Used is the New New

Used is the New New

Many startups have tackled the hassle of selling used clothing by making it pretty darn easy to get rid of it, and as a result, the past few years have seen huge growth in the used clothing space. These companies have expanded the supply by utilizing new shipping and consignment models that allow sellers to get rid of all their items at once (the “clean out your closet” model). They take on much of the work traditionally associated with selling on marketplaces, up to and including picking up, photographing, pricing, listing, and fulfilling your items for you. While each company has particular focus, it’s staggering to see such a large number of platforms (and the large amount of capital they’ve raised) competing to be very similar marketplaces. And yet if anything, these startups are another example that vertically focused marketplaces can challenge the behemoths. Vinted, TheRealReal, Threadflip, ThredUp, Twice, Poshmark, Tradesy, and Swap have cumulatively raised nearly $250M, and it’s seemingly on the back of legitimate growth. It’s hard not to expect some level of consolidation at some point, particularly since they’re all starting to look the same, but they’re all so damn big! EU-based Vinted likely has a $100M+ marketplace revenues. The RealReal expected $125M for 2014. Poshmark has a $100M run-rate. And it goes on…

Clothing Niches
Each company has a slightly different take on used clothing. EU-based depopfocuses on buying and selling from friends and influencers (although it isn’t exclusively used). Like others, they make a point of showcasing a dead-simple listing process. The RealReal focuses on authenticated women’s luxury goods. Threadflip focuses on everyday brands in order to make it a true “clean out your closet” shop. ThredUp buys and sells similar items to Threadflip, but differentiates by buying most clothes outright instead of paying on consignment or via a marketplace (direct purchase from a buyer). Others, like Swap, sell just one category like kids’ items, but they tend to expand categories as they grow. As more startups succeed in different areas, we see some features get copied, with “clean out bags” and upfront purchasing being good examples. Twice has also shown some ingenuity on the buyer-side via its acceptance of gift cards from other stores. eBay has even taken a stab at the consignment market with eBay Sell For Me (a.k.a. eBay Valet), but they exclude clothing and it’s unclear whether it's been successful or not.

Furniture
So can we expect growth like this elsewhere? Well, the next wave of used innovation is already well under way in the furniture and home furnishings business. This category (furniture specifically) will likely see the same thing that happened with vintage clothing. Companies will cannibalize craigslist as the preferred “used furniture” marketplace by offering simple, integrated local shipping, and will increase the supply by making it easy for people to sell. AptDeco and Move Lootare perfect examples of this, but it should be noted that industry growth won’t reach that of clothing because the delivery does not reach the national/international population the way it does for clothing. Just like with clothing, each home furnishing startup has a specific way of doing things. Move Loot, which just raised $9M, operates on a consignment model, and will pickup the item, photograph, and list it for you. Of course this convenience comes at a steep price-50% to be exact. True marketplaces will always be the cheapest option given the lower cost structure, which is what AptDeco has done, although they have also built out a furniture delivery capability. They have even begun offering delivery from NYC home base to neighboring cities of Philadelphia, Washington DC, and Boston. That extended range should significantly increase sales, but of course big heavy items will always be expensive to move around. Other competitors Chairish and Viyet focus on vintage/design-oriented and newer/higher-end items, respectively. Viyet, and to a lesser extent, Chairish, even visits your home to select and document everything.

So is consignment the future for marketplaces? No, but it works well for used marketplaces because they rely much more on people who want to get rid of things but are not setup to run a business, otherwise known as casual sellers. Consignment also helps provide some curation by enabling the intermediary to weed out obviously bad items. Clothing startups offer to either return your items (for a fee) or donate them directly to charity, which is probably what those people would have done anyway.

More Vertical Marketplaces
We’ll continue to see specialized used marketplaces pop up with vertical-specific services that are designed to make the experience superior to that of a generic marketplace. 1st dibs, having raised a massive $122M, seems to be doing well with high-end antiques by sourcing products via an exclusive list of dealers. TrueFacet just announced $1.7M for a used jewelry marketplace, and will certify the authenticity of its products (a must in the high-end used space). Beepi tackled the used car market by providing inspections and purchase price guarantees, raising $79M in the process. This is all happening while the Used Merchandise industry as a whole is declining, according to the US Census (although I assume it misses a lot of newer online activity). Excluding cars, it’s down to $13.6B in 2012 from $16.4B in 2010, and the entire sector is expected to continue to contract as the economy improves.

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Photo credit: Flicker user slgckgc