Fashion resale, a booming market: interview with Anthony Marino, President of ThredUp

The stigma against second hand apparel and footwear is quickly becoming a thing of the past: according to a recent report by resale platform ThredUp, the market has grown 21 times faster than first hand fashion retail over the past three years and is expected to grow from 24 billion US dollars to 51 billion US dollars in the next five years, in the United States alone. That means the secondhand market will be 1.5 times bigger than fast fashion by 2028, when previously-owned items are forecasted to account for an average of 13 percent of American closets.

The market is so promising companies working in this space have been receiving significant investments. ThredUp raised 175 million US dollars in August, while competitor The RealReal raised 300 million US dollars in its initial public offering. Neiman Marcus acquired a minority stake in Fashionphile, a resale website for luxury handbags, accessories and jewelry, while Farfetch acquired sneaker resale platform Stadium Goods before launching its very own resale platform for designer bags.

Farfetch is not the only retailer dipping its toes in the resale space. Zalando, the European fashion marketplace, opened a pop-up store in Berlin earlier this year to sell used fashion items purchased from customers of Zalando Wardrobe. Similarly, H&M has announced an ecommerce trial of second hand sales for its & Other Stories brand.

Fashion resale, a booming market: interview with Anthony Marino, President of ThredUp

Younger consumers are the ones driving this growth. Affected by the aftermath of the 2008 economic crisis and plagued by student debt, young adults are the “thriftiest” of generations according to recent research. For many of them, fashion resale offers an extra source of income. “Personal closets transform into a revenue stream and shopping decisions are made by looking at investment potential. Clothes are seen as tradable assets. Platforms such as The RealReal and Vestiaire Collective allow us to know how much those pieces can be worth and therefore can be traded upon season after season”, explains Ana Roncha, Course Leader of the master’s degree in Strategic Fashion Marketing at the London College of Fashion, in an email to FashionUnited.

Also working to the resale market’s advantage is the fact that consumers are becoming increasingly aware of the environmental impact of the fashion industry. A recent report by British NGO Fashion Revolution revealed that one in three European consumers take sustainability into account when shopping for clothes. In the US, 34 percent of consumers declare themselves to be concerned about how the clothes they wear affect the environment, according to a survey by the Changing Markets Foundation and the Clean Clothes Campaign. “We’re seeing more and more consumers make a conscious choice of moving away from fast fashion. With the above comes an awareness that the lifecycle of our clothes needs to be extended and therefore our purchases need to be based on quality,” says Roncha.

Fashion resale, a booming market: interview with Anthony Marino, President of ThredUp

Looking to get a behind-the-scenes peek at the segment and where it is headed, FashionUnited is interviewing some of the most prominent players in fashion resale around the world. Make sure to drop by our website every Tuesday.

This week we’re speaking with Anthony Marino, president of ThredUp. Founded in 2009 by James Reinhart as a men’s shirt swapping service, the company now claims to be the world’s largest fashion resale marketplace, with over 35,000 womenswear and childrenswear brands at up to 90 percent off retail prices. On its way to process its hundredth-million product this year, ThredUp adds over 40,000 new arrivals to its site every single day.

ThredUp’s service works as follows: customers can order a bag (named Clean Out Kit) for free to send back to ThredUp all the clothes they no longer want to wear. The company then selects the items suitable for resale, photographs them and lists them on the websie. Once one of them is sold, the customer receives a percentage of the sale in cash or shopping credit. Alternatively, ThredUP will donate 5 US dollars to one of its charity partners, and the donor gets a tax receipt.

Now that it’s established its name in the market, ThredUp is partnering up with fashion retailers such as Reformation, JC Penney and Macy’s to strive toward a circular economy.

Read the interview in full below. Answers have been edited for brevity and clarity.

Fashion resale, a booming market: interview with Anthony Marino, President of ThredUp

Can you tell us a little bit about yourself and how you joined ThredUp?

I’ve been working for ThredUp for almost seven years. I’m responsible for the overall growth and business performance of our marketplace. I actually learned about the company because my wife was a customer: we were living in New York at the time and I came home to my apartment to find a ThredUp green polka dot box in our kitchen with a stack of cashmere sweaters inside of it. My wife said: “you won’t believe it, this is a 200 dollar sweater but it cost me just 40 dollars”.

After that, I started to see ThredUp Clean Out bags outside people’s doors all the time. I felt like the universe was trying to tell me something [laughs], so I started to do some research about the company and ended up moving six months later to California to join ThredUp. That was in 2013.

ThredUp started as a swapping platform for men’s shirts and now it’s a huge company carrying over 35,000 brands. In your view, what have been the most significant milestones in the company’s trajectory?

The business has definitely grown and changed a lot as far as the technology and the approach we use, but the core insight has never changed: consumers generally have more in their closet than they’re actually wearing, and we want to do something about that. Between 60 and 70 percent of what’s in an American woman’s closet goes unworn. We find that to be an interesting problem, because that’s essentially waste.

You don’t want to throw it out because you feel guilty about it, you don’t want to list it on eBay either because it would take you all day to take pictures of everything, describe the items, price them... A lot of people also tell us that they don’t want to put those clothes in a bag and drive them somewhere because that’s a lot of work. Some of them even put them in a bag but it ends up just sitting there, the clothes just migrate from the closet to the basement. And that doesn’t even begin to describe the broader problem of textile waste and its polluting impact on the environment!

When we saw this ‘micro problem’ of an overstuffed closet and the ‘macro problem’ of how this is going to play out for our environment and community in the long term, we knew we had to do something. How can we make it easy for people to clean up their closet? We discovered that the most convenient way was just to send them a bag which can they put outside their door and we’ll come pick it up, we do all the work. When we sell the items, we’ll send you money for the items that we sold. That is a desirable service for many, many people, women especially. 99 percent of our customers are women.

Fashion resale, a booming market: interview with Anthony Marino, President of ThredUp

What happens when a customer sends clothes which are not suitable for resale?

We accept about 60 percent of the items we receive, as we only work with items that are “like new” quality. The items we don’t accept, we have worked very hard to build relationships with other consignment stores which will accept them. We’ve also built relationships with fabric recyclers, people who make rugs and other durable textile materials. Our goal is to have a 100 percent reuse outcome for the clothing that comes to us, we don’t want anything to end up in landfill.

Besides choosing to donate the items to charity, customers can also choose to have the items we don’t accept sent back to them. We give them a lot of options and transparency around what we do, because we found that the other options consumers had in the US were oftentimes a black box, you drop things off and never know what happens to your stuff.

ThredUp recently criticized Burberry for burning unsold stock, offering to resell those items. Does the company have similar partnerships with other brands?

Both brands and retailers are beginning to show interest in participating in the resale economy. We’ve recently teamed up with Reformation, sending their customers a co-branded Reformation x ThredUP bag. Those who sent their used clothing to us received credit to shop at Reformation.

Then there’s the Burberry case, where we said ‘hey, we’re seeing the wisdom in not destroying these goods. If we can resell them in a way where you’ll have more control and understanding over the brand experience and who the customers are, then yes, we can work with you towards finding these items a home rather than destroying them’.

There are actually lots of ways that brands and retailers are starting to work with us, we even have retailers approaching us to create ThredUp pop-up stores within their retail environment. They’re interested in selling second hand clothing in their stores to entice the ThredUp customer (who is a younger customer). This whole area of how retail and resale work together is really starting to pick up momentum.

I think we’re in the early stages of how we’re going to work with retailers and brands, but we’re going to be announcing later this year some partnerships with very large retailers in the US which will have ThredUp pop-up stores in their stores -- and there will be many others to come. [Editor’s note: ThredUp announced its partnerships with JC Penneys and Macy’s after the interview]

This is very satisfying to us as a business because our mission is to inspire a new generation of shoppers to think second hand first, so the more opportunities we have for them to interact with resale in an easy way and get those clothes back into the circular economy, the further we’re getting towards our goal of 100 percent reuse and people just being more mindful about how they impact the environment.

Fashion resale, a booming market: interview with Anthony Marino, President of ThredUp

One of ThredUp’s three brick and mortar locations in the US.

You just mentioned that the ThredUp consumer is young, and most of them are women. Which age group uses ThredUP the most?

The range is very wide, from 18 to 65, but the fastest growth is among millennials and generation Z. That’s not surprising at all because those shoppers are online and always looking for smarter ways to do things.

I think resale satisfies the two biggest demands of the so-called ‘Instagram generation’: first, they don’t want to be seen wearing the same thing twice on their Instagram feed. They’re constantly looking for fresh items and new styles and, on ThredUp, we list about 100,000 new items every single day. Every time you come back to our website, you’ll see new stuff. We’re constantly processing and listing items, as 56 percent of 16 to 29 year olds prefer retailers that offer new items every time they visit.

The other thing is, although this generation doesn’t want to be seen wearing the same thing twice, they also want to be conscious consumers. 74 percent of 18 to 29 year olds prefer to buy from sustainably-conscious brands.

ThredUp launched Remade, its own sustainable fashion line, in October 2018, encouraging customers to resell the pieces later on. Can you tell us more about this decision?

The idea came about because we were trying to address a couple different things. First, we were trying to give shoppers an entry point into circular fashion meaning you can buy something new with the intent to resell it. It was a way to educate customers, like ‘hey, this is something you can do. These clothes are designed to be resold’. Additionally, we wanted to see if we could fill some gaps in our inventory. When a shopper comes to ThredUp, they may not find exactly what they want in their size, color and style. We wondered if we were able to produce a line that filled some of those gaps in items that we didn’t have enough volume and that consumers were shopping for. Would it help them be a more satisfied ThredUp shopper?

The line had a modest success, I think we’ve learned a lot about it. We’re still figuring out the right items to sell and the right price points. One of the most important lessons we’ve learned while rolling out that program is that, when people come to ThredUp, they come to buy used things! They don't want to buy new things! It’s still a work in progress and, in the coming years, we will refine it. We definitely believe that there’s a place in the world for a fashion line that is designed to be resold, so we’ll just keep working at it until we get it right.

What are ThredUp’s other plans for the future?

We’re at a pretty significant growth and expansion mode right now. We’re opening additional distribution centers in the US. We have four right now, two of which are fully automated. We’ll open more of those facilities so we can process and list more items because there continues to be significant demand for our service. As we build up our operating platform, that will drive the growth of the total business: all of our data science, analytics, pricing, those are all areas that we’ll continue to refine and build out because we’re processing hundreds of thousands of items a day. That data layer is a key input into us being able to scale resale on the Internet, so we’ll just continue to build out our core functions.

Next Tuesday: Vestiaire Collective’s CEO Max Bittner

Pictures: ThredUp Facebook, homepage image courtesy of ThredUp with the permission of @missbriseboislovesbeetles

 

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