Store of the Future   //   July 3, 2024

How Fashionphile is using data to scale its resale shops

For years, the luxury resale platform Fashionphile has sold bags, jewelry and watches via its website, its showrooms in San Diego and New York City and its shop-in-shops at Neiman Marcus. Now, the company is opening two permanent stores as it looks to have a firmer footing in physical retail.

Fashionphile is turning two of its mall pop-ups — one in the Carlsbad Premium Outlets and one in the Irvine Spectrum Center — into permanent stores. The pop-ups first opened in November 2023, and Fashionphile found “there was huge demand from customers to come see the product,” Fashionphile Founder Sarah Davis told Modern Retail. Eight thousand to 10,000 people visited each location monthly, and more than three-quarters of the customers at each pop-up were new to shopping at Fashionphile, the company said. All of this motivated Fashionphile to have a more long-term presence in both areas. Fashionphile is now looking at opening additional stores in other markets, Davis said.

Fashionphile, which was founded in 1999, sells authenticated, pre-owned handbags, purses and other accessories from brands including Chanel, Hermès and Louis Vuitton. All items are vetted by in-house specialists who are experts on certain brands. Eighty-one percent of the merchandise at Fashionphile is unique — meaning that there’s only one of a particular item, in a particular textile, in a particular size, with particular hardware. Online, that’s not so much of a challenge — customers can search for one of thousands of SKUs and mostly likely get a result — but it’s been tricky to replicate that formula in physical stores with limited space, Davis said.

“[For any retailer] opening a retail store, there’s a planogram, and you’re getting this season’s product in,” she told Modern Retail. “There’s a very organized, systematized strategy for your retail offerings. But in resale… our vendors are selling us one backpack or one wallet on chain. We get what we get, for the most part… So how do you merchandise any store beyond having onesies, twosies, pick what’s in store?”

To try and answer this question, Fashionphile is turning to crowdsourcing and its 25 years of customer data. This data covers everything from what colors of purses are popular in certain zip codes to what sizes of watches are on trend in certain markets. Fashionphile has an in-house team that collects this data, as well as employees who speak to customers every day in certain locales to find out what they like.

Today, 70% of Fashionphile’s store merchandise comes from analyzing buying patterns and customers’ requests. “We have a little more flexibility in [the other] 30%,” Davis said. “It’s a system that we’ve developed in house, and we’ve been testing it, and it actually works.” Keeping bestsellers like crossbody bags and flap bags in stock is another priority.

Fashionphile will change up the merchandise at its stores and existing pop-ups as it collects more data. For example, Fashionphile learned that it could stand to have more expensive merchandise at its studio in Boca Raton when it found that its average selling price there was $9,000. Online, the ASP is $1,800.

But figuring out which price points to stock in stores can be tricky, Davis acknowledged, which is where the data comes in. “There’s certain centers where if we get the price right, we will just run a profitable business, and that store will sell a lot,” she said. “And if we aim too high… we’re just not going to sell a lot.” Right now, Fashionphile is profitable, she said.

Fashion resale, especially online, is becoming popular among consumers looking to reduce their environmental footprints or try out new fashions for cheaper. But the sector is also facing challenges from apparel retailers offering competitive prices and blowout sales, Sky Canaves, principal retail and e-commerce analyst at eMarketer, told Modern Retail. While the number of fashion resale buyers is projected to go up every year until 2027, the pace of growth is slowing on an annual basis.

With this in mind, more resale platforms are experimenting with physical retail, albeit to mixed results. In February 2023, The RealReal announced it was closing two flagship stores, two neighborhood stores and two consignment offices in an effort to cut costs, per Axios. Now, it’s reversing this and opening more stores as it focuses on higher-value goods, the Wall Street Journal reported.

Sneaker resale marketplace StockX held its first-ever sample sale at its drop-off location in New York City in February. It’s since held three more, the most recent of which took place in June. These events drew hundreds of visitors daily and led to tens of thousands of dollars in product sales, a StockX spokesperson told Modern Retail. StockX launched its first “shoppable experience” at that same location in New York City in October 2023. Meanwhile, eBay held a streetwear pop-up in New York City in November 2023.

EMarketer’s Canaves said Fashionphile “has had a long-standing advantage” over other resale platforms that sell at lower price points where it’s harder to make a profit. It’s managed to do this successfully, she said, by carving out a niche in handbags and then moving into other expensive categories like watches. Buyers in these categories tend to “have a strong preference to see very high-priced luxury goods… in person,” Canaves added. Knowing this, it makes sense for Fashionphile to move into physical retail, she said.

For resale players in particular, “stores can help to foster a sense of trust in the products and their authenticity, which is typically one of the biggest concerns when buying luxury goods online,” Canaves said.

Davis told Modern Retail that items in the Carlsbad and Irvine stores will be listed concurrently on Fashionphile’s website, but that listings will change to reflect availability. In addition to its two new stores, Fashionphile has a showroom in New York City, a showroom in San Diego, a pop-up in San Diego, a pop-up in Los Angeles and eight shop-in-shops (which it calls Selling Studios) across California, Arizona, Georgia, Pennsylvania, Texas and Florida.

“We are actively engaged in expanding that footprint,” Davis said.