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Grailed, the curated menswear resale platform offering brands from Supreme to Saint Laurent, has secured $60 million in a new funding round led by larger sneaker resale rival Goat Group, alongside smaller investment from Groupe Artémis, the investment fund of Kering’s Pinault family and Marco Bizzarri, the Gucci CEO, who has invested personally.
The Series B funding round also includes existing investors Thrive Capital and Index Ventures, Vogue Business can exclusively reveal. Artemis Group already has a stake in GoatGroup, so today’s investment adds to its growing portfolio in the resale market, including a 5 per cent stake in Vestiaire Collective.
The investment adds to the boom in resale mergers and acquisitions, as the fragmented market with rapid growth consolidates and investors eye opportunities. Already this year Goat secured $195 million in Series F funding in July, valuing the business at $3.7 billion; Vestiaire Collective raised $216 million in March, led by Kering; online thrift platform ThredUp acquired European resale site Remix in July; and Etsy purchased resale site Depop in June. StockX, Goat’s main rival with a valuation of $3.8 billion, is reportedly primed to IPO this year but is yet to confirm the news.
The move signals Goat Group’s move to solidifying its position in the resale market, already amongst the bigger players in streetwear resale with a gross merchandise value of $2 billion. Goat says it’s not exploring other investment opportunities at present but will work with Grailed to share expertise, including knowledge on digital authentication and Grailed’s expertise in peer-to-peer fashion selling. Instead of spotlighting sellers such as Grailed and Gen Z favourite Depop, who hold no inventory and take a commission from sales, Goat mixes stocked inventory from brands with resold items from 600,000 approved sellers, operating with the look and feel of an e-tailer. Its focus is mixing retail with resale is mostly on sneakers and increasingly on clothing. Grailed will remain independently run, with Goat Group COO Yunah Lee, appointed to the board of directors.
“In Goat Group, we saw an incredibly like-minded partner who is just as passionate and forward-thinking about the global fashion community as we are,” says Grailed co-founder and CEO, Arun Gupta. “With Goat’s investment, we are excited to deliver powerful new features across the platform and to double-down on our bold innovations in authentication at an even faster pace.” Eddy Lu, co-founder and CEO of Goat Group said: “Grailed and Goat share a common approach, based on authenticity, trust and a highly curated perspective on style.”
The investment by high profile rivals and names in luxury suggests consolidation is ripe and interest among brands is growing, analysts say. Kering Group’s brands, including Gucci, do not offer resale internally, though brands from Alexander McQueen to Balenciaga have partnered with Goat.
“From a competitive standpoint, even primary retailers and e-tailers are looking to tap the resale opportunity,” says Fabio Colacchio, partner at consultancy Bain & Company. “If we look at China, one of the most dynamic luxury markets, we see a lot of new platforms that are coming up and gaining visibility… It's definitely a very dynamic market.” In China, Alibaba-owned resale platform Idle Fish is expected to reach CNY 500 billion ($77 billion) in gross merchandise value by the end of 2021. Other platforms include GoShare2, Poizon and Plum.
Grailed is relatively small compared to players like Goat and StockX, despite launching two years before them in 2013. However the company near-doubled its business since Series A funding of $15 million in 2018, reaching seven million global users and three million listings. The platform specialises in affordable secondhand luxury pieces which are unique but not necessarily hype. Only 20 per cent of the audience are female.
Two-thirds of Gen Z said they like resale because of the opportunity of saving money, while 50 per cent of consumers state that on resale platforms they can find one of a kind product, according to a recent study from Bain. “If you want the latest Supreme shirt or the latest pair of kicks, like Yeezys or Jordans, go to Goat and buy them,” says Grailed’s Gupta. “But if you want to express a style that is unique and individual to you that makes you feel better about yourself. That's what Grailed is for.”
Consolidation and competitive advantages
Despite the competitive nature of the streetwear and resale markets, Gupta says there’s enough growth opportunity in the market to go around.
“In online digital resale, we’re seeing strong acceleration for fashion and luxury overall,” says Bain’s Colacchio. Resale represented 12 per cent of retail sales in 2019, up to 23 per cent in 2020. It’s expected to hit 44 per cent by 2025.
“When it reaches 50 per cent primary and 50 per cent secondary, think about how many companies there are going to be,” says Gupta. “We're in our infancy now. This is not a zero-sum game. This is like a tide rises, all ships type-of-situation.”
Grailed’s inventory is vast compared to other players, with three million listings from over 10,000 brands. Goat has 2 million listings by comparison, despite its much bigger user base. “When you talk about cutting edge, like Rick Owens or Dries or Marni, Grailed is really the only place that has that kind of inventory besides the retail boutiques themselves,” says Gupta.
Authentication is a big challenge for resale platforms as they scale. Grailed decided to raise Series B when it did because after two years of development it's figured out its authentication process and is ready to scale it, Gupta says. Grailed completes this process digitally using a network of over 100 moderators who receive photographs of the item and approve it for listing. Other companies like Goat and StockX authenticate products in person. “If you're a new seller and want to sell a $500 Supreme t-shirt, you go through three independent moderators who all have to turn the key and say yes — this is real,” Gupta says.
The new funding will also be dedicated to recruiting new sellers, who in turn attract more buyers. Gupta plans to do this by improving the curation on the site, to inspire purchase from brand agnostic shoppers who don’t know what to search and direct them to sellers who match their style. Right now, sellers have multiple options in terms of where to sell their goods, including Ebay, StockX, Goat, Vestiaire and The Real Real. Sellers say that Grailed has advantages including a user-friendly design and digital authentication. However, acquiring customers is costly, and Grailed has some big rivals. Sellers mention struggles with payment disputes on resale platforms which can result in payments being retracted if a buyer makes a complaint.
With scale as it’s next challenge, Grailed has an opportunity to bring more women into its platform. Currently marketed as a menswear marketplace, it built womenswear platform Heroine, which has a smaller user base (Grailed didn’t disclose exact numbers). By comparison, 40 per cent of Goat’s 30 million users are women. And on Stock X, female users grew more than 100 percent from 2020-2021 due to the increase of women’s models on the platform.
Grailed’s distinct audience in Gen Z and male consumers, who increasingly view fashion as an important form of self-expression, sets them apart, says Danny Rimer, partner at investor Index Ventures. “Their focus and product innovation have translated to significant organic growth since our last investment and allowed them to build one of the largest online fashion communities,” he said.
Clarification: The previous headline of this story has been amended to reflect that Grailed is not a rival of Gucci.
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