As the thriving apparel resale market sees rapid growth, a key player wants to dispel the myth that secondhand fashion is only for people shopping on a budget.
Most consumers rifling through digital resale racks are looking for great clothing and great brands, ThredUp president Anthony Marino told Shoptalk attendees on Sunday. According to the Bay Area online thrift platform’s data, 53 percent of consumers have purchased secondhand apparel in the past 12 months alone.
“I bet that everything you think is true about the resale shopper probably isn’t true,” said Marino at the Shoptalk trade show in Las Vegas on Sunday. “A lot of people think that the resale shopper buys used clothing because they need to. But the truth is they do it because they choose to.”
From Abercrombie & Fitch to Gap to PacSun or most recently H&M, ThredUp is powering secondhand fashion sales for some of the biggest brands around.
One assumption about resale customers does appear to ring true, however. Marino credited younger audiences for the success of ThredUp and resale overall, calling secondhand “second nature” to the Gen Z and millennial crowd. He estimates that anywhere between 50 percent to 60 percent of this demographic looks to buy used before they buy any fashion at all.
Now, the challenge for ThredUp is wading through the fallout from last year’s supply chain pileup.
ThredUp became so popular during the Covid-19 Marie Kondo craze that the company ended up with a backlog of clean-out kits that it’s managed to cut down from 20 weeks to seven, according to Marino.
Additional square footage in the form of a newly opened distribution center in Dallas grows ThredUp’s U.S. network storage capacity from 6.5 million to 9 million items. The company has also tightened up the rules about what kinds of products it will accept.
Marino said he was surprised that so many sellers have acknowledged the need to be mindful about product quality, pointing to what he sees as a shift from previous years when some would say they felt they were underpaid for the contents of their clean-out bags.
“It’s the beginning of people acknowledging the truth. If you buy quality, you’ll get your money back. But if you don’t, and you have an item that’s 100 percent polyester and probably won’t break down for about 1,000 years, you won’t get value for it,” Marino said. “We’re trying to create that virtuous cycle and create more value for those sellers, so they send us quality products and we’ll pay them more product.”
Brands still come to ThredUp with questions about whether joining the platform means they’ll cannibalize new product sales. But Marino believes these concerns are moot because the customers who buy new aren’t always the same as those who buy used, and today’s economic pressures are creating new spending behaviors.
“It takes a little time for them to sort of absorb that you’re going to get a new customer, and you’re going to get a bigger share of mind and share of wallet,” Marino said. “You’re going to be offering value to a customer at a time when in the apparel industry, for sure, that’s what customers are looking for more than ever. You can offer other alternatives into your brand that save customers money, really help them see the quality of their brand and really be advocates for, but it’s really a win-win.”
Though Marino said it will some take time to break the retail cycle of producing too much stuff only to sell much of it at a discount, he’s encouraged by what he’s hearing from the industry.
It doesn’t hurt that brands are increasingly confident in the business model. According to ThredUp’s Recommerce 100, the number of brands with resale shops increased 244 percent in 2022 versus 2021.
“Brands are increasingly coming to us and asking us a really exciting question, which is, ‘Can you help us define a resale strategy?’” Marino said. “Because they see that their customers want this product. They see that the direction things are going with sustainability, whether it’s consumer preference, or regulation, or employees wanting customers and businesses to take steps in the right direction in how they run their operations. Resale is a really powerful way for brands to stand up and say, ‘We’re going to take action to get something where we can really open up our product to a whole different set of customers.’”
While ThredUp had a down year in 2022 when apparel retailers slashed prices on their inventory glut and consumer spending slumped, the company expects to bounce back in the months ahead.
After a fourth quarter where the Resale-as-a-Service (RaaS) company reported a 2.1 percent revenue decline year-over-year to $71.3 million, ThredUp anticipates full-year revenue of $310 million to $320 million, or a 7.5 percent to a 11 percent improvement from 2022.