Thanks partly to Ellen’s compelling presentation, the company that I’ve been wanting to revisit and learn more about is thredUP. Since Ellen’s blog and presentation was plenty sufficient in explaining what ThredUP is and its business model, I’m going to jump into the conservation by what else but a list of fun facts 🙂
- On thredUp’s website you can peruse more than 1 million pieces of clothing, accessories, and shoes currently available at up to 90% off the retail price
- Among the 35,000 brands sold, Lululemon, J. Crew, Theory, Banana Republic, Gap, Coach, Free People and Express are among the most popular
- 50% of their online customers have never shopped secondhand before
- thredUP is “way past” a $100 million revenue run rate, but cash flow is not positive just yet
- Millennials and grandmas are the most likely age groups to shop secondhand
- 10% of thredUP’s most active shoppers are millionaires
- Resale disruptors are growing 20x faster than broader retail market
- 80% is the average discount on thredUP
- 1000 new items are added hourly
Okay, now to get down to business. And by business, I mean expansion.
Some of thredUP’s biggest recent moves are all about expansion. Yet, when it comes to thredUP, expansion can be talked about in two different regards. The first is moving from the internet into physical stores. While the only two stores on their website are listed in Austin, Texas and Walnut Creek, CA, an announcement in June of last year said that the first store they were launching was in San Marcos, TX. Despite being a small town of only 60,000, this was a strategic approach on thredUP’s part since it was where their customers were. This data driven approach separates them from their discount retailer and traditional thrift store competitors in two ways. One, it allows them to target regional customers with clothes popular to that region and two, it gives them insight to know where to build their next stores. Moreover, creating actual stores helps destigmatize secondhand clothes. In a professional and clean setting like thredUP’s stores, I bet most people who walk in off the street don’t even realize the clothes are second hand. This not only helps their ecommerce business but the resale industry as a whole.
The second kind of expansion for thredUP is going international. This kind of expansion is especially important for their inventory variety. Although the United States definitely carries a full range of clothing styles, other countries could contribute brands to the platforms that would otherwise never reach the states and vice versa.
The platform economy
Whether it has been expansion (both to brick and mortar and internationally) or some other product testing, I have been a fan of threadUP’s strategy from the get go. Yet, I feel like my post wouldn’t be complete if I didn’t take a step back and look at thredUP in context of the industry it’s in and the movement it’s a part of. While thredUP calls itself an online thrift and consignment store, it’s really a part of the platform economy or what’s known today as the sharing economy. As Michael Cusumano, a professor at MIT’s Sloan School of Management, says, “it (the sharing economy) is a kind of awkward label, but it does get the idea across: building a new or sub-economy around sharing under-utilized assets. The sum of many of such ‘platforms’ is what creates the sub-economy.”
But why is this important? Well that’s the wear the movements comes in. For threadUP, these under-utilized assets aren’t just the clothes that are sitting in your closet day in and day out. Additionally, these assets are the clothes that you want to get rid of but you don’t have anyone to give them to so they end up in the trash. These are the clothes that matter since 6 million clothing items end up in a landfill every year. What threadUP has done is created a closed loop where clothing has infinite life until they are eventually worn down to the point that they cannot be resold. Consequently, threadUP collectively saved 140 Nordstrom sized department stores from going the route of the landfill in 2016 alone.
Conclusion and Complaints
While I can complain about the annoying pop up that prevented me from clicking anywhere on thredUP’s site, thredUP is nevertheless a serious disruptor in the garment industry and a company that’s doing a lot of good for the environment. My only serious complaint is the idea that their brick and mortar stores will ultimately takes away from the fun of what feels like the randomness of thrift shopping. In a way, we are faced with the classic dilemma of now being presented with the clothes that match our regional tastes but, as a result, decreases the variety of what we see. While I wouldn’t go as far as to say it’s a filter bubble, the unintended consequences of thredUP’s use of data is likely going to be something close to that. Nevertheless, you must also consider that thrift shops are local businesses so this regional bias already exists, if is not stronger in these local shops.