woman jacket shopping

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.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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