Brick-and-mortar retail might eventually die one day, but Amazon isn’t the only one to blame.
As Amazon has shifted most shopping activities online, more businesses are reinventing themselves or being built from scratch on the e-commerce front. One particularly thriving business at the moment is secondhand shopping sites.
Over the past year, the market size of secondhand shopping platforms has grown five times faster than traditional retail, a new industry study by e-commerce retailer thredUP recently found.
Half of the resale market consists of clothes, shoes and accessories, which are posing a great threat to traditional apparel retailers, and, more importantly, reshaping consumers’ shopping habits.
Evidently, resale platforms have a huge price advantage over traditional retailers, even most of discounted stores, but what makes them truly disruptive to the retail industry is the sheer size of inventory that a typical resale platform carries—and the speed at which new inventory arrives.
“On resale platforms like thredUP, you get new inventory by the minute. It feels like your Twitter feed and Instagram feed. There is constant freshness that consumers really respond to,” thredUP CEO James Reinhart told Observer.
According to thredUP’s own statistics, 70 percent of users on the platform were first-time thrift shoppers at the time of sign-up.
“There is a thrill of the hunt that’s driving a lot of new consumers onto resale platforms,” Reinhart said. “But, for more mature thrift shoppers who have done this for a while, it’s clear that they are increasing the share of their closet through secondhand shopping. So, for that group, resale platforms are becoming more of a regular shopping destination than a place for a thrill of the hunt.”
Secondhand shopping has always been part of the diverse picture of retail, but its real boom didn’t take off in recent years until a gold rush of venture capital was poured into resale startups. thredUP, for example, which was founded in 2009, raised 80 percent of its total funding within the last four years from large investment houses like Goldman Sachs and Silicon Valley’s notable venture capital firms.
The same accelerating pace of fund raising has also been seen at other successful resale platforms, notably The RealReal, Poshmark and Tradesy, which have all raised tens of millions of dollars in the past five years.
Reinhart said the fast-growing resale sector will increasingly put pressure on already struggling department stores and mall brands. However, that doesn’t mean that mall brands are going out of fashion. Quite the contrary, many struggling brands are becoming more popular among shoppers; however, shoppers are no longer willing to pay the price charged by these brands.
J.Crew, for example, is one of the most sought-after names on thredUP among the platform’s 35,000 brands, Reinhart said, but “people who buy J.Crew coats from thredUP are not those who regularly visit J.Crew stores.”
“It’s true that people are jettisoning J.Crew [stores] a lot. Why would you pay $138 for a J.Crew dress when you can get the same thing for $28 on a resale site?” Reinhart added.