The trend: Shoppers embraced fashion resale platforms in 2021, with multiple companies reporting record sales and revenue growth.
A closer look: Despite those strong percentage increases, several of the biggest names in fashion resale are not yet profitable.
However, both companies are taking a longer-term view of success.
Analyst take: ThredUP’s strong 2021 illustrates “resale’s sustained appeal among fashion consumers,” said Sky Canaves, eMarketer principal analyst at Insider Intelligence. “However, the company's big investments in infrastructure and expanding into the European market have added up and will continue to cut into future profitability. ThredUP is really betting on an ‘if we build it, they will come’ strategy, but they won't all come this year.”
The appeal of resale: Fashion resale is growing in popularity among consumers, thanks in part to increased interest in sustainable shopping and vintage styles. And with luxury brands continuing to raise their prices, buying secondhand allows consumers to get access to the goods they covet without emptying their bank accounts.
Paths to profitability: With the number of online fashion resale shoppers growing slowly, resale platforms must find other ways to make money.
The big takeaway: For fashion resale platforms to succeed, they must be able to maintain an engaged and loyal user base. Not only will doing so enable them to increase lifetime value per customer, but it also means the platform becomes top-of-mind when the consumer has something to sell.
As the competition for customers and inventory heats up, platforms will have to decide which perks to offer users, from lower seller fees to exclusive brand partnerships, that will keep them coming back.