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ThredUp, the 10-year-old fashion resale market, has a lot of big news to brag about lately. To begin, the company has closed a new $ 100 million financing from a consortium of investors including Park West Asset Management, Irving Investors and its previous sponsors, Goldman Sachs Investment Partners, Upfront Ventures, Highland Capital Partners and Redpoint Ventures.
The round brings the total capital raised to ThredUP to more than $ 300 million, including an undisclosed $ 75 million investment that was sewn last year.
A potentially even bigger deal for the company is a new resale platform that Macy's and JCPenney are starting to test. ThedUp will send the stores the clothing they will be processing via their own point-of-sale systems, while trying to -end customers on jewelery, shoes and other accessories.
This speaks volumes to the fact that traditional retailers are increasingly seeing second-hand goods used as a source of income, and it is hardly surprising that the resale market $ 24 billion currently and is expected to become a $ 51 billion a year market. 2023.
Yesterday, we spoke with ThredUp's founder and CEO, James Reinhart, to find out more about how he's getting closer to the two brands and what the start-up is all about.
TC: You have partnered with Macy's and JCPenney. Have they approached you or is ThredUp promoting traditional retailers?
JR: I think [the two companies] think about resale for a while. They are trying to find the best way to serve their customers. In the meantime, we've been thinking about how we can make resale to more partners. There was a convergence of views six months ago.
We are now well placed to do this in store very efficiently. So we start with a pilot program in 30 to 40 stores, but we could have 300 or 400 if we wanted.
TC: How will this work exactly with these partners?
JR: We have the [software and logistics] the architecture and selection of carefully selected clothing selections for particular stores, including the right mix of brands and sizes, depending on the location of Macy's, for example. Macy's then encapsulates a high quality experience [those goods]. It may be a dress, but they wrap a purse, scarves and jewelry around the purchase of the dress. We feel [certain] that future consumers will buy new and use it at the same time.
TC: Who is your population, and please, do not tell everyone.
JR: This is is everyone. This is not a satisfactory answer, but we sell 30,000 brands. We serve a lot of luxury customers with brands like Louis Vuitton, but we also sell Old Navy. What unites the customers of all the brands is that they want to find brands that they could not have bought new ones; they trade with brands that, at a high price, would have been too much, so Old Navy buyers are [buying] gap [whose shopper are buying] J. Crew and Theory and all levels. Constantly, what we hear is [our marketplace] allows customers to exchange their closet at higher rates than would otherwise be possible, and they feel they are doing so more [environmentally] responsible way.
TC: What percentage of your customers also buy goods?
JR: We do not follow that closely, but it's usually about a third.
TC: Do you think that your customers buy high-end products for sale in order to cover their overall costs? I know that's the thought of Julie Wainwright, CEO of [rival] RealReal. All this is supposed to be a kind of virtuous shopping circle.
JR: We like to talk about buying the purse, then selling it, but a lot of people will also buy a used Banana Republic sweater because it's a value [and because] fashion is the second most polluting industry on the planet.
TC: Until where will you fight against this pollution? I am just curious to know if you are trying to strengthen the sale of hemp, for example, nylon.
JR: We do not make hardware choices. Our thesis is: we want to stay out of the fashion business and ensure that there is a responsible way for people to buy the opportunity.
TC: For people who have not used ThredUp, discover the economy. How much of each sale does someone keep?
JR: On ThredUp, it's not a uniform payment; it depends more on the brand. On the luxury side, we pay [sellers] more than anyone – we pay up to 80% when we resell it. If it's Gap or Banana Republic, you get maybe 10, 15 or 20% based on the original price of the item.
TC: How would you describe your standards? What does the discard pile contain?
JR: We have high standards. Articles must be in a state like new or lightly used, and we reject more than half of what people send us. But I think there's probably more room for Theory's and J.Crew bands around the world than if you buy a Chanel dress.
TC: Unlike some of your rivals, you do not sell to men. Why not?
JR: Men's is a small secondhand market. Men wear the same four colors – blue, black, gray and brown – so this is not a big resale market. We sell children's clothing and that's a big part of our market.
TC: When will Macy's sell a ThredUp dress, how much will you get from this deal?
JR: We can not share the details of the economy.
TC: How many people are currently working for ThredUp?
JR: We have less than 200 in our offices in San Francisco and 50 in Kiev, then in four distribution centers – in Phoenix; Mechanicsburg [Pa.]; Atlanta; and Chicago – we have 1,200 other employees.
TC: You have now raised a lot of money over the past year. How will it be used?
JR: On our resale platform [used by retailers like Macy’s] and building our technology and operations and building new distribution centers to handle more clothing. We can not get people to stop sending us stuff. [Laughs.]
TC: Before leaving, what is the least appreciated aspect of your business?
JR: Logistics behind the scenes. I think for every major e-commerce company, there is incredible logistics [challenges to overcome] In the wings. People do not understand how difficult this piece is, beside the data. We will process our 100 millionth article by the end of the year. It's a lot of data.
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