ThredUp’s Chairperson Patricia Nakache on Secondhand Strategy
ThredUp is both a business and part of a broader cognitive shift in fashion that has the industry reevaluating not just whether it sells in stores or online, but what it sells, where those goods come from and what impact they have on the world.
As the secondhand site made its Wall Street debut on Friday, WWD got the view from the boardroom from chairperson Patricia Nakache, who is also general partner at venture capital firm Trinity Ventures.
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Here, Nakache weighs in on the future, for both ThredUp and fashion.
WWD: ThredUp has built a lot of physical capacity to process inventory while others take a more platform approach. What are the strategic benefits that outweigh those costs?
Patricia Nakache: This is a great question and gets to the heart of one of ThredUp’s strategic advantages. We have invested in the tech and infrastructure to power a fully managed marketplace, which makes it truly easy for consumers to buy and sell secondhand, either directly on ThredUp or through our retailer and brand partners. ThredUp’s managed marketplace enables a convenient Clean Out Kit experience as well as a trusted shopping experience with great prices, reliable quality, easy search and fast shipping.
Our infrastructure is highly scalable. Our distribution centers can currently hold 5.5 million items, and we expect this to increase to 6.5 million items by the end of 2021. We have the ability to process more than 100,000 unique [stock keeping] units per day, and we expect our daily processing capacity to increase over time. Since our founding, we have processed more than 100 million unique secondhand items, and we are rapidly expanding our capacity to serve our buyers, sellers and RaaS partners.
We drive operational efficiency through proprietary technology and automation of our infrastructure. Key processes that involve technology and automation include visual recognition of items, supply acceptance and itemization, pricing and merchandising, photography, and storage and fulfillment. Our distribution centers are located in Arizona, Georgia and Pennsylvania. By locating our facilities in strategic locations across the country, we can be closer to our buyers and sellers, which allows us to reduce shipping times in transit, and lower our inbound and outbound shipping costs.
ThredUp’s business may be harder to build in the short term because we’re taking on work for the customer, but I believe it will have a lasting long-term impact.
WWD: Is there an optimal balance between operating ThredUp’s own operations and powering resale for big retailers? Is that a choice ThredUp is going to have to make at some point to become more of one or the other?
P.N.: We see the two strategies as highly complementary. Our marketplace has created opportunity for [retail as a service], and RaaS supports the growth of our marketplace by driving supply and awareness. More brand and retail partners on our platform drives more supply for our marketplace and creates brand awareness with buyers for ThredUp and our partners. We plan to continue to invest in and extend our RaaS offering to power resale for more brands and retailers.
WWD: Resale is hot now, what keeps it hot? Does the message to consumers need to evolve to keep them clicking? Will consumers continue to engage on the sustainability aspect of this?
P.N.: Sustainability is a growing priority for consumers, especially among younger generations. With continued environmental crises (e.g., wildfires, flooding, hurricanes), it is likely to continue to grow as a priority, not decline. Resale is the fastest-growing sector in retail today and is expected to grow from $7 billion in 2019 to $36 billion by 2024. We believe resale is driving a significant expansion of the secondhand market because it unlocks dormant, high-quality supply by taking the friction out of selling, and provides a buying experience for consumers that is similar to shopping new. For those looking for low prices, resale also delivers great value. Consumers can have freshness and style at affordable prices without buying disposable fashion, which is environmentally harmful.
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