This story was initially revealed on sister website, Fashionable Retail.
When President Donald Trump’s sweeping tariffs had been introduced earlier this yr, retail executives predicted that thrifting and secondhand purchasing corporations can be sudden winners. Now, that forecast has come true: Firms together with ThredUp, Depop, OfferUp and extra are reporting report consumer progress, elevated engagement and gross sales spikes, as customers hunt for duty-free bargains.
“Tariffs are beginning to creep into the psychology of the patron, whether or not they’re realizing the value or they simply have worry in regards to the costs,” ThredUp CEO James Reinhart informed sister publication, Fashionable Retail.
That mindset helped the resale platform report its greatest two quarters of buyer acquisition ever, with new consumers up 95% within the first quarter and practically 75% within the second. ThredUp’s monetary efficiency underscores the purpose: Income rose 16% year-over-year to a report $77.7 million in the latest quarter, whereas gross margin approached 80%. The corporate additionally raised its full-year outlook for income and adjusted EBITDA margin.
On-line vogue reseller Depop is experiencing an identical tailwind. The Etsy-owned platform posted 35% world gross merchandise gross sales progress within the second quarter, with U.S. gross sales surging 54% yr over yr, Steve Dool, Depop’s senior director of brand name technique and inventive, informed Fashionable Retail. In its earnings report, Etsy stated Depop’s gross merchandise gross sales had been “the best because the enterprise was acquired in 2021.” Based on Dool, tariffs have broadened the platform’s viewers, as effectively. As soon as pushed nearly solely by Gen Z, Depop now sees older buyers experimenting with resale as disposable earnings tightens.
The secondhand purchasing increase has arrived at a vital time for the resale trade, which has largely struggled with profitability. On-line resale is not a fringe trade, however regardless of its rising recognition — one estimate tasks the U.S. secondhand attire market will develop to $74 billion by 2029 — profitability stays a wrestle amongst even its greatest gamers. Luxurious resale market The RealReal turned worthwhile for the primary time within the fourth quarter of 2023 after the corporate refocused on luxurious consignment. In the latest quarter, ThredUp reported its internet loss narrowed to $5.1 million from practically $14 million a yr in the past.
Resale corporations are below strain to maintain the surge — pouring cash into AI instruments, rolling out new app options and putting extra model partnerships.
“There’s some cyclical facet to resale that we’d proceed to see,” stated Sky Canaves, principal analyst at eMarketer. “However the corporations now have actually honed in on making plenty of enhancements to their operational effectivity. They’re additionally doing a very robust job on getting extra provide and creating incentives for sellers to affix their platforms. That, in flip, helps to deliver consumers.”
Scaling as much as meet demand
At a time when U.S. corporations expect hiring to sluggish, ThredUp’s Reinhart stated the Oakland, California-based firm has ramped up hiring at each stage.
“We’re including employees to our distribution facilities to fulfill incremental demand from clients shopping for stuff, but additionally for all of the processing that we now have to do to place provide on-line,” Reinhart stated. He added that the corporate has been “hiring fairly aggressively, each in our company workplace and in our distribution facilities, actually, to fulfill the second.”
Larger tariffs on imported luxurious items are steering customers to secondhand.
At The RealReal, income climbed 14% within the newest quarter to $165 million, the corporate’s strongest displaying so far. Common order values rose 8% to $581 as consumers flocked to purses and jewellery. (The RealReal didn’t reply to an interview request from Fashionable Retail.)
“Resale is a brilliant alternative for a luxury-minded shopper, and worth will increase within the main market on account of tariffs or different components make our worth proposition much more compelling,” The RealReal’s CEO, Rati Levesque, stated on the earnings name.
An analogous development can be enjoying out on peer-to-peer resale market Poshmark, the place Burberry gross sales have risen practically 30% year-over-year, the corporate informed Fashionable Retail.
“It is sensible; if costs on items rise, buyers might be searching for fashionable and inexpensive alternate options, and that’s precisely the place resale shines,” stated Kate Franco, Poshmark’s vp of selling, who added that the platform has seen a 24% rise in new customers since April.
OfferUp, a peer-to-peer resale platform that focuses on localized promoting by connecting sellers with close by buyers, is seeing related habits play out throughout classes disproportionately impacted by tariffs. Ken Murphy, OfferUp’s svp of product, stated e-bikes and child merchandise abruptly appeared amongst its prime search classes as soon as duties took impact. Sellers are even explicitly referencing “inflation” and “tariffs” in product descriptions for Italian leather-based sofas and toaster ovens, positioning their provides as a method to beat worth will increase.
Customers are additionally spending extra time on OfferUp’s platform. Murphy didn’t present actual figures, however he stated the corporate has seen “a fairly important year-over-year improve in periods per consumer on our website,” as customers search out duty-free items.
The tariff tailwind extends offline. Evergreen Goodwill, one of many largest Goodwill organizations within the nation, is seeing visitors far above its historic tempo. Evergreen Goodwill runs 21 shops in Washington state, and its flagship Seattle retailer now attracts 16,000 weekly guests, up 9% from a yr in the past. Throughout the community, gross sales are operating greater than 6% forward of final yr — double the chain’s typical progress.
“We’re excited to see the extra visitors and the way that’s translating to gross sales efficiency,” stated Derieontay Sparks, svp of retail operations.
To maintain up, Evergreen is testing AI instruments that may scan donations, generate merchandise descriptions and counsel pricing. Sparks stated the system, which is constructed with help from a Microsoft “AI for Good” grant, will debut in Seattle this month.
The anecdotal positive factors are backed up by app metrics. Resale app downloads within the U.S. jumped 20% year-over-year between April and July, whereas month-to-month lively customers rose 10%, in keeping with Sensor Tower. Depop led the sphere with a 110% surge in downloads, whereas ThredUp’s month-to-month customers climbed 13% in the identical interval.
Whereas executives at resale corporations agreed that tariffs are driving cost-conscious buyers to their websites and shops, in addition they consider the development is greater than a brief blip. For instance, Depop claims greater than three in 5 purchases on its platform displace the acquisition of brand-new gadgets, whereas 71% of consumers will stroll away reasonably than purchase new if they will’t discover what they need secondhand.
Constructing stickier platforms
From OfferUp to ThredUp, resale corporations are adopting a variety of methods to not solely entice new clients but additionally retain them.
OfferUp, for example, just lately rolled out a brand new characteristic that permits customers to ask questions on used gadgets and crowdsource recommendation from fellow consumers and sellers. Based mostly on early assessments in Seattle, the characteristic has already proven “outstanding adoption,” not solely by way of questions posted but additionally within the variety of responses, Murphy stated.
To Murphy, the instrument fills what he known as a “data hole” in resale — the absence of dependable evaluations and steerage that exist on conventional e-commerce websites.
On Amazon, for instance, a purchaser can see a whole lot of evaluations about whether or not a espresso maker works as marketed or how a settee holds up over time. On resale platforms, nonetheless, that data usually isn’t out there, which might make buying a used merchandise really feel like a big gamble. The brand new group characteristic is designed to shut that hole by letting potential consumers ask different customers if a fridge is prone to final or what to search for when shopping for a secondhand bike.
The instrument can be aimed toward serving to sellers, a lot of whom are uncertain how you can worth or current their listings.
In the meantime, ThredUp has been laser-focused on rising its higher-margin resale-as-a-service providing, which helps manufacturers launch their very own resale applications in partnership with ThredUp. In Might, the corporate eradicated upfront and month-to-month charges to draw extra retail companions. “Since then, we’ve had only a ton of re-engagement with ThredUp’s resale-as-a-service providing,” Reinhart stated, noting that ThredUp is in discussions with “greater than 60 manufacturers.” Reinhart has touted resale as a tariff protection for manufacturers who desire a supplemental income stream that depends on home items.
ThredUp can be betting that smarter expertise would be the key to turning a surge of first-time consumers into repeat clients. Reinhart stated the corporate is working exhausting to make purchasing simpler and extra tailor-made for every buyer. This implies serving to folks shortly discover garments they like, of their measurement and elegance, with as little trouble as potential. The efforts construct on AI-powered search instruments ThredUp rolled out final yr, aimed toward serving to buyers extra simply navigate its 4-million-item catalog.
“We actually needed to spend money on the onboarding movement for brand spanking new clients, together with how they get the high-quality product in as few clicks as potential by lowering friction for search prediction and lowering friction for locating one thing of their measurement,” Reinhart stated. “It’s actually been all fingers on deck to seize this new set of consumers, and the crew has finished an distinctive job persevering with to make it simpler for folks to buy secondhand.”
Poshmark, Depop and The RealReal have additionally guess on AI to turbocharge enterprise, introducing AI-powered itemizing instruments, authentication options and extra. The RealReal’s Levesque informed Vogue Enterprise the corporate is grappling with how instruments like ChatGPT will affect how customers discover and buy secondhand items.
Depop is leaning closely on AI to make its platform extra interesting and to make sure that new buyers stick round. “Our search has been massively improved by AI to develop into very private, so the extra you employ Depop, the higher it may well predict and perceive what you want and in addition what you could be searching for subsequent,” stated Depop’s Dool. The corporate has additionally rolled out AI-enabled itemizing instruments that may auto-generate product descriptions from images, making it simpler for first-time sellers to get began. Dool stated the purpose is to “make secondhand purchasing as interesting as potential to as many individuals as potential.”
To eMarketer’s Canaves, one of many main variations between now and previous boom-and-bust cycles is the position AI is enjoying to assist resale corporations cut back their prices.
“Resale will be pricey to do effectively. With AI instruments, they will automate much more, significantly on imagery and the copy,” she stated. “Profitability remains to be on the horizon for them, however they’re getting there a bit sooner than they will surely with out these instruments.”
