Amidst Shortages, Resale Clothing Market Heats Up
Poshmark and ThredUp Protect Their Turf
Second-hand clothing stores are having a moment as out-of-stock items prompt consumers to find alternatives. Poshmark (POSH) and ThredUp (TDUP) are attempting to capitalize on that by snapping up smaller rivals. The newly public companies also want to stave off competition from the likes of Levi Strauss (LEVI), Madewell (JCG), and Urban Outfitters (URBN) which have recently entered the thrifting market. They have deep pockets and large customer followings, which presents a threat to incumbents in the used clothing industry.
Poshmark and ThredUp are also facing pressure to show they can grow in an industry defined by tight margins and spotty inventory. One way to counter these issues is to increase the volume of clothing they offer, which they are trying to do.
Poshmark, ThredUp Hunt for Deals
Poshmark, which went public in January and sports a market capitalization of $1.96 billion, has over $500 million in cash which it wants to put to work. The secondhand marketplace operator is particularly keen on expanding internationally. Poshmark could also ink deals in its existing markets which include the US, Canada, Australia, and India. Last month the company bought Suede One, a startup which authenticates sneakers online.
ThredUP is also looking overseas for ways to bulk up. In July it acquired Remix Global, a European thrift store operator. The acquisition kicked off European expansion for ThredUp. Meanwhile, Etsy (ETSY) recently spent $1.6 billion to purchase Depop, the UK secondhand clothing retailer.
Larger Rivals Circle
It makes sense that secondhand platform operators would seek to bulk up as demand for secondhand clothes swells. The companies’ larger rivals are relying on their legions of customers to help their used marketplaces to flourish. Urban Outfitters recently launched a marketplace where it connects buyers and sellers. The retailer takes a 20% cut and relies on customers for the majority of the inventory. Levi Strauss is taking a different approach. Last year it launched a secondhand store where it sells used clothes, largely from customers, authenticated by the retailer.
The resale market is booming with sales projected to grow 11 times faster than the overall clothing industry through 2025. A lack of inventory is partly a driver, but so is a desire on the part of consumers to protect the environment. That has not been lost on the major retailers, which is why the secondhand operators are bulking up. Who will come out on top remains to be seen.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS21110103
All your finances.
All in one app.
App Store rating
