James Reinhart is hitting the accelerator at ThredUp Inc. — buying entry into Europe, building capacity to process more secondhand goods from consignors and powering resale operations for outside merchants.
If Reinhart, cofounder and chief executive officer of the resale company, is rushing to grab both mind share and market share, it’s because he’s seeing a mammoth opportunity.
A recent report from ThredUp estimated that the resale category is growing 11-times faster than apparel retail overall and will be worth $77 billion by 2025 — and will expand to twice the size of fast fashion by 2030.
“Every day we wake up, we realize how big the opportunity is in front of us,” Reinhart told WWD after ThredUp reported a stronger-than-expected second-quarter sales gain, as well as wider losses.
It’s an opportunity that the traditional fashion industry is feeding — making goods that go into consumers’ closets and then, increasingly, cycle back out into ThredUp’s supply chain.
Many fashion companies are getting into resale themselves and some — most recently Madewell, Farfetch and Fabletics — are using ThredUp’s resale as a service option. But the brands that are not are inadvertently feeding a potentially giant competitive risk.
“Especially on the supply side, we see just incredible interest in our clean-out service,” Reinhart said, referring to the bags the company gives users to empty out their closets and send in the looks on consignment. “It really feels like we’ve struck this nerve with the American consumer and I don’t want to lose our leadership position. We have this incredible opportunity to change the way consumers shop. I’ve never been more ambitious or more excited around the sort of impact that we can make in the world. I wake up every day and, man, I don’t even want to think about slowing down.”
But a big future is built one quarter at a time.
ThredUp’s revenues rose 26.7 percent to $60 million for the three months ended June 30 — better than the $54.3 million sales analysts projected. Active buyers increased by 8 percent to 1.3 million while orders grew 22 percent to 1.2 million from a year earlier.
Net losses expanded to $14.4 million from $6.7 million a year earlier with the company prioritizing growth, and apparently still getting a pass from Wall Street to do so.
Shares of ThredUp, which went public in March, rose 7.6 percent to $23.05 in after-hours Nasdaq trading.
The Oakland, Calif.-based company is also pushing its vision of the future across the Atlantic, with a deal last month to buy Remix Global for $28.5 million in cash (plus restricted stock units), a deal that will give the company a foothold in Europe, a $21 billion resale market.
Reinhart is most engaged when the conversation turns to the company’s resale as a service and bringing established players on board.
“What we have in our hands right now is a road map to where the consumer is headed,” the CEO said. “We have the map and I think retailers and brands are trying to figure out how to get from point A to point B. We can be an incredibly powerful enabler of brands doing this correctly. In the near term, brands might see that as competitive. More than anything we are a channel for the most successful brands in the world to get this right.”
Reinhart said the market is splitting between brands that want to dabble and those that want to jump on board and accept a different mode of operation.
“I’m now in a position where I can’t deal with the pretenders and the people who want to get some positive PR about having a resale strategy,” he said. “I just don’t care.”
From Reinhart’s way of seeing the world, change is coming and it will come to everyone eventually.
“I don’t think retailers and brands are really understanding what’s going to happen five to seven years from now when 25 or 30 percent of a customer’s closet is full of secondhand clothes,” he said, noting the impact on the sale of new goods. “What’s being displaced?”
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