The surging secondhand clothing resale business got a double dose of optimism from two separate reCommerce platforms on Wednesday (May 12), as both Poshmark and ThredUP told investors they were expecting increased sales as the economy continues to reopen in the second quarter and beyond.
The dual forecasts came as the two so-called “circular economy” retailers — both of which made their trading debuts as public companies early this year — announced results and forecasts that saw rising revenues and buyer and seller counts alongside continued net losses.
“We are pleased with our first-quarter performance and the trends we’re seeing in our business as we emerge from the pandemic,” ThredUP CFO Sean Sobers told investors on the Oakland, California-based company’s earnings call. “In the next few weeks and months, we believe more people will get out of their homes, reconnect socially and travel with a desire to refresh their wardrobes,” he added, noting his company’s appeal to digital consumers who seek an efficient, fresh and personal shopping experience.
At the same time, just 35 miles south in Redwood City, Poshmark’s CEO said his company was witnessing a similar acceleration within the retail industry’s hot secondhand sub-sector. “We are optimistic that as consumers begin to leave their homes and engage in social activities once again, there will be pent-up demand for apparel, which could drive more frequent and a wider range of apparel and accessory purchases, benefiting our marketplace,” said Founder and CEO Manish Chandra.
Despite headwinds from severe weather and ongoing pandemic restrictions that limited activity during the first three months of the year, Chandra said Q1 marked Poshmark’s fourth consecutive quarter of operating profitability and was a testament to the strength of its customers and social marketplace.
Riding the Circular Wave
The pair of reports follows similar results and sentiments posted by luxury resale leader The RealReal on Tuesday (May 11), which also reflected an increased interest in — and customers’ comfort with — the retail industry’s most interesting new channel.
Officially, Poshmark said its Q1 revenue and GMV both rose over 40 percent, while its active buyers topped 6.7 million. For its part, ThredUP told investors that its record revenue, active buyers and orders were helped by elevated awareness for thrifting and sustainability within the fashion sector by celebrity influencers such as Paris Hilton.
“The way we look at resale and the way brands and retailers are looking at it … this is a new emerging channel, so when you think about the current channels that exist out there, whether it’s stores or eCommerce or off-price or outlet, we think resale is another meaningful channel for these brands and retailers,” ThredUP CEO James Reinhart said on the earnings call, pointing to Lululemon’s recent entry into resale with the launch of its “Like New” venture to re-sell its premium-priced workout clothes.
“I actually think it’s really good that these brands are dabbling into [reCommerce], and we feel really confident that they will come to the conclusion that working with a company like ThredUP — who are experts in all of this — is the right move to scale,” Reinhart said. “We love what Lululemon is doing, but if they really want to do it big, they’re going to need a partner with real, meaningful scale for them to achieve their business objectives.”
For the record, Lululemon is currently partnered with secondhand marketplace manager Trove, a startup that also runs the apparel resale operations for Levi’s, Patagonia, Eileen Fisher and REI.
Who Is Next?
Considering the fact that Nike has also recently launched a resale pilot program for its sneakers, it appears that other retailers and brands will be hard-pressed to explain why they’re not taking part in this burgeoning opportunity, if only from an environmental and sustainability purview.
In launching its Nike Refurbished program in April as part of a five-year sustainability and carbon footprint reduction strategy, the footwear and apparel giant made clear that circular considerations were more than a passing fad. “[The Refurbished program] extends the life of eligible products by taking like-new, gently worn and slightly imperfect kicks, refurbishing them by hand, and offering them to you at select Nike [locations and stores],” the company said, while outlining the four-step process that will pave the way for its entry into the secondhand — or circular — shoe business.
As much as these thrifting sites are growing to meet consumer demand, their sales are limited by their ability to source and process supply at scale, which points to the value of securing relationships with businesses in addition to individual customers. “We think about ourselves as an enabler and a software provider, and these brands and retailers as customers. That’s the way we approach the opportunity, and we think that’s where the biggest prize is,” Reinhart explained.
According to Joseph Einhorn, co-founder of Brooklyn-based startup The Archivist, which tracks and monitors secondhand sales activity for brands on over 150 resale sites around the world in multiple languages, entering the circular reCommerce space is complicated but impactful.
“We believe that reCommerce will become a priority business line for brands right alongside wholesale and retail,” Einhorn said in an email to PYMNTS, noting that his company’s Marketplace-as-a-Service platform provides brands with a turnkey, white-labeled resale venue. “Brands need our big data and powerful software to win the resale wars.”
May 13, 2021 at 04:00PM