🛒 Secondhand Market Growth
The secondhand apparel market in the U.S. was valued at $43 billion in 2023. It is projected to grow by 11% annually until 2028. This growth is driven by younger consumers embracing thrifting. ThredUp, a major player in online resale, has reported these figures. More people are buying and selling used clothing, making this market attractive. Yet, profitability remains elusive for many companies.
📉 Profitability Challenges
ThredUp and Savers Value Village have both experienced around a 29% drop in shares this year. ThredUp offers a convenient selling process where customers mail in items for resale. RealReal, another luxury resale platform, has seen a slight improvement due to a debt exchange announced in February. However, these companies still struggle to turn a profit based on generally accepted accounting principles and aren't expected to do so for the next four years.
🏷️ Competition and Quality
Balancing supply and quality is a key challenge. ThredUp introduced fees to encourage high-quality submissions. RealReal adjusted commissions to incentivize consignors to send high-end items. Despite these strategies, many consignors prefer Poshmark and eBay for potentially higher payouts, even though they require more effort. These platforms remain strong competitors in the secondhand market.
🏪 Brick-and-Mortar Thrift Stores
Savers Value Village offers a more efficient shopping experience than nonprofits like Goodwill and the Salvation Army. Savers’ sales per store are nearly twice that of Goodwill and six times that of the Salvation Army, according to Piper Sandler. However, only about half of the items Savers receives end up on the sales floor, and of those, only half are sold. This highlights the ongoing challenge of maintaining quality while operating efficiently.
Will secondhand clothing companies ever become profitable?
