Traditional competitive analysis encounters several limitations when evaluating the competitive landscape of platforms. A prime example is Michael Porter’s Five Forces model (1979), which is unsuited for this environment. This model is based on a conventional value chain structure typical of pipeline firms, where entities purchase raw materials and intermediate goods from suppliers and then transform or assemble these inputs into products or services of greater customer value. However, platforms differ significantly because they primarily serve as facilitators of transactions between independent users rather than engaging in transformation or assembly.
In this light, evaluating the bargaining power of suppliers and buyers becomes less relevant. Instead of viewing the market in terms of buyers and suppliers, it is crucial to focus on the diverse user groups that the platform intends to connect. Moreover, since a platform’s primary challenge is attracting users, our understanding of competitors takes on a unique perspective. We define competitors as entities or solutions that impede the platform’s ability to attract or retain users. Competitors can target all user groups at once or focus on specific segments. This leads us to classify platform competitors into three distinct categories.
- We refer to rivals as competitors that engage the same user groups as the platform, making it more challenging for the platform to users regardless of their group affiliation.
- We consider substitutes as alternative solutions that fulfil the needs of one specific user group without fostering connections with users from other groups.
- New entrants encompass a broader category, including potential rivals and substitutes that may emerge.
We direct our analysis towards the European second-hand clothing sector, focusing on Vinted, one of the continent’s largest platforms for buying and selling used apparel. However, before we delve into this examination, we must complete two preliminary tasks. In our book, the competitive analysis (Chapter 3) is rooted in our exploration of the network effects influencing the platform (Chapter 1) and the articulation of its value proposition (Chapter 2). Therefore, we begin by briefly addressing these two foundational aspects.
Network effects and value proposition
Network effects on Vinted can be succinctly summarised as follows. First, the two user groups—buyers and sellers—reinforce one another: increased participation from sellers enhances the experience for buyers, and vice versa. Second, users within the same group face competition: sellers vie for the attention of buyers, while buyers compete for the same desirable items. In economic terms, these interactions are referred to as positive cross-side network effects and negative same-side network effects, respectively.
To articulate a platform’s value proposition, we propose a tool, named the Multisided Value Proposition Canvas (MVPC) that extends the Value Proposition Design developed by Ostervalder et al. (2014). We refer you to our book for a complete description of the MVPC. Here, we just lay the foundations by answering the following three questions for users in the two groups: What jobs does a user try to get done? (Jobs); What kind of difficulties does a user experience before, during, or after getting the job done? (Pains); Which benefits does a user expect or desire while consuming your product or service? (Gains). Table 1 summarises our answers.
Table 1. Jobs, pains, and gains for users in the second-hand clothing sector
Vinted’s rivals
Rivals are competitors targeting the same user groups as Vinted, which means they can potentially redirect buyers and sellers away from Vinted. In this context, we differentiate between direct and indirect rivals based on whether their value propositions align closely with Vinted’s or differ significantly. While direct rivals may pose a more considerable threat, it is essential not to underestimate indirect rivals.
Direct rivals. The most apparent competitors are those platforms that mirror Vinted’s offerings. They perform the same user jobs in a relatively similar manner. Here are some of these direct rivals: Depop (a popular app, especially among younger users, with over 30 million users worldwide), eBay (the original online marketplace for used goods, including a significant clothing section), Vestiaire Collective (Europe’s largest resale site for luxury fashion), Wallapop (a popular app in Spain with over 15 million active users, offering a proximity filter for local transactions), and Hardly Ever Worn It (focuses on barely-worn designer items).
Indirect Rivals. Focusing solely on direct rivals offers a narrow perspective, as other entities may cater to the needs of Vinted’s user groups while employing different business models. In particular, the offline world remains vibrant and relevant in the second-hand clothing sector.
First, there is an ample supply of charities that operate a mix of physical stores and online platforms. Here are a few examples: Oxfam (which operates numerous second-hand shops across Europe), Les Petits Riens (a Belgian organisation with second-hand shops supporting social projects), and Humana (a chain of thrift stores with multiple locations across Europe, particularly popular in Berlin).
The key distinction between charitable organisations and for-profit platforms like Vinted is that charities encourage individuals to donate their pre-loved clothing. As shown in Table 1, these indirect rivals fail to fulfil one specific job that “sellers” seek to achieve: generating extra income from items they no longer use. However, many users may perceive the satisfaction derived from supporting a worthy cause as a significant alternative compensation. Moreover, specific pains are alleviated, such as the difficulties associated with selling items quickly or at desired prices and concerns about scams and potential disputes. On the buyers’ side, charities also alleviate most of the pains while accomplishing all the jobs listed in Table 1.
Second, clothing swap events are another type of indirect rival. Clothing swaps are gatherings where participants exchange used clothing, accessories, and shoes. These events aim to extend the life of garments, reduce textile waste, and provide a cost-effective way to refresh wardrobes. They are often hosted by community centres, environmental organisations, schools, or local governments. These local events can be regarded as physical platforms. While they offer less convenience than their digital counterparts, they also present fewer challenges, such as a reduced risk of disputes.
Vinted's substitutes
We now turn to substitutes and alternative solutions that environmentally conscious consumers can embrace. Figure 1 recaps the distinction between rivals and substitutes, as we present it in our book.
Figure 1. Categories of platform competitors
The key to understanding substitutes is identifying alternative options that Vinted’s sellers or buyers can use to get their jobs done without engaging with users from the other group.
Sellers. As explained in the previous post, sellers on Vinted seek to strike a balance between clearing out their wardrobes, earning money, and participating in sustainable fashion, all while navigating the potential risks of online marketplaces. If these risks are perceived as significant, individuals may opt for alternative clothing disposal methods. Some retailers, such as H&M and C&A, offer take-back programs that address all these concerns—decluttering, financial benefit, and sustainability. Customers can bring their items to the store and place them in designated collection boxes, receiving a discount voucher for future purchases in return. (If you are wondering what competing retailers may gain with such programs, look at this excellent paper written by two former collaborators of mine.)
Alternatively, individuals can dispose of unwanted clothing through municipal collection services or recycling centres if financial motivation is less compelling.
Buyers. Vinted buyers are primarily motivated by financial savings and sustainability but face significant concerns regarding scams, shipping costs, and the effectiveness of buyer protection measures. Environmentally conscious individuals have several alternatives to buying second-hand clothing that align with sustainable practices.
One option is to rent clothes. Clothing rental platforms provide access to high-quality or designer pieces without the need for ownership. These platforms aim to reduce overconsumption by avoiding permanent purchases and encourage circular fashion by keeping clothes in circulation longer. Popular platforms are Rent the Runway, By Rotation, or Tulerie. The latter two platforms are peer-to-peer services, so they can be considered substitutes for both Vinted’s buyers and sellers.
Another option is to keep clothes longer, which can be achieved by investing in quality (durable fabrics, timeless styles), handling clothes with care (less frequent washing with an eco-friendly detergent), repairing garments when they show signs of wear, or transforming old clothes into new items (upcycling). Platforms also exist to help with these tasks. Here are two examples: Sojo connects customers with local seamsters for clothing repairs and alterations; Loom enables users to collaborate with designers to transform old garments into trendy new pieces.
In the same spirit, a final option is to buy ethical and sustainable clothing. People who prefer new clothing but avoid fast fashion can choose brands that use eco-friendly fabrics like organic cotton, bamboo, jute, or soy silk, such as Patagonia, Reformation, or People Tree.
New entrants
New entrants are organisations aiming to fulfil user needs in a market segment where they currently do not operate but may enter in the future. Unlike existing competitors, these potential entrants pose a different challenge since their presence is not established yet. In the second-hand clothing market, the primary entrants are retailers of first-hand clothing. With some of these retailers having entered the market in recent years, an important question arises: how much of a threat do their services pose to Vinted?
Large fashion chains are moving significantly into the second-hand clothing market, recognising the growing demand for sustainable fashion options. For instance, Zara has expanded its “Pre-Owned” platform across various markets. This platform allows customers to buy and sell pre-owned Zara items or donate them to charities; it also offers repair services for damaged clothing. Similarly, H&M Group partnered with ThredUp for resale in the U.S. and owns a majority stake in Sellpy, an online second-hand fashion platform. Other retailers have followed suit (pun intended) with a dual objective: to address the increasing interest in sustainable and circular fashion, particularly among younger consumers, and to enhance customer loyalty in an increasingly fragmented industry.
Takeaway
The competitive landscape for platforms like Vinted is multifaceted, shaped by rivals, substitutes, and potential new entrants. Unlike traditional businesses, platforms must address the unique dynamics of multi-sided markets, where user groups interact and influence each other through network effects. Vinted faces direct competition from similar platforms like Depop and Vestiaire Collective, as well as indirect threats from charities and clothing swap events that offer alternative solutions to user needs. Substitutes such as take-back programs, clothing rental services, and sustainable fashion brands further diversify the options available to buyers and sellers. Meanwhile, new entrants like Zara’s “Pre-Owned” platform signal a growing interest from traditional retailers in the second-hand market. To maintain its position, Vinted must continue refining its value proposition by addressing user pains, enhancing convenience, and leveraging its strong network effects to remain competitive in an evolving marketplace.
(During the preparation of this post, the author used GenAI tools to collect ideas and improve the expression. After using these services, the author reviewed and edited the content as needed. The author takes full responsibility for the publication's content. Photos by author or royalty-free photos from Pexels.com.)
