Why Resale Site Thredup Is Opening Brick-and-Mortar Stores

Online resale is still hot, but this OG company sees opportunities offline, too.
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Photo: courtesy of Thredup

Photo: courtesy of Thredup

Just over $131 million. That's how much money online resale site Thredup has raised in the eight years it's been in business. It considers itself the world's largest online thrift store, as it doesn't limit its inventory to just luxury items like some of the other big "re-commerce" sites you may have heard of. But it still wants to get bigger (and given all that equity funding, it probably has to), so it's moving offline with plans to open five brick-and-mortar locations by the end of 2017.

The e-commerce space saw a bit of a resale boom between 2009 in 2012 with entrepreneurs and investors alike seeing an opportunity to disrupt the dusty thrift store concept in a sleeker, more enticing way than Ebay had done by taking it online. Like others, Thredup allows sellers to simply mail in their unwanted clothes and accessories, and the company takes care of the rest. Shoppers can find over 35,000 brands at up to 90 percent off. So why move offline at a time when traditional brick-and-mortar retailers are struggling — including some offline secondhand chains — when its online model has been successful?

According to Thredup's Head of Retail Experience Heather Craig, it's because there's plenty of opportunity to disrupt the traditional IRL thrift store experience, too. "Our customers for years have been asking for us to have some sort of a brick-and-mortar expression of our brand," she says, noting that 91 percent of the U.S. retail market is still omnichannel, meaning stores that connect online and offline components. In addition, 85 percent of apparel is still bought offline. "We really thought there was a huge opportunity for our customer as well as for growth to be able to go into this brick-and-mortar segment of the business."

Photo: courtesy of Thredup

Photo: courtesy of Thredup

In regards to the turbulent retail landscape, Craig says that the closings and bankruptcies we've seen have been "a long time coming."

"This is kind of a perfect time to go into retail when there's all these sort of other changes happening in the opposite direction," she adds. Thredup's first physical store will open in an outlet mall San Marco, Texas — near Austin — on July 20, and the company is calling it the "world's first smart thrift store." Everything — including where each store opens — is backed by data. By leveraging what it knows of its shoppers' online habits and locations, the company can pinpoint exactly what's trending by city and will stock shelves accordingly. It can also tap into its vast inventory and utilize its infrastructure of four distribution centers throughout the country to consistently cycle in fresh product — up to 1,000 new items per day, Craig says. Thredup will also ensure that its stores feel different from traditional thrift shops.

"When you've shopped in previous thrift stores, you may have noticed that some of them are not really highly merchandised, their service might not be as great, a lot of the products may seem a little bit outdated or not as exciting," says Craig," but what we're really looking to do is change that so we have a store that is beautifully designed and merchandised; it's a very clean and minimal aesthetic." Also unlike stores like Buffalo Exchange and Beacon's Closet, customers can't sell their clothes on site, though they can bring in their "clean out kit," which store associates can mail to the distribution center for them.

Photo: courtesy of Thredup

Photo: courtesy of Thredup

After the first store opens and it works out the kinks, Thredup also plans to integrate omnichannel features, like notifications of in-store arrivals in a customer's size, favorite brands and styles; pre-stocking dressing rooms with items a customer chooses; and a service that suggests items available online to complement the look they bought offline. 

Thredup isn't the only resale site with plans to move offline. The Real Real, which focuses on authentic secondhand luxury items, announced recently that it would be doing the same with a concept store set to open in New York this winter.

With all of the money these companies have raised, this is likely where many of them are headed. And if it works, that could mean bad things for more traditional secondhand chains. Just like everyone, they're going to have to find ways to innovate if they want to compete.

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