Why it matters:
- Fashionphile Founder Sarah Davis turned down early funding, instead choosing a slow and steady growth approach of funneling earnings back into her upscale re-commerce business.
- Her success has come as Fashionphile has moved from online-focused to fully omnichannel, bricks-and-clicks retail sales in the luxury space.
- The luxury brands that the startup sells have taught Davis that growth comes from investing in what matters most—clienteling and strong relationships, she told CO—.
Long before Sarah Davis became a business owner, she was hustling. As a child, the now–Co-founder and President of ultra-luxury re-commerce brand Fashionphile pulled a wagon full of cold sodas to neighborhood parades, selling them to thirsty paradegoers to make the money her parents didn’t have for new school clothes.
Years later as an adult, Davis channeled that early drive into more fleshed-out endeavors: an online business selling used law books, a children’s clothing line. During law school in the late 1990s, she started selling her own clothes and accessories on eBay as a way to help her cover law school tuition and living expenses.
As she sold online, Davis noticed a trend: luxury accessories and items like designer handbags were holding onto their value much better than run-of-the-mill clothes. Realizing the potential for selling luxury items secondhand and wanting to make pre-owned, ultra-luxury goods more accessible, she founded Fashionphile in 1999.
More than 25 years later, her company is one of the world’s top resellers of pre-owned luxury goods from brands like Chanel, Hermès, Gucci, and Louis Vuitton, and the exclusive re-commerce partner of Neiman Marcus. Over the years, Fashionphile has transformed from a purely digital business into a fully integrated omnichannel luxury brand, offering a cohesive experience online and in its over a dozen physical locations.
Fashionphile is part of the $32.47 billion U.S. luxury resale market, which is projected to grow to $50.06 billion by 2030, according to Research and Markets. Its revenue rose 12% this year, with unit sales climbing 16%, according to Davis. The multimillion-dollar brand has surpassed 1.5 million registered customers and continues to grow steadily, adding new shoppers at a rate of more than 10% over last year.
It’s about real relationships with people. We’ve found that the more investments we’re making not using AI, but having human interaction, more human involvement, that’s been a way we’re differentiating ourselves.Sarah Davis, Founder of Fashionphile
CO— spoke to Davis to learn how she successfully scaled her business without outside funding for the first 20 years, and what the future has in store for her luxury goods resale business.
CO—: How did you come up with the idea for Fashionphile?
SD: My husband and I were both on The Price is Right, and he won a bunch of prizes. One was a Rug Doctor cleaner. Where we lived, we had hardwood floors so we didn’t need it. That was the first item I sold on eBay, and we got almost the entire value out of it. If I’d tried to sell it at a yard sale, I would have gotten a fraction of the value. I thought, “This is so cool, what else can I sell?” So, then I started to sell my own things, and it went really well right out of the gate. In the early days, I was selling to local consignments, too, and I saw … they only had local reach. Because it went so well selling on eBay, I thought, “Why don’t I try to run a business on this platform?” When I started Fashionphile, it felt easier since I’d already started so many other businesses in my life. This was something where the demand was stronger than the supply. I felt like I was being pulled in that direction, it felt unique and special.
[Read more: 3 Scaling Startups Unpack Customer Acquisition and Retention Strategies Driving Growth]
CO—: Fashionphile went for 20 years without any investors. How did you get by for so long without funding?
SD: The reality is that most businesses are running like that. My hairdresser on the corner doesn’t have the luxury of investors. My brother-in-law who has a sunglasses company isn’t raising money. It’s about running a profitable business, growing over time, making money, and putting the money back into the business. If I were to replicate my business today, I would need to raise money because there are too many other big players in the market, and I’d need to ramp up very quickly. But, back then, we had the luxury of being in a vacuum almost without any competition and just building for the first 15 years. We were growing 50% a year and were profitable every year. We made a couple hundred thousand and put it back in. Early on, we got offered $400,000 for 25% of the company. But we asked ourselves, “What would we do with that money?” With $400,000 at the time, we couldn’t buy much more product than we already were because we didn’t have the team and tech to support it. In the end, it wasn’t worth it.
CO—: So then what ultimately prompted you to seek funding?
SD: Now, several very large competitors are raising hundreds of millions of dollars. They’re playing a different game. We asked ourselves, “Do we want to play that game?” And we decided, yeah, let’s do it. In 2019, Neiman Marcus bought a minority stake in the company, and we opened Fashionphile selling studios in Neiman Marcus stores where potential sellers would have their luxury items appraised by appointment. With the funding, we’ve been building tech (which is getting more and more expensive) so we can get more automation in our quoting, and potentially use AI for authentication.
CO—: Part of your growth has been transforming from a primarily digital-first business to a fully omnichannel luxury leader. How did that happen?
SD: In the early days, we opened in Beverly Hills in a small office. People would come by to have their item appraised and say, “Hey, what else do you have here?” But it wasn’t set up for a customer to come in and buy from our inventory. In 2006, we said, “We’ve got to do more for the customer, they want to interact with us in this way.” So, that’s when our physical locations started. In 2009, we opened in San Francisco, in San Diego in 2011, and in New York a few years after that. Now, we’re mostly in stand-alone locations in traditional retail malls, as opposed to inside Neiman Marcuses. Department stores like Neiman are big overall, but the space we can have is tight. By the end of this year, we’ll have sixteen Fashionphile locations. Customers though can still accept a quote, ship items, and receive payment (or credit) with a Neiman Marcus gift card option as their payout.
[Read more: 3 Consumer Brand Founders and CEOs on Finding Growth in B2B Channels]
CO—: What are some of your most popular items today?
SD: The number one top-selling bag this year was the Louis Vuitton Speedy made in the 1930s. Audrey Hepburn carried it around in the 1950s, which is why it’s so iconic. The Chanel Double Flap bag comes in second, and Marmont by Gucci third. For decades, the bag has been exactly the same—the shape, chain, quilting. We talk about these bags in “The Book of Iconic Bags,” which we recently published in collaboration with luxury publisher Assouline.
CO—: Where do you go from here, and what are some of your business goals for the coming year?
SD: We really want to be the best brand doing what we’re doing. We want to give our shoppers and sellers a brand they can trust and lean into and be as excited to support as the brands they love and buy from us. So, we look to the luxury brands for the playbook. What are the best brands in the world doing? They’re making large investments in clienteling and relationship-building. We have an entire team that supports online customers and builds relationships just like luxury brands do. It’s about real relationships with people. We’ve found that the more investments we’re making not using AI, but having human interaction, more human involvement, that’s been a way we’re differentiating ourselves. A business existing solely online is going to be easier to kill. So, we want to do even more human interaction and human involvement. The best brands also don’t just exist in the U.S. So, we’re doubling down on Fashionphile UK. We recently acquired resale platform Luxe Collective, and we’ll be building that out.
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