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Fashionphile has acquired Two Authenticators Inc (also known as 2a), a Montreal-based wholesale distributor of authenticated, pre-owned luxury vintage. The terms of the deal were not disclosed.
It’s part of a larger strategy to expand Fashionphile’s secondhand market presence by scaling its B2B wholesale and omnichannel operations. Fashionphile currently operates on an instant quote, quick payout model for items sold on-site. 2a, on the other hand, distributes secondhand luxury pieces to wholesalers (department stores, for instance).
“A little while back, we made a decision to strategically seek additional sales channels beyond the e-commerce sales channel,” says Fashionphile co-founder and CEO Ben Hemminger. “For our whole history, we’ve been a native digital e-commerce company, and that’s where all of our revenue and sales comes from.”
With 2a, which has over 20 retail partners across e-commerce and physical stores, the teams will come on board. Though it was founded in 2021 to support luxury vintage B2B retail operations in Canada and the US, it has been working in the B2B luxury resale space since. Founder Fred Mannella will bring 2a’s teams with him, from operations to sales, setting the foundation for Fashionphile’s venture into wholesale.
The plan is to get Fashionphile products into department stores, cruise ships, airports and more, Hemminger says. For this, 2a’s buying team will offer valuable insights into what a good inventory mix looks like for wholesale business buyers. Sometimes offerings will be Fashionphile-branded, sometimes not.
Last year, Fashionphile planted the seed with the acquisition of resale company LXR, also founded by Mannella, who will now assume the role of senior vice president of wholesale at Fashionphile. With LXR, Fashionphile acquired assets, but no people or integration, Hemminger says.
The market has changed since Fashionphile’s 1999 founding, Hemminger adds – particularly in the last five years. “The re-commerce market has grown up around us, and it exposed a lot of opportunities that we weren’t present in,” he says. “It’s market penetration; getting more of the pie beyond e-commerce.”
To do so, Fashionphile identified three target channels of luxury resale: wholesale and business-to-business (B2B) sales; brick-and-mortar; and clienteling.
They’re borrowing from the playbook of the luxury brands that they stock, says Fashionphile co-founder and president Sarah Davis. “This is the way that these luxury brands play. They play in wholesale, they have retail stores, they sell online — some don’t yet — and they all sell through client relations. We are really just executing on the playbook that they have been playing with for hundreds of years.”
2a is Fashionphile’s first full business acquisition, with the strategic goal of helping the resale company break into wholesale, or B2B, the first of Fashionphile’s three target channels. “There were companies doing this that had a lot of experience in the space,” Hemminger says. “We felt acquisition would be the best way for us to enter this new channel.”
It’s been a trying time for luxury resale. Since going public in 2019, The RealReal faced faltering sales as it struggled to turn a profit. Vestiaire Collective, too, has struggled with resale’s profitability problem, and launched a crowdfunding campaign in January 2024 in a bid to achieve profitability by the end of the year. According to Globaldata’s Apparel Resale Market to 2027 Report, resale’s high operational costs, alongside tight consumer spending and issues with online resale platforms are what inhibits profits and growth.
Given this, Fashionphile’s expansion bid is certainly ambitious, yet aims to curb some of these issues. Davis notes what she calls the company’s awareness problem. “We want to make sure we have a real stronghold on awareness in [the US],” she says. “The more you see us outside of our own website and our own few stores and flagships, that’s going to be good for a major halo that will help add awareness.”
By expanding its retail footprint by way of wholesale and B2B, the goal is to get the Fashionphile name out there even in areas where there will never be a dedicated retail store. “There’s a demand for this type of product across the country,” Davis says. “And when you’re talking about a price point that’s over $1,000, lots of people just want to put it on their shoulder. When you say it’s pre owned and it’s in ‘very good’ condition, they want to see what that scratch looks like on the front.”
That said, the 25-year-old company has managed to achieve a marker of success that’s remained elusive for many secondhand luxury providers: profitability. Fashionphile has been profitable since its launch. (The RealReal did report profitable revenues for the first time this past quarter after a long struggle, though whether it maintains this remains to be seen.)
Right now, Fashionphile isn’t able to accept every handbag sellers want to sell. This selectivity, Davis says, is what’s helped them achieve a balance that enables profitability. By opening up more sales channels through which to sell inventory, it’ll be able to grow the business by accepting — and selling — more goods.
“If we want to dominate this space, we need to be also at scale in these same categories,” Hemminger says. “[2a] will help us to do this the right way; which is growing it at scale, but also profitably.”
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