THRED IT UP

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 already elaborated on what ThredUP does and their 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 let’s get down to business. And by business, I mean expansion.

Some of thredUP’s largest recent moves have been all about expansion. However, when it comes to thredUP, expansion can be broken down into two different categories. 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 their first store would be in San Marcos, TX. Despite being a town of only 60,000 people, this was a strategic approach on thredUP’s part since it’s where their customers are. This data driven approach separates them from their discount retailer and traditional thrift store competitors in two ways. One, it allows them to target customers by region with clothing that is popular in that region and two, it gives them insights into where they should build their next stores. By expanding into brick and mortar stores, thredUP is also helping destigmatize secondhand clothing. In a professional and clean environment like thredUP’s stores, I bet most people who walk in off the street don’t even realize that the clothing is second hand. This not only helps their ecommerce business but the resale industry as a whole.

The second area of expansion for thredUP is international expansion. This kind of expansion is especially important in helping them bring a greater diversity to their inventory. Although the United States carries a full range of styles, other countries could contribute brands to the platforms that would otherwise never reach the states and vice versa.

storestech-anatomy-smart-store

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 it’s industry and the movement it’s heading.  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 where the movement part comes in. When we think about our clothes being under utilized, we usually think about it in the sense that most of our clothes sit in our closet all day. However the point in which our clothes most under utilized is when we decide to get rid of them. Unless we have a younger brother or sister (who isn’t too fashion conscious) who will take them, they typically end up in the trash. These are the clothes that make up the 6 million items of clothing that end up in landfills every year. What threadUP has done is created a closed loop system in which clothing has infinite life until it is eventually worn down to the point that it cannot be resold. Consequently, threadUP has collectively saved 140 Nordstrom sized department stores from going the route of the landfill in 2016 alone.

Conclusion and Complaints (Kinda)

Overall, thredUP is a serious disruptor in the garment industry and a company that’s doing a lot of good for the environment. While I was annoyed by the pop up that prevented me from clicking anywhere on their site, my only serious complaint comes from the idea that their brick and mortar stores may ultimately take away from what feels like the randomness of thrift shopping. Similar to Facebook with news, thedUP may ultimately figure out what clothing exactly fits our fashion taste but, by doing so, decrease the variety of clothing in which we see on their site. While I wouldn’t go as far as to call it a filter bubble, the unintended consequences of thredUP’s data driven model may result in something close to that. Nevertheless, there is also the argument that since almost all thrift shops are local institutions, this regional bias already exists. In that sense, maybe thredUP will actually do the opposite by bringing together clothes from all over the world and presenting them on a single platform for all to see.

1cdab82d182f7803455b39abe4465a87c6450758b6f3bc7441b9386ca93c133a.jpg

8 thoughts on “THRED IT UP

  1. Nice post! Something I am going to be interested to watch is thredUp’s international expansion. I foresee network effects with the new markets: a slow start but will pick up speed with more international users who sell their clothing to the company, diversifying selection and adding inventory that fits fashion trends elsewhere.

    Also interesting and not surprising how Millennials and seniors are the main customer base. Definitely a trend here and with other companies we’ve studied where our age group is more inclined to participate in the sharing economy than our parents.

    Like

  2. Great post, Will! I was shocked by a few of your fun facts (namely that grandmas and millionaires are big customer bases for thredUP, I definitely would have expected it to be dominated by mid-socioeconomic young adults). I think brick-and-mortar stores will be huge for their expansion, while they can utilize data to target the right styles, customers can also see the physical items and clear any doubts they may have about quality of second-hand items. Reducing landfill sized at a discounted price seems like a pretty good business model to me!

    Like

  3. Great post Will I really enjoyed reading your fun facts (millionaires are really into thrift shopping??) Knowing everyone’s closet is full of clothes yet they always go shopping, thredUp was really smart in choosing platform for an underused assets like clothing.

    While I was reading your post, I wondered how thredUp can incorporate Artificial Intelligence into their business or if they will accept cryptocurrency as their means of payment.

    Like

  4. I think it’s great that 50% of thredUP’s customers have never shopped secondhand before! Truthfully, this is something that I have never done, but it is definitely something I would consider given how accessible the service is. I’m also curious how they know that 10% of their customers are millionaires. This seems like volunteered information.

    Like

  5. Thanks for the great extension, Will! You elaborated on some really interesting points. I liked how you described clothing having an “infinite life” by making a loop that clothing can rotate through. The main way that I think thredUP can grow is through broadening their scope to the international level. I also think they must continue to innovate and utilize data in the brick and mortar stores to set themselves apart from local stores.

    Like

  6. I don’t think it looks like we’re going to make it to Thred UP this year. In the past we’ve gone to the Warehouse, which is really interesting to see how “low tech” it is compared to what you’d expect.

    Liked by 1 person

  7. Great post, Will! I also got that annoying pop up haha. It’s cool to see them expanding to locations like San Marcos, Texas, with a very specific focus of following its customers. Although I haven’t done too much thrifting myself, I love the concept of it and have friends who are crazy about thrift shopping. I think ThredUP has really taken advantage of the emerging sharing economy and am excited to see where they will go in years to come!

    Like

  8. Nice post, Will! In the context of so many companies using software and other intangible products, I think it’s really cool to see ThredUp growing in the physical world. The fact that they’re already over $100 million in revenue speaks volumes on the value that retail still has in our society. With that said, I’m curious to see how their brick and mortar stores pan out going forward: do you think it’s a worthwhile investment for them to indirectly compete with thrift shops? Or do you think they’ll continue relying on sales from their online presence? Great job again!

    P.S. I loved your presentation today!

    Like

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s