Forget about new clothes — the Internet is turning into a massive consignment shop.
And now, driving that point home even further, Poshmark just got an additional $25 million, the company has announced in a release. The round was led by GGV Capital, though all of its previous investors participated, too. This brings Poshmark’s total funding to over $70 million.
But Poshmark isn’t alone in this increasingly competitive niche market.
Many new companies that re-sell clothes are popping up, and venture capitalists are throwing money at them, Kim Bhasin of Bloomberg reported in the fall.
And in the fall, one of these companies, ThredUp, had raised a total of over $131 million, Bloomberg noted — at the time, it cemented a round of funding (a whopping $81 million) that was spearheaded by Goldman Sachs.
ThredUp, which boasts the catchphrase, “like-new clothes from brands you love,” has a relatively large online fanbase — over 35,000 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 of 2015, Re/code reported that Tradesy landed $30 million round of funding from Kleiner Perkins. In September, Business of Fashion reported that luxury consignment shop Vesitaire Collective raised $37 million.
There are more competitors emerging, too, Bloomberg added — including 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 reported.
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 $25 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.