Given the amount of money investors have been pouring into online resale startups over the past few years, we never really doubted the secondhand e-commerce concept's staying power. It's a competitive space, of course — some startups either repositioned or didn't make it past their first couple of years — but those that have survived have been able to grow rapidly. Vestiaire Collective, The Real Real and Thredup, three of the biggest, have raised over $100 million in venture capital each.
But while investors are clearly on board, are shoppers? A new report compiled by Thredup released Tuesday suggests that they are and that this isn't just a fad. Now worth $18 billion, the U.S. secondhand apparel industry as a whole — encompassing both offline and online (including eBay) — is expected to be worth $33 billion by 2021. And online resale is growing much more quickly than its offline predecessors (meaning thrift stores, Buffalo Exchange, Beacon's Closet, etc.): While offline resale has been growing at an 8 percent CAGR (compound annual growth rate), online resale has been growing at a 35 percent rate.
Online resale's other competition when it comes to budget-friendly apparel shopping is off-price retail chains like TJ Maxx, Nordstrom Rack and Saks Off Fifth. This market has been growing more quickly than full-price retail over the past few years (for some ailing department stores, they've been a saving grace of sorts), but it's no match for online resale, which is growing five times faster than traditional off-price. Additionally, 50 percent of Thredup shoppers said their secondhand purchases replace ones they would have made at TJ Maxx or Marshall's.
Of course, part of this rapid growth owes to the fact that newer businesses, if they're successful, generally grow more quickly than those that have been around for a long time (see: Madewell vs. J.Crew). Still, Thredup points to some overarching shopping preferences that are likely fueling the continued growth of what many are calling re-commerce.
Millennials — that all-important consumer group all retailers are obsessively trying to crack — are among those most likely to shop secondhand. The number-one most likely? Women over 65, though millennials tend to be motivated not only by saving money, but also by eco-conscious factors. Many resale shoppers don't even need a bargain. Interestingly, 36 percent of Thredup's most active shoppers make between $250,000 and $1 million per year, while 10 percent make over $1 million. According to Thredup, growing dissatisfaction with traditional retail is also contributing to the growth of resale. Online resale inherently offers elements like discovery and newness — thousands of items could be uploaded in one day, steep bargains and the ability to easily search brands online that many traditional retailers struggle to offer. Millennials' desire to spend on experiences rather than items could also be fueling their desire to seek out deals when it comes to clothing.
To borrow a phrase often used by Rent the Runway, Thredup also points to the rise of "access over ownership." In the case of online resale, it's the idea of selling your own items to make room for new (or gently used) ones, thereby seeing one's closet as a revolving door. This appeals both to the eco-conscious Millennial consumer and the one who just needs a lot of new outfits for Instagram photo variety. This might also be driven by the KonMari phenomenon. Seventy percent of people who have recently decluttered "feel a greater sense of control over their lives," the report notes.
New online resale concepts are popping up now, too. Suffice it to say: the struggling traditional retail market better brace for even more competition.
You can read the full Thredup report here.