Forget about new clothes — the Internet is turning into a massive consignment shop.
Many new companies that re-sell clothes are popping up, and venture capitalists are throwing money at them, Kim Bhasin at Bloomberg reports.
One of these companies, ThredUp, has raised a total of over $US131 million, Bloomberg notes — and its latest round of funding (a whopping $US81 million) was spearheaded by Goldman Sachs.
ThredUp, which boasts the catchphrase, “like-new clothes from brands you love,” has a relatively large online fanbase — 11.7 Instagram followers. The brand has capitalised on social media by encouraging followers to post their “unboxing” photos for a chance to be featured on the company’s Instagram feed.
ThredUp seems to be the most successful so far. Target has even partnered with ThredUp to give credit to those who donate used clothing.
ThredUp has raised the most money so far out of the latest crop of online thrift stores, but there are many competitors emerging in the space — and they’re sweeping up funding quickly.
In January, Re/code reported that Tradesy landed $US30 million round of funding from Kleiner Perkins. In September, Business of Fashion reported that luxury consignment shop Vesitaire Collective raised $US37 million.
There are more competitors emerging, too, Bloomberg adds — including Poshmark, Vinted, and RealReal. And that’s just the short list.
Not at all analysts think this will work out in the long run. With so many competitors doing the same thing, it’s an incredibly tough field.
“I don’t even know if there is going to be one winner,” Forrester Research analyst Sucharita Mulpuru said to Bloomberg. “This model is never going to take over the world.”
Some venture capitalist believe it’s all about execution.
“This is an execution business,” Brian O’Malley, a partner at Accel Partners, a venture firm that has invested in Vinted, said to Bloomberg. “They’re all competing over that same closet space.”
And don’t forget about the elephant in the room: eBay.
The “problem” that these startups are aiming to solve is that of Internet behemoths eBay and Amazon — they lack a level of curation, which these smaller startups possess, Bloomberg reports.
Still, eBay still remains the biggest online re-seller, Bloomberg notes, adding that eBay is working to make its experience more seamless.
eBay also boasts breakout success stories, like Linda Lightman, who told Business Insider she makes $US25 million a year in sales with her online consignment shop, Linda’s Stuff.
Consignment shopping is already a wildly profitable industry — popular consignment stores like Buffalo Exchange and Second Time Around offer shoppers opportunities to sell their used clothing and purchase luxury clothing for less.
Even Goodwill has made over some stores to resemble Urban Outfitters stores.
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