Online sales of secondhand apparel are growing at a rate of 20 times the broader retail market, with much of the increase coming at the expense of off-price chains. This, and other data points from Thredup’s fifth annual resale report, has the online resale site feeling optimistic about the future and looking beyond online and mobile to brick and mortar.
“We’re thinking about stores,” said James Reinhart, founder and chief executive officer of Thredup. “The reality is that 85 percent of apparel is still bought off-line. It wouldn’t be smart for us to stay just online. We might do a pop-up and test it. It’s a big jump for us as a pure online business. We’re treading carefully into it. It’s interesting and something we’ll definitely be exploring.”
The reasons Reinhart is bullish include the report’s assertion that the $18 billion secondhand apparel industry will reach $33 billion by 2021. Online resale is growing five times as fast as off-price retail and four times as fast as off-line thrift.
Reinhart declined the divulge sales volume, but said that this year, the site will sell more than 10 million items, adding that the business is expected to double for the fourth year in a row.
“Value is certainly a part of the appeal of resale,” Reinhart said, “but the number-one reason is the entertainment factor. Seventy-six percent of shoppers said resale is more fun. We’re always putting fresh items online, about 1,000 per hour.”
According to the study, one-third of women said they shop secondhand. Millennials are driving resale’s momentum, as evidenced by the fact that 79 percent of Thredup’s sales are done through mobile. The cohort is 2.4 times more likely to be motivated by eco-conscious factors when shopping than average consumers. About 84 percent prefer socially conscious brands that share their values.
The number of new items purchased annually is declining, from 51 items in 1996 to 37 in 2016, with 32 projected in 2021. “Secondhand is guilt free,” Reinhart said. “People feel good about it.”
While the number of new purchases has decreased, the number of secondhand items collected by Thredup is growing. The site went from two million items in 2014 to 14 million in 2016. Sellers continuously revolve their closets, with 70 percent reporting recent clean-outs. More Thredup sellers are becoming buyers on the site, and buyers become sellers.
Thredup said it appeals to Millennials’ with facts, such as 10 billion gallons of water have been saved as a result of its resale model.
Millennials aren’t the only cohort heading to resale. “There are also a lot of grandmas shopping resale,” Reinhart said. “The similarities between the two groups is that they both grew up during challenging economic times.
“It was a surprise to me how many [grandmas] we have,” Reinhart said. “We do a fair amount of national TV advertising on Bravo, E and Lifetime. Even if we’re targeting ads broadly to women who like certain brands, we may be reaching grandmas there.”
The study makes the case that resale shoppers are affluent. Thredup’s study found that 10 percent of customers are millionaires; 36 percent have a net worth of $250,000 to $1 million; 21 percent, $100,000 to $250,000; 10 percent, $50,000 to $100,000, and 23 percent, below $50,000.
“They’re looking for high-quality brands,” Reinhart said. “It goes against conventional wisdom that people who shop resale shop at Goodwill.”
According to the survey, 78 percent of women said they rarely find anything new or exciting when shopping at traditional retailers, while 90 percent reported that they rarely buy clothing that’s not on sale. The average Thredup discount is 80 percent. About 50 percent of resale customers said their purchases replace items they would have bought at T.J. Maxx and Marshalls.
There seems to be no shortage of apparel for Thredup to consign. The average American throws away 70 pounds of clothing annually. Women reportedly use only 60 percent of their wardrobes, which leaves plenty hanging in closets. Thredup estimates that $220 billion worth of unworn clothing could potentially be resold. The site in the last five years has paid $58 million to consignors.