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While retail continues to spiral toward its ill-fated future, there are a few players giving the space a well-needed boost; off-price brands like T.J. Maxx and Nordstrom Rack (and, yes, Amazon) continue to grow.
Another one is jumping into the fray, sure that it can compete in a bigger and better way. ThredUp, a secondhand e-commerce company that’s been around since 2009 and now processes as many as 100,000 items in a single day, is opening its first store in San Marcos, Texas, today, with four more on the way across the country before the end of the year.
The San Francisco-based startup boasts a $500 million valuation (for context, secondhand shopping is an $18 billion business). ThredUp is one of a handful of digital companies, like Tradesy, Poshmark, and The Real Real, that’s turned consignment — a costly business model — into a successful digital venture.
ThredUp calls itself “the world’s largest online thrift store,” with some 20 million users. One thousand new items across 35,000 brands are added to the site every hour. While The Real Real has found a niche (and has made a fortune) selling luxury online, ThredUp prides itself on owning the middle market. Banana Republic, J.Crew, Madewell, Michael Kors, Club Monaco, and Lululemon are the best-selling clothing brands; Coach, Kate Spade, and Vera Bradley win in the accessories category; the best-selling shoe brand is Steve Madden, and shoppers are hunting for designers like Tory Burch, Vince, and Diane von Furstenberg. Everything costs a fraction of its retail price because it’s used (and in good condition). A Theory pencil skirt, for example, will sell for $215 at Nordstrom and $79 at T.J. Maxx, but by the time it makes its way to ThredUp, it’s marked down to $35.
With hundreds of thousands of pieces from beloved brands selling for bargain prices, the move into brick and mortar should terrify stores like T.J. Maxx and Marshalls, businesses ThredUp is coming for, and hard. According to consumer research gathered from ThredUp’s most recent annual report, 50 percent of its customers said their online purchases had replaced shopping they’d normally do at off-price stores. Heather Craig, ThredUp’s head of retail experience, says the company plans to one-up these off-price companies; it does, after all, have tons of valuable ongoing data on shopping behaviors and trends.
“We know what customers want to shop for and will be implementing that, so it’s already a different kind of store,” says Craig. “We have millions of units of inventory, but we’re able to create an assortment based on what’s being searched and bought online. It applies regionally, too: In central Texas, for example, we’re able to see that dresses sell really well in the market, and specific types of dresses, too, so we’d just be pulling all that into the store.”
Craig adds that while much of what’s sold at a store like T.J. Maxx is unwanted inventory from department stores and often cheaper versions of designer products made specifically for off-price, “we carry items that people have already loved and cherished. It’s a different proposition to sell things that were already bought in the first place because they were treasures.”
There are already consignment stores making bank off the buy-sell-trade model, but customers will only be able to shop in ThredUp stores, not consign, so no pawnshop feels are to be expected. And even though in-store foot traffic is currently down across the industry, ThredUp believes that precisely now, when other retailers are struggling, is a perfect time to experiment with brick and mortar.