sell, with 20 percent being given to the scale-up as commission.
Is 20 percent commission a little bit too low, or is that the industry standard?
We thought that the 20 percent commission on every successfully sold product on The Next Closet is a tad bit low. However, asking about it, Ogtrop said that the company deliberately chose that margin. She says, “I know a few competitors that are focusing on high volume low margins that ask 5 percent. I have a few competitors that are even more high end with their brands and they ask 50 percent margins.”
The Next Closet also has another setting in place that enables it to earn a bit more by doing all the work required in selling a user’s stuff. One can choose the company to photograph, store and chip the product that is to be sold for 60 percent value of the sale, which means that the company gets a 40 percent commission from such users. However, as mentioned above, if users decide to do everything themselves, they can earn 80 percent of whatever is sold.
What other competitors The Next Closet has, in and beyond Europe?
Vinted from Lithuania and United Wardrobe from the Netherlands are some of the key competitors of The Next Closet. As per CrunchBase, Vinted has raised €106.1M till date while United Wardrobe has secured €1M. Naming some other foreign competitors, Ogtrop says TheRealReal and Tradesy are some of the big ones in the US while Vestiaire and Youbl are some of the big ones in France and Germany respectively. However, the Next Closet is said to have a ‘different approach’ than these competitors.
What’s your different approach?
As per Ogtrop, The Next Closet has the “best margins within the high-end space.” Additionally, the shipments don’t go through the company’s head office, which means quicker delivery. This is possible because the scaleup believes having a review system in place makes it safer and easier to sell products to each other. The company also performs a KYC check where a seller has to upload a copy of their passport. That is because of certain payment provider and especially for such marketplaces that require such a high level of authentication.
“If for whatever reason, something came to your door and it is fake, you can get your money back. And with a regular eBay or marketplace, you don’t have that safety check. And that’s what makes us different from a regular eBay marketplace.” says Ogtrop. When asked about why are Dutch marketplaces always so keen on safety, the scaleup founder says that it is probably a standard for buyers in Europe.
What’s next, for The Next Closet?
Currently, the company is focusing on becoming the biggest online marketplace for designer second-hand clothing and apparels in the Benelux. In our conversation, we discovered that there is also a chance that it will expand to other countries. Ogtrop says that “We have a few cities on our radar that have high e-commerce density luxury there and not big competitors, like in France and Germany, so we’d have to do something with that”.
Stay tuned to Silicon Canals for more updates in the tech startup world.