ThredUp Vs. Poshmark Vs. RealReal on Wall Street
ThredUp Inc. might be taking the plunge, having officially filed this week to go public. But it’s not the first resale site to hit Wall Street.
The RealReal Inc. jumped into the public markets in 2019 and Poshmark joined in January.
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Every time a reseller opens up its books for an IPO, the size and shape of the resale market comes a little more into focus — putting more facts and figures to a business opportunity that is clearly very big and growing, but still amorphic.
A GlobalData Market Survey cited by ThredUp put demand for secondhand apparel, footwear and accessories at $28 billion in 2019 and headed to $36 billion by 2024.
ThredUp sends “Clean Out bags” to users, who empty their closets of unwanted looks and send them back to the site for packaging and consignment. The company estimates that 16.9 billion pounds of apparel is thrown out in the U.S. each year. That’s enough to fill about 1 billion Clean Out bags — meaning the company has tapped into about 0.1 percent of the available supply, having processed more than 1 million bags last year.
The big question is, “How many of those 999,999 other bags — representing billions of dollars of fashion sitting idle in wardrobes — can be brought into play?” And who can make the most of it?
The resale companies all have a strong environmental component since they make use of goods that have already been produced, but the business models differ in important ways. ThredUp collects fashion from users and processes it before selling on consignment, Poshmark operates as a platform and never touches inventory and luxury specialist RealReal sells on consignment and also owns inventory.
Here, a closer look at the companies looking to clean up by clearing out America’s closets.
ThredUp
Founded: 2009
2020 revenue: $186 million, up 14 percent.
2020 net loss: $47.9 million
Active buyers: 1.24 million
Active sellers: 428,000
Environment: ThredUp estimates it has saved 1 billion pounds of CO2 emissions, 2 billion kWh of energy and 4.4 billion gallons of water by helping consumers buy and sell secondhand.
Strategic thinking: “Our impact flows from our strategy. I believe that clear strategy is essential to building enduring, transformational companies. Since the earliest days of ThredUp, we have been told that our strategy was contrarian. That our commitment to cracking the hardest infrastructure, supply chain and data challenges in the service of a better customer experience was risky or could lead to failure. ‘Touching things’ is hard. ‘Low price points’ are hard. ‘Single skus’ is just plain crazy. Yes….We are doing the hard things that meaningfully expand this opportunity and enhance our leadership position. I have been willing to be misunderstood and even underestimated in taking this approach, driven by my belief that businesses that are harder to build in the short term can have extraordinary long-term impact.” — James Reinhart, CEO
Poshmark
Founded: 2011
Annual revenue: $247.5 million (for the 12 months ended Sept. 30)
Annual net profit: $6.2 million
Active buyers: 6.2 million
Active sellers: 4.5 million
Active users: 31.7 million
Engaging: Poshmark saw a daily average of more than 56 million social interactions marketplace in 2019.
A new social: “It seems that we have shifted toward more anonymized, commoditized and transactional purchases than any time before in the rich history of human commerce. In this world, our instant gratification purchases often pile up in closets, some even with the tags still on — items lacking the joy of a discovery or a personalized deal. This led me to wonder — why couldn’t online shopping be as social, exciting and personal as it was before e-commerce ‘disrupted’ retail? Would people sell and recirculate items from their closets? And could we recreate community around the shopping experience?” — Manish Chandra, CEO
Founded: 2011
2020 revenue: $298.3 million, down 6.2 percent
2020 net losses: $177.5 million
Active buyers: 648,856
Teaming up: Consignment of Gucci items on The RealReal grew 2.5 times faster than overall consignment after the company launched a partnership with the brand in October.
Luxury opportunity: “We exited 2020 with our marketplace back to GMV growth, supply momentum increasing and widespread vaccine distribution hopefully around the corner. Growth is a powerful driver of profitability as it enables us to realize efficiencies in our operations, leverage our fixed expenses, and negotiate better rates with our service providers….We will continue building on the strong momentum of the past several months to position us to profitably capitalize on the large luxury resale opportunity ahead.” — Julie Wainwright, CEO
