ThredUP, the online marketplace for secondhand fashion items, is betting that the resale industry is going to keep growing. The company announced it just snagged $175 million in funding, bringing its total capital raised to more than $300 million. This flood of cash will help ThredUP launch a platform that powers other resale companies or, to use the brand’s terminology, “Resale-as-a-Service.” The idea is for other retailers and brands to plug into ThredUP’s infrastructure and marketplace to power their own businesses.
The company says that it is already working with retailers like Macy’s and JCPenney to sell secondhand products in store but will add more to the mix in the years to come. It has also worked with brands like Reformation to pilot a program where customers can send back any clothes in their closets they no longer want to earn shopping credit to buy new clothes. Clothes that are in good condition will be sold on the resale market, but clothes that are no longer wearable will be recycled.
But part of this new funding would help ThredUP expand its own internal capabilities. Right now, the company processes millions of secondhand garments every day and receives 100,000 new items daily. It has developed a system of automated carousels in its distribution century and can determine the value of any garment using computer vision and AI. It will need to scale up this technology to be able to process the new clothes coming in from other brands.
Part of this new business strategy comes from ThredUP’s own research. It publishes an annual report and has found that the secondhand market is currently worth $24 billion and is on track to double over the next five years to hit $50 billion. It is growing 21 times faster than retail, and it is on track to surpass fast fashion in the next 10 years. As I’ve written before, fast fashion has created a massive amount of pollution on the planet. If consumers were able to buy secondhand products at a fast fashion price point, it would be a much more sustainable alternative to the status quo.