ThredUp Unveils New Platform And $175 Million In Funding As Resale Trend Accelerates

Even as the retail industry has slumped, dragged down by disappointing earnings and an unending trade war, resale is exploding. With the $24 billion secondhand market looking more and more enticing to hard-up traditional retailers, no small number of them began to court the fashion resale marketplace ThredUp over the last year, CEO and cofounder James Reinhart says.

“I think all of them acknowledged that resale was a trend that was accelerating,” he adds. “But they weren’t exactly sure how to participate in it.”

The result of those conversations, ThredUp announced today, is a new platform called Resale-As-A-Service that will allow retailers to partner with the company, offering three options: an in-store pop-up, online collaboration or a loyalty program. To power the initiative, ThredUp has raised $100 million in a new funding round, to go with a previously undisclosed $75 million from last year. That brings ThredUp’s total funding to more than $300 million and values the company at $670 million, according to Pitchbook. (ThredUp wouldn’t comment on its valuation.)

In pilots of Resale-As-A-Service, Reinhart says, the loyalty program has proved the most popular of the three options. In that model, when shoppers purchase an item from a ThredUp partner, they are sent a co-branded “clean out kit”—the bag that ThredUp sellers use to send items to be resold. But instead of receiving cash, as they would in a direct transaction with ThredUp, sellers in the loyalty program get credit to the partner retailer. ThredUp keeps the markup on the resold item, and the partner retailer improves its customer retention; the individual seller, meanwhile, may get a bonus for using the loyalty program instead of going straight to ThredUp. For example, Reformation, an eco-conscious contemporary label, adds 15% to what ThredUp offers a seller as an incentive.

The pop-ups are also gaining traction, with Macy’s and JCPenney announcing last week that they are partnering with ThredUp. The in-store spaces, which will be about 500 to 1,000 square feet, will feature new items on a weekly basis, offering brands that aren’t already in a typical Macy’s or JCPenney. There will be 100 pop-ups by Labor Day, Reinhart says, including the company’s partnership with Stage Stores, a department store chain.

Retailers across the board are demonstrating a “new appreciation for where the young shopper is shopping,” says Reinhart, 40. But it’s not as if Macy’s and JCPenney had much of a choice. 

Both have been struggling of late. Macy’s shares fell 13% after it announced its second-quarter earnings (and its ThredUp partnership) on August 14; shares are down another 9% since. JCPenney’s results were grim, too, and it’s at risk of being delisted from the New York Stock Exchange with shares hovering around $0.60.

The two companies have long been trying to differentiate their drab department stores any way they can to draw people in. JCPenney offers Sephora store-in-stores while Macy’s last year acquired Story, a concept shop.

With their latest attempt at a tie-up, there’s no doubt they have landed on a popular trend. According to a ThredUp report, resale is growing 21 times as fast as the broader retail market and itself will become a $51 billion market by 2023.

But what’s to say those treasure-hunting shoppers will choose a Macy’s with a ThredUp pop-up over an off-price retailer like TJ Maxx? Reinhart himself notes that’s where 70% of ThredUp shoppers say they would go if the reseller weren’t an option.

Still, Reinhart is confident that ThredUp’s broad appeal—it carries more than 30,000 brands—and its ability to scale will bring more retailers on board. He hints that other partners are already in the pipeline. Plus, the resale industry is only going to keep growing. Investors already poured $300 million into The RealReal, an online consignment shop that focuses on luxury, when it went public in June. And Poshmark, another resale startup, is considering an IPO this fall, the Wall Street Journal reported in April. (ThredUp says it has no plans to go public.)

“The opportunity has gotten bigger and bigger every year,” Reinhart says. “The closet of the future…is going to look very different than the closet of today. If you think back 10 years ago when we started, you had none of these direct-to-consumer brands. There was no such thing as rental. There were no subscription companies. 

In just these 10 years, we’ve had a radical shift in how people shop and buy apparel. And I think that shift is going to continue.”

This post first appeared on Forbes.com. To see the original, click here.