ThredUp: Reinventing the resale business 20 years after eBay
James Reinhart built his secondhand clothing e-commerce site, ThredUp, based on a simple thesis: Women don’t wear more than 50 percent of the clothes in their closet.
And so he thought there could be big business in helping them sell those pieces online if he could make it as easy as stuffing the castoff clothing into a bag and getting it to a mail carrier. There are signs that his model is gaining some traction: ThredUp received 3.8 million items from sellers last year and $81 million in fresh funding earlier this month.
ThredUp, along with like-minded digital apparel resale sites such as Threadflip, Tradesy and Poshmark, are attempting to remake the secondhand clothes market by innovating on both sides of the consignment equation in a way that could meaningfully expand the ranks of people willing to shop for and sell goods this way.
All will face serious hurdles: Their supply chains are unpredictable and efficiency is hard to achieve, since their workers must inspect thousands of items each day that ultimately are not sellable.
With T hredUp, seller s need only pack their clothes into a hamper-siz e “C lean Out” bag, which the company sends to them f or free. Once customers send clothes in, ThredUp does the r est, pricing and taking phot os of the items before posting them on the company’s website. Once the item is sold, the seller is given the option of r eceiving their portion of the s ales price in cash or using it t o make purchases of their own on the site.
“It r eally empo wers the consumer to control that exchange that always in the past was vie wed as a har dship or challeng e,” s aid Br andon Rael, a retail strategist at consultancy North Highland.
ThredUp is aiming t o at - tract the kinds of seller s that eBay, perhaps, has not: Those turned of f b y the ef fort it takes t o sell online and instead take unwanted clothes to the dump or leave them to be munched by moths in the attic.
The c ompany s ays that for more than half of its customers, their pur chase on ThredUp was their first time buying a used it em. In other words, T hredUp might be growing the overall audiencefor sec ondhand shopping, rather than st ealing customers fr om tr aditional brick - and-mortar thrift stores.
“It’s actually replacing the shopping beha vior of bu ying things at a deep disc ount from the disc ount r etailers,” Reinhart said. “So we’re seeing that it’ s a shift fr om the T.J.Maxxes, the Mar shallses, the R osses, the fl ash sales, into a w orld w here the y can ac quire things that ar e secondhand.”
That ma yr eflect ThredUp’s f ocus on pr oviding a bou tique-like user e xperience. P urchases, f or e xample, arrive wrapped neatly in tissue paper and come with tags scr awled with s ayings such as “Life is full of second chances.”
Kirthi Kalyanam, a professor at Santa Clara University in California who researches retail, s aid the slick w ebsite design may also help nab a different kind of cust omer than eBay.
“The selling atmospher e also matters. If the bu yer is looking f or a Louis V uitton handbag, she ma y want the site to have the look and f eel of [the] Louis V uitton sit e,” Kalyanam said in an email.
ThredUp says it is finicky about the brands and quality of the goods it is selling. Bu t that doesn ’t mean it’ s onl y looking for your fancy Chanel handbags — in fact, Old Navy and H&M are among its bestselling brands. But it has f ocused on delivering a curated shopping experience that differs from the free-for-all that is eBa y. C lothes that don ’t meet its standar ds in tr endiness or wear-and-tear are recycled or given to charity.
That at tention t o detail could present a challeng e as ThredUp aims t o at tract a bigger audienc e. T he c ompany has 500 employees who assess and pric e inc oming items. Bu t it plans t o open two additional distribu tion centers b y ear ly ne xt y ear and ultimately wants to open as many as 15 centers nationwide, which will only require more workers.
Plus, ThredUp has limited control of its merchandising.
“You’re really at the mercy of the quality of the products you’re g etting in, ” s aid Andrew Billings, senior manager of retail and consumer products at North Highland.
ThredUp’s strategy is similar to what Warby Parker is aiming to do with e yeglasses or what Casper is trying to do with mat tresses: bring ne w convenience t o a cat egory that’s widel y thought t o be rife with hassles.