![]() For example, sellers are sending in fewer Cleanout bags, filling those bags with more items and including higher-quality pieces, all of which Reinhart attributed to the shift in mindset “when people are paying for a service.” These include new fees for ThredUp’s cleanout service, which was previously free, and an increase in the “restocking fee” for returnable items from $1.99 to $3.99.Īside from bringing in additional revenue, Reinhart noted on the 2022 earnings call in February that the modified fee structures also were helping to incentivize more lucrative behaviors. Earlier this year, ThredUp began testing a series of changes that Reinhart described as “a meaty experiment” in optimizing the unit economics of its marketplace. The company also is taking steps to improve the margins on the marketplace side of its operations as well. “If you think about any company that’s been an innovator in the economy, whether it was Amazon or Tesla or Netflix, people always pooh-pooh the growth strategies and say, ‘These companies are never going to make money.’ We know that’s not true, because once you cross that threshold of paying back your fixed costs, you can generate enormous amounts of profit. “Ultimately it’s just about getting bigger to serve more customers - as we do that, the profits will come,” Reinhart told Retail TouchPoints in a 2022 interview. ![]() The tide is turning though: ThredUp anticipates a significant reduction in its CapEx spending in 2023 - by approximately 60% compared to last year - thanks to the completion of projects like a new 600,000-square-foot processing facility in Dallas. ThredUp spent $128 million on operations, product and tech in 2021 and nearly $156 million more in 2022. But Amazon’s success in these areas came after years of heavy investment, and the same has been true for resale companies. Today, the company’s Resale-as-a-Service (RaaS) offering boasts more than 50 client brands, representing a “recurring, high-margin revenue stream,” as CEO James Reinhart described it on the company’s 2021 earnings call.Īmazon has been the model for this type of monetization, from its AWS cloud services to its Fulfillment by Amazon offerings for marketplace sellers. In 2019, the company packaged the tech and logistics infrastructure it had developed to run its own marketplace and began to offer it to other brands and retailers as a white-label service. While both companies debuted at over $20, shares of ThredUp were trading at $2.99 and The RealReal were trading at $1.32 as of May 9, 2023.ĭespite operating one of the largest resale marketplaces in the U.S., ThredUp now views itself as more technology company than retailer. Both The RealReal and ThredUp have seen share prices dip precipitously since their IPOs in 20, respectively. ![]() However, this positive momentum has not been enough to satisfy Wall Street (a common challenge for companies in the retail and tech sectors). Total revenue at The RealReal fell 3% YoY to $142 million, but much of that came from direct sales, which declined 49%, while revenue from consignment was up 22%, reinforcing the company’s renewed focus on this side of its business. ThredUp saw revenue increase 4% YoY to $75.9 million and decreased its adjusted EBITDA losses to $6.6 million, or 8.7% of revenue. īoth companies’ Q1 results do indeed indicate movement in the right direction. This dilemma was on display as two of the biggest managed resale marketplaces, ThredUp and The RealReal, reported Q1 2023 earnings on May 9.īoth platforms have zeroed in on profitability as their primary focus in the coming year, with ThredUp confirming its expectation that it will reach adjusted EBITDA break-even by the end of 2023, and The RealReal reiterating its own prediction that it will reach profitability by 2024. Resale is one of the hottest sectors of retail right now, but despite rampant consumer demand and brand uptake, resale platform operators are struggling to make ends meet. ![]()
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