California-based thredUP is preparing to enter the European market via the acquisition of reCommerce platform Remix, a move that comes as the resale market is poised to explode in both the U.S. and Europe.
The $28.5 million acquisition gives thredUP a foothold in Europe’s emerging resale market amid the initial phase of an international expansion strategy, and gives Bulgaria-based Remix the resources to scale more quickly than it would on its own. Total revenue for Remix in 2020 was nearly $34 million, whereas thredUP had $186 million in revenue.
The acquisition comes just months after thredUP made its public debut in March, pricing its initial public offering (IPO) at $14 per share and giving it a market value over $1 billion. Since the IPO, thredUP’s stock has risen over 42 percent, giving the company a market capitalization of $2.7 billion.
thredUP is now positioned to expand its Resale-as-a-Service (RaaS) platform internationally, allowing brands and retailers to create customized resale experiences for consumers. In the U.S., thredUP recently made RaaS deals with Vera Bradley, FARFETCH, LG and Madewell.
As thredUP and Remix use similar “single-SKU” logistics to process garments, thredUP said the acquisition “adds a complementary operational infrastructure and an experienced management team to springboard its expansion into Europe.” The European secondhand market was estimated to be $21 billion in 2020; by 2025, it’s expected to grow to $39 billion, and by 2030, it’s expected to reach $59 billion.
Lyubomir Klenov, CEO of Remix, said in a statement that he’s long admired thredUP: “Together, I believe we can build upon Remix’s core operational engine, technology and logistics to bring that scalable experience to the European market, where resale has only scratched the surface.”
After the acquisition closes, likely in the fourth quarter, thredUP plans to expand Remix’s product offerings and invest in the company’s processing infrastructure to position it for further growth. Remix will operate as an independent business unit led by Klenov, who will also lead thredUP’s European expansion efforts into key markets. Remix currently operates in Austria, Bulgaria, Germany, Greece, Poland, Romania Slovakia, the Czech Republic and Hungary.
“Lyubomir and his team have built a strong, lean, customer-first business, and they know how to deliver resale operationally across multiple markets in Europe,” said James Reinhart, co-founder and CEO at thredUP. “We’re bullish about the massive opportunity in the European resale market and are thrilled about the chance to build on Remix’s technology and operational expertise to help accelerate its growth.”
By entering the European Economic Area, thredUP will have to abide by new laws and regulations, including the General Data Protection Regulation (GDPR), which the company warned in a filing with the U.S. Securities and Exchange Commission (SEC) “will require resources and could be more costly and take more time than we anticipate.”
A Growing Market
Resale alone is expected to grow 11 times faster than the broader U.S. retail clothing sector over the next five years, from $15 billion in 2021 to $47 billion by 2025. Over 52 million people resold clothing in 2020, nearly 70 percent of whom were first-time sellers.
And competition is growing in the space, with Etsy last month paying $1.6 billion to acquire resale marketplace Depop, Nike launching an in-house refurbished program in April, and Rent the Runway now allowing customers to rent and purchase outfits without a membership fee. Lululemon, Levi’s, Patagonia, Eileen Fisher and REI are also among the brands currently partnered with secondhand marketplace manager Trove to run their resale operations for them.
All of this may be why thredUP is looking to Europe for future opportunity — though the company is also placing a lot of emphasis on its RaaS platform in the U.S. Reinhart told investors last month that not many brands are really taking the resale market “seriously from a scale perspective,” leaving room for thredUP to swoop in.