Fashionphile’s Ben Hemminger: ‘We don’t desire to be in every single channel’

Hemminger told Glossy that the company has been profitable since its inception, and resale’s growing popularity has undoubtedly helped. According to Statista, the global secondhand market will be worth at least $100 billion by 2026.

With new-to-market competitors cashing in on consumers’ increased demand for resale accessories and apparel, Fashionphile is now shifting its focus to acquire new customers and maintain relevancy in the marketplace. Last year, the company announced the acquisition of Canadian-based resale company LXRandCo, Inc., and in March, it purchased the assets of wholesale distributor Two Authenticators Inc. Both moves signal Fashionphile’s new focus on B2B wholesale.

On this week’s episode of the Glossy Podcast, Ben Hemminger discusses how Fashionphile is evolving its business model to compete with new competitors and what the recent acquisitions mean for the company’s future.

Excerpts from the discussion, below, have been lightly edited for clarity. 

Exploring wholesale
“We value moving quickly because the margins aren’t as big for resale as they are for the primary market. In order to make the dollars that it takes to run a business work, you have to move that money over and over throughout the year. You can’t just hold one item for the whole year, so we try and find ways to move it. … What we found is that we have more opportunity to buy than we have to move product quickly. That was the problem to solve in recent years. The reason we’re in that position is, in part, because of the business model: We’re able to buy up front, and we have a 25-year legacy, which helps a lot. And we also offer a lot of services no one else offers. … We’re trying to be customer-friendly on the selling side, which does put us in a position of being a first choice for sellers to bring us their bag. … The desire to get into the wholesale market was born during a brainstorm where we were like, ‘What can we do to get more sales channels?’ There were all these other people selling bags through retail partners and other online marketplaces. There our bags being sold in many other places that we’re simply not present in? … Wholesale presented an opportunity for us to get our inventory in other channels. We don’t have the experience or the desire to be in every single channel because we do have our Fashionphile brand to uphold. … But there are a lot of bags being sold in places where we aren’t currently, so we thought, perhaps, we could bring in a wholesale division that would allow us to be present in those other locations without the Fashionphile brand — and in some cases with Fashionphile, depending on the outlet.”

Inventory acquisition strategy
“We are not buying directly from the brands. There are relationships that we maintain with the brands, and it’s partnering on the trade-in, trade-up services. With Neiman Marcus, we’ve had a five-year-plus partnership where the value there has been that we can help their customers who are primary shoppers at Neiman Marcus turn last year’s or prior years’ treasures into a new purchase at Neiman Marcus by going through the Fashionphile sales channel. We partner with them on the intake of bags. With other brands that we speak to, typically, the conversation is about how we can help them enable their customers to trade up their old purchases. We are purchasing inventory from the brands, and that’s by design. We want to be the pre-owned version of luxury retail. You have all the luxury players. … and you have this lineup of amazing retailers that have great brands and a great value proposition. We want to position ourselves as a sister to those brands, but the pre-owned offering or the pre-owned version of that. We never want to be seen as the best consignment store or the best used store. We’re the pre-owned version of luxury brand row, and that’s where we want to stay. So we try and keep that to be what it is, meaning the selection is wider, more vintage, more new, different variations of colors, all seasons at once and all brands shopped together — we want to have that value proposition. If we tie ourselves to a particular brand, then it makes that hard to accomplish.

How Fashionphile is adapting to consumers’ changing behavior
“The customer loves the opportunity, now that it’s out there, to shop a much broader variety of options. If you walk through one of our flagships where we have all the inventory, you would see, for example, 45 different colors of Chanel flaps in one place. It’s so much variety. … There’s nowhere else in the world where you can have all those side by side and have all of those choices. It’s not only the variety of color and style, but it’s price point — it’s like three-dimensional shopping, all of a sudden. … The [resale] landscape is much more diverse, with different things to choose from within the brands we pick, and also deeper because the price points can be varied based on the condition. Once it’s not in new condition anymore, … that brings the price down. Now, you’ve got freedom in the pricing, which was something that has been unlocked by recommence that didn’t exist before. Customers come in and go, ‘Wow, I’ve got wide and deep options.’ It’s pretty fun, and it is it allows people to express themselves in a very unique way.”