Tradesy is about to turn the corner, with the fashion resale site nearing profitability.
The Santa Monica-based company said net revenue is up 150 percent year-over-year, although it declined to reveal specific numbers, and is forecasting profitability in the fourth quarter. That would be the first time the company has realized a profit since 2011 when Tradesy was just starting out with founder and chief executive officer Tracy DiNunzio working at her kitchen table.
The business has obviously changed since then, having raised nearly $75 million in the process along with the 2015 acquisition of online consignment store Shop-Hers.
Tradesy allows people to both buy and sell clothing, shoes and accessories from a wide range of labels that include luxury and contemporary brands. The company, which employs 100 people, counts more than 5 million users. It also boasts its sellers can set up a sale listing in less than 60 seconds.
“Our business grows primarily organically and due to the kind of natural network effects of a peer-to-peer marketplace, and so much of the work that we do is technical work that enhances us,” DiNunzio said.
Overall top-line growth is driving the profit projection, the ceo said.
The company about six months ago also bumped up its commission rate from 9 percent to 14.9 percent. The increase didn’t seem to phase users, with the business losing less than 1 percent of its sellers in the process.
Also aiding Tradesy’s growth is improvements in its curation and search capabilities to manage the volume of listings and return better search results through structured listings. This is key, with some 70 percent of the company’s customers buying off Tradesy when they are searching for something specific.
The company is now testing thematic browsing. That is, searching for something based on a specific filter. Thematic browsing is expected to be rolled out by the end of the year for Tradesy.
Interestingly, most of the company’s new user acquisitions come via Google search, meaning more traditional routes for marketing don’t necessarily apply to Tradesy. Consideration of bricks-and-mortar, for example, is on the minds of many online companies. ThredUp, which swims in the same online resale marketplace as Tradesy, recently opened its first ever brick-and-mortar store. Other competitors, such as Poshmark, host events that bring the brand to in-real-life experiences that continue to build on the sense of community many of these companies rely on to create brand equity and grow their businesses.
DiNunzio is monitoring the situation closely but isn’t necessarily ready to follow the pack right away.
“We’re going to wait and watch,” she said. “I think in retail it’s obvious that the omnichannel approach can work, but in resale I’m less convinced and I know that there’s some in the category who have announced plans to expand into bricks-and-mortar. So we’re going to sit back and wait and watch.”
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