How a luxury e-commerce founder continued a key partnership with Neiman Marcus throughout the pandemic, while leaning into a socially distanced business model

• Sarah Davis is the founder of Fashionphile, a luxury consignment platform that is primarily e-commerce but operates brick-and-mortar stores throughout the nation.
• In 2019, the platform took on its first major partner, Neiman Marcus, and began opening up flagship locations in various Neiman Marcus locations throughout the nation.
• The partnership — and Davis' company — were both put to the test as the pandemic began to sweep through the nation.
• Davis told Business Insider that not only did she keep her company afloat, but she leaned into a socially distanced business model to recover back to pre-pandemic revenues.
• Here's how she did it.

At first, Sarah Davis thought that the pandemic would ruin everything.

She had been bootstrapping the company she founded, Fashionphile, since founding it in 1999. Twenty years later, in 2019, she took on her first major outside partner in Neiman Marcus, with ambitious plans to launch flagship brick-and-mortar locations across the country in Neiman Marcus locations.

The partnership saw Neiman Marcus acquire a minority stake in the company, making it the first luxury retailer to ever invest in a secondhand shop.

"I didn't believe that going into this, we would end up with someone like Neiman Marcus as a strategic partner, but that's what happened," she said. "I just thought immediately of some really awesome opportunities we might have, and a lot of those have actually come to be."

Leas than a year later, the pandemic threatened not just these plans but the existence of Fashionphile, a major e-commerce player in luxury consignment sales.

"Honestly, we had no idea what was going to happen for a while," Davis told Business Insider. "We were just like, what is happening here?"

As part of the partnership, Fashionphile opened four locations, last November, known as Fashionphile Selling Studios, inside Neiman Marcuses in Dallas, Newport Beach, San Francisco, and Beverly Hills. Its fifth location, in Palo Alto, was under construction when the pandemic shut everything down in February.

Since 2007, Fashionphile had opened some of its own brick-and-mortar locations at which consumers could sell some items in person (buying remains online only).

In March, the standalone Fashionphiles and the flagship Neiman Marcus stores all had to shut down. People, she said, were no longer selling items, even on the Fashionphile site, and she was preparing for a massive sales slump to devastate her business.

Of course, Davis said, her sales declined in March, but she said a big bounce back in April started the momentum that has now brought Fashionphile back to where it was before the pandemic struck. Although Davis declined to disclose specific data, Fashionphile had $200 million in revenue for the 12 months ended December 2019, according to PitchBook.

"We imagined that we were just going to be flooded with inventory and that sales were going to go just to a screaming halt," she said. "It was so bizarre."

Luxury retailers Moda Operandi and Olivela have also told Business Insider that they have seen upticks in jewelry sales since the pandemic struck in March. Jewelry is popular, of course, to bring more personality to Zoom calls, but it also holds good investment value.

And since sales went up and stores started opening again, Davis says there wasn't really a reason for Fashionphile and Neiman Marcus to halt the opening of the Palo Alto flagship store. It officially opened in September.

"This is a challenge that we have, that Neiman Marcus has, that literally everyone, even Starbucks, anyone who is selling anything to the public is saying, 'Okay, how could we do this in a way that is safe?" she said. "That's what we're trying to do."

Davis says Fashionphile stores were always made to support social distancing

One thing that made Fashionphile's recovery easier, Davis says, is that Fashionphile stores always supported social distancing because the company had always sought to give clients an experience of privacy and exclusivity.

"If you go into one of our market studios, there's a reception desk and then there are these small offices where you are able to have private experiences," she said. "But they were always large enough where you can have social distancing."

Also, all of Fashionphile's stores have always been appointment only, meaning the amount of foot traffic within their stores have always been contained. The flagship locations are no different. Adjusting the stores to the pandemic climate therefore mostly meant adding additional safety measures such as periodic cleanings, Davis said.

Davis said much of her work these past few months has been about trying to increasingly cater to the online customer — the one who probably won't come into Fashionphile stores, or any store for that matter, as the pandemic continues.

Fashionphile has increased the offerings on its website, offering virtual appointments for people. It's also revamped its options for coordinating pick-ups and drop-offs.

Before the pandemic, the company would send a free shipping label and customers could then pack up their items and drop them off at the post office. But since people haven't been going to the post office as much, Davis said she had to find a way to help negotiate UPS pickups, something she said "sounds fairly easy but is actually a technical component."

The result is that it's been seven months since March when the pandemic saw most of the country shut down, and Davis said she's quite a bit less worried than she was in those uncertain days. In fact, she sees her company positioned well for this moment.

"It sounds simplistic to say, it's not hard to sell luxury brands online when they are cheaper than retail," she said. "When we talk about investment bags and investment pieces, which is what we carry, this is the climate where people need a place to cash those things in. And people are doing that."