LONDON — In another major boost for the luxury resale market, online marketplace 1stDibs started trading on Nasdaq on Thursday and saw its shares leap 35 percent by the end of the day.
The initial public offer was priced at $20 a share for 5.75 million shares — about 20 percent of the company. Response from the market was positive straight away, with the share price ending the day at $27.
Gross interests of the offering are expected to reach $115 million, excluding underwriters’ overallotment option.
The retailer’s chief executive officer David Rosenblatt said that a flotation was the best option for the company to explore both “organic and inorganic” growth avenues, including potential partnerships with other players in the sector, and raise capital.
“We’ve been very early in the digital adoption curve of this industry and we feel like there are a lot of attractive new businesses we can continue to invest in,” said Rosenblatt, adding that offering localized services is top of the agenda.
“If you don’t speak English, it’s not possible to use 1stDibs, yet 50 percent of our sellers and 40 percent of our items are located outside the U.S. So we are very interested in localizing the consumer experience for non-English speaking customers, and investing more in marketing to those international suppliers,” he added, pointing to the marketplace’s current network of buyers and sellers from over 100 countries.
The ultimate ambition is to be present “in every market with qualified buyers,” but key European markets and Asia will take priority.
The company is ready to expand its footprint given the boost in online sales during last year’s lockdowns. In 2020, revenues jumped 16 percent, while in the first quarter of 2021 gross merchandise value was up 64 percent to $112 million.
“COVID-19 and work-from-home substantially accelerated our growth as it did for many e-commerce companies. But I think more importantly, it changed consumer behavior and trained generations of buyers, particularly older ones, on how to do everything from registering an account, to setting up passwords online, all the way through making purchases. The consumer engagement that we’ve seen from those buyers have actually been higher than engagement rates from cohorts of customers we had before work-from-home,” said Rosenblatt. “And from what we’ve seen from our last 24 years on the internet, consumer behavior never becomes less digital over time, it always increases — and we expect to benefit from that.”
1stDibs is one of many marketplaces benefiting from the surge in online sales and vintage goods alike. Ever since the start of 2021, there has been a flurry of mergers and acquisitions activity in the sector, with luxury fashion marketplace Vestiaire Collective receiving a $216 million investment from Kering and Tiger Global in January; Vinted raising 250 million euros and boosting its valuation to 3.5 billion euros, and more recently Depop, Gen Z’s favorite marketplace, being sold to Etsy for $1.6 billion.
“The more activity the better. It reflects higher consumer engagement and acceptance of the resale and so-called secondary markets for apparel as well as jewelry, decorative objects, furniture and the other categories we specialize in,” said Rosenblatt.
He added that 1stDibs has a point of differentiation as the only marketplace that dabbles in fashion, art, jewelry and furniture — with all categories seeing “healthy growth,” particularly new verticals such as contemporary furniture, jewelry and art.
This also means that the marketplace attracts a more mature audience with more money to spend — average order values are $2,500, roughly 10 times higher than those of competitors.
“There’s some verticals that we entered over the last years, such as contemporary apparel and jewelry, which have broadened our appeal to younger audiences. Our average order value may seem high to a younger audience, but we offer a very wide assortment and as we view it, luxury doesn’t equate to prices that are necessarily always very high in an absolute sense. Luxury really means premium price for premium quality, but there are plenty of premium quality items that cost $500 and are accessible to wider audiences.”
The company plans to invest part of the capital in new marketing channels, in particular video, to further connect with customers around the world.
As part of the deal, existing private investors will be exiting the company’s board, apart from Benchmark Capital, its earliest and lead investor, which plans to stay on board for an extended period.