Correction: An original version of the piece cited ThredUp receiving $23 million in funding. The company has received $23 million over the course of a few years. However, the latest round of funding is $14.5 million. This version has been corrected.
The thrift-store economy got a boost Wednesday with the announcement that online used-clothing store ThredUp has received a new infusion of cash, bringing their fundraising total to $23 million — with the latest round of funding totaling $14.5 million from Highland Capital Partners with Trinity Ventures and Redpoint Ventures participating.
ThredUp does what organizations like the Salvation Army have been doing offline for years. They take children’s used clothes and post pictures of the items online for resale. The difference between ThredUp and, say, eBay (former COO Brian Swette is an adviser to the company) or Craigslist is that ThredUp controls the inventory. The process goes like this: Parents clean out their children’s closet and send the clothes in via a pre-paid “clean-out” bag. Then ThredUp takes it from there. The clothes go through a propriety quality evaluation process and then are posted online for users to peruse. The original owner of the clothing receives 30 percent of each item’s resale value, assuming it is accepted into the system.
But ThredUp is not alone in the used clothing sales market. Online storefronts include ThreadFlip (which specializes in “pre-loved” fashion for women), The Attic and MyLittleClothesline.com. Then there are clothes rentals. While men have been doing it for ages with tuxedos, women have since joined the bandwagon with popular sites such as RentTheRunway.com.
ThredUp’s additional financing will, according to a Wednesday release, allow the company to open additional processing centers across the country to handle a growing volume of inventory. Eventually, ThredUp anticipates handling as much as 25,000 new items a day. And in terms of expanding processing centers, the company has yet another good adviser in Netflix CEO Reed Hastings.
The company averages about 7,000 new customers a month, with 46 percent of buyers returning to the site to purchase more clothes, according to ThredUp PR Director Karen Fein. By this time next year, the company anticipates expanding into teen, maternity and general adults clothing.
All of this begs the question: Is used the new, well, new? Companies such as ThredUp are turning the used-clothing model on its head, giving parents an opportunity to steer clear of buying clothes that will fit for months or even weeks at a time. If it looks like new, it’s clean and, most importantly, your child will agree to wear it — why not? And you don’t have to go hunting through the racks at the Salvation Army to boot.
Companies such as ThredUp, ThredFlip and even RentTheRunway are in line with other rental and used services, including Uber (instead of taking a cab for $10, why not a black sedan with driver that you can rent for $15?), Zipcar (why walk all the way to a rental car storefront, when you can walk straight into your rental car just down the road?). And, in D.C., there’s now car2go, which lets you rent a compact vehicle for a one-time membership fee.
The trappings of the stereotypical suburban life (two cars, a four-bedroom house and 2.5 kids decked in fresh new clothes) are increasingly out of reach for 20-somethings who wish to start a family and still be able to afford occasional treats. And younger consumers, particularly ages 20 to 34, are particularly prone to rent, given the additional pressures of student loans and unemployment. If there’s a way to buy things used or rent items they want or need to use but can’t buy, there’s little excuse not to, particularly when the items are well-indexed and just a finger-tap away.
ThredUp’s new round of financing is yet another signal of a changing tide where used is what’s next in new, and an amplification of the message that, for younger consumers, ownership no longer carries the premium it once did.
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