ThredUp CEO on Resale Economy: ‘Math Says This Stuff Is Super Hard’

The fashion industry has ramped up its focus on circularity in recent seasons, with an eye toward addressing a product lifecycle’s (beyond designing and producing) environmental impact.

And one area of interest—and possibility—for finding the sweet spot between ambitions and action is the second life of garments. ThredUp’s annual resale report predicted that the U.S. resale market will grow to $70 billion by 2027—nine times the growth of the broader retail sector. The global secondhand market is expected to nearly double by then, reaching $350 billion. By next year, 10 percent of the global apparel market is expected to be made up of secondhand apparel.

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So what’s contributing to this explosion of interest?

ThredUp CEO James Reinhart attributes it to a generational shift. “When you look at the data, which is provided by GlobalData—a big independent provider—they look at consumer preference, consumer behavior and people who say, ‘Hey, I’m going shopping secondhand today; am I going to shop secondhand more in the future?’ and when you look at these cohorts of young people, you’ll get their revealed preferences,” Reinhart said during a panel titled “Apparel’s Afterlife: A Look at Fashion’s Second Act” moderated by Sourcing Journal features editor Kate Nishimura at the second annual Sustainability Summit.

“So, I think that, ultimately, what’s driving it is those of us who maybe already buy and sell secondhand, but it’s this generation, two decades’ worth of consumers, that are going to rise up and be big players,” Reinhart said.

While Gen Z has consistently cited sustainability as their No. 1 priority—their wallets indicate otherwise. Trend research suggests that while younger people try to buy environmentally friendly products, 76 percent agreed that they don’t make enough money to support their values.

One of the ways that brands try to alleviate this pain point is through resale-as-a-service (RaaS) via platforms such as ThredUp, which has launched nine new RaaS partners this month alone. Madewell, for one, joined forces with the resale powerhouse in 2019 before expanding into Madewell Forever in 2021. Its sister brand, J. Crew, partnered with ThredUp in January.

J. Crew learned from Madewell’s initiative and realized a seamless experience was critical to its success, said Liz Hershfield, senior vice president, sustainability, at J. Crew Group and senior vice president, sourcing, at Madewell.

“It just made perfect sense to partner with someone who’s already an expert at [resale], and then we could obviously provide the brand perspective and [make it] feel as part of our brand and as part of our experience, so it made sense to work with ThredUp,” she said during the panel.

Tommy Hilfiger partnered with Depop in January to court climate-conscious consumers with curated preowned Tommy Hilfiger and Tommy Jeans from the PVH-owned brand’s retail stores, e-commerce channels and archives.

“[The launch] goes back to us seeing whether consumers are testing different channels, trying different approaches,” Rohit Burman, vice president, sustainability and inclusion at Calvin Klein Global and PVH Americas, said. “Also localizing in different contexts. So we’re in 13 countries and continuing to gather insights.”

There are obvious benefits for brands getting into the resale game, whether it’s through platforms such as ThredUp or Depop or re-commerce providers like Archive and Trove, as they can retain equity in their products on the secondary market. But second-life initiatives pose more challenges than just ensuring the clothing quality can stand the wear and tear of multiple owners.

“Resale has been super exciting; it’s gotten attention focused on it, it’s got people thinking about it in a way they’ve never been thinking about it before. And one of the ways that works is they have a high bar—you have to have good, quality stuff,” Buddy Teaster, president and CEO of nonprofit Soles4Souls, said. “Well, there’s a big gap between that standard and recycling, that’s 50, 60, 70 percent of the stuff out there. Shameless plug, that’s where Soles4Soul can turn that stuff that’s not good enough for resale [and] doesn’t have to be recycled yet into food, shelter, education for people in many places of the world.”

Reinhart agreed with Teaster, saying that ThredUp rejects half of the items it receives. The company gets 150,000 items daily—2.25 million garments a month that aren’t eligible for resale.

“It’s not because [these items] can’t serve the Soles4Soul community; it’s not what anyone wants in their store. There needs to be a full stack solution to this because the economics are the thing, right? Let’s not bury the lede: Retailers and brands are incentivized to sell new stuff and make more money. Full stop,” Reinhart said. “So getting people to sell used stuff, like we’re trying to do, is getting them to sell stuff where they make less money. And getting them to make stuff—whether it’s ‘upcycled,’ call it whatever you want—it costs more money, lower margin, full stop.

“We can’t fight the elephant in the room, which is we’re in the math business here, and the math says this stuff is super hard,” Reinhart continued. “And we’re trying to figure out how do we make the math better for all our partners. At the same time, [Burman] is trying to figure out, ‘Man, it cost more money to upcycle this stuff and I can’t even sell it for [the cost],’ right, so that to me is really the struggle. Retail is detail, and it’s a tough business.”

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