The secondhand market continues to boom, as resale platforms Poshmark and thredUP reported in separate earnings announcements on Tuesday (Aug. 10), with both companies doubling down on investments in their platforms in an attempt to gain the upper hand.
Poshmark, for example, has added myriad new features over the last several months to keep buyers, including notifications for when another buyer is interested in a certain item and recommendations when something of interest gets sold. For sellers, the platform introduced a price suggestion tool to help them list items more effectively, which has improved sell-through rates.
In an expansion of its social commerce functionalities, Poshmark also last month launched a shop within the photo-sharing app Snapchat, which allows consumers to browse and buy without leaving the social media platform. Nearly 80 percent of daily active users using Poshmark Mini on Snapchat are Gen Z shoppers.
For thredUP, the focus is on partnerships through its Resale-as-a-Service (RaaS) platform, which is currently utilized by LG, Fabletics, Farfetch and others. CEO James Reinhart said the RaaS partnerships “just compound our supply advantage in this industry.”
“If you think about marketplaces, they’re all driven by supply,” he told investors. “Doesn’t matter whether it’s Airbnb or it’s Doordash or it’s Uber — all these marketplaces are ultimately about capturing supply.”
thredUP is also trying to increase its capacity to process incoming merchandise. Unlike Poshmark, which holds no inventory, thredUP receives bags of discarded clothing from sellers and processes them for sale on its platform. The company has increased its processing capacity by more than 40 percent this year, but processing times still reach up to 12 weeks, which the company is trying to remedy through investments in automation.
In June, thredUP released its ninth annual report on the secondhand market, projecting that it will reach $77 billion by 2025, up from a current value of $36 billion. Approximately $47 billion of that is projected to be in resale, which thredUP defines as the sector of secondhand that includes “more curated assortments.” The report also found that 86 percent of consumers have purchased or are open to purchasing secondhand apparel.
“When you combine that with the number of new sellers who are coming into the market, I think you have the ingredients for an industry that will continue to grow pretty rapidly — not over the next few years but over the next 10, 15, 20 years,” Reinhart told investors and analysts on a conference call. He added, “Now is the time to be more aggressive.”
Officially, Poshmark said its second-quarter gross merchandise value (GMV) grew by 25 percent to $450 million, and its revenue grew by 22 percent to $82 million. Meanwhile, thredUP saw a 27 percent increase in total revenue to $60 million.
Poshmark and thredUP’s earnings come just days after luxury consignment competitor The RealReal said it achieved a record GMV of $350 million in its second quarter, up 91 percent year over year and 53 percent compared to 2019. Still, The RealReal is struggling to make a profit, and executives told investors it would be unwise to provide a timeline to profitability amid uncertainty about COVID-19.
Both Poshmark and thredUP are focused on expanding their horizons internationally, with thredUP announcing its pending acquisition of Bulgaria-based resale platform Remix last month.
Though executives were cagey about specific plans for Remix as the transaction has yet to close, Reinhart said thredUP plans to invest in the company’s product offerings and processing infrastructure in order to accelerate growth in an area of Europe that has been overlooked.
“We can invest in that as really a springboard to Europe, both central and eastern, and then as we think about moving into Western Europe,” Reinhart said.
Poshmark is also looking abroad for opportunities, launching earlier this year in Australia and currently preparing for a launch in India in the coming months. The company has already hired a country general manager for India and is in the process of building a team on the ground.
“India is one of the fastest-growing eCommerce markets in the world and has a vibrant culture of resale, thrifting and pre-loved shopping,” CEO Manish Chandra told investors in explaining the move.
Poshmark had previously hoped to expand to the United Kingdom later this year, and while Chandra said he couldn’t comment on specific plans, the CEO said he intends to continue marching toward other countries, “continuing with English-language countries and then going beyond that.” Poshmark has also had a presence in Canada for two years.