Second to none: fashion resalers bulk up to capitalize on booming sales

ThredUp

28/10/2021 13:39

By Uday Sampath Kumar
    Oct 28 (Reuters) - Second-hand clothing firms are fighting
to snap up smaller rivals and lock in investment as demand for
thriftwear booms on the back of supply chain snarl-ups for
traditional retailers ahead of the peak holiday shopping period.
    Newly listed companies such as Poshmark Inc  POSH.O  and
ThredUp Inc  TDUP.O  are starting to scoop up smaller firms to
fend off competition from deep-pocketed apparel brands such as
Levi Strauss & Co  LEVI.N  and Urban Outfitters Inc  URBN.O ,
which have launched their own thrifting businesses.
    Volume growth is essential for second-hand clothing
companies to turn in steady profits in an industry notorious for
tight margins and inconsistent inventory, analysts say. 
    "Companies like ThredUp and Poshmark have to demonstrate
growth, and one of the things that they will probably do in the
next few years is acquire other players, maybe in foreign
countries," Neil Saunders, managing director of research firm
GlobalData, said.
    The resale industry is expected to grow 11 times faster than
the broader retail clothing sector in the period to 2025,
according to GlobalData, driven also by a growing awareness of
fast fashion's environmental toll.  
    That could make the industry a magnet for deals as companies
look to grow quickly to capitalize on a boom that industry
estimates suggest could more than double the size of the U.S.
second-hand apparel market to $76.4 billion by 2025.
    
        
    Poshmark, a platform for peer-to-peer sales that takes a 20%
cut of each transaction, made its first acquisition earlier this
month, of a company that authenticates sneakers. 
    It is eyeing more takeover deals, especially in overseas
markets, as it looks to put more than $500 million in cash on
its balance sheet to work.   
    "So far, the four countries we've entered - U.S., Canada,
Australia and India - have all been organic, but there certainly
are opportunities for inorganic growth there as well," CEO
Manish Chandra told Reuters.
    Rival ThredUp bought European thrift site Remix Global in
July in a bid to expand beyond U.S. shores, an acquisition it
said would "springboard" further expansion in Europe. It
declined to comment on prospects for further deals.
    Etsy Inc  ETSY.O  has also bought British secondhand fashion
app Depop for $1.6 billion. More consolidation, Julie
Wainwright, CEO of luxury reseller The RealReal Inc  REAL.O ,
said earlier this year, "is going to happen".
    
   
    FRESH STYLES
    The supply-chain disruptions making it hard for retailers to
get fresh styles on their shelves - apparel had the highest
online out-of-stock levels among U.S. retail sectors in the
run-up to the holiday season, Adobe Analytics said - are
benefiting second-hand sellers.  urn:newsml:reuters.com:*:nL4N2RE2TA
    Richard Branson-backed resale marketplace Tradesy, which
raised $67 million in a funding round earlier this year, expects
shortages of new apparel to translate into strong holiday sales.
    CEO Tracy DiNunzio told Reuters the company favored
independent growth, but was open to "other possibilities".
    Other firms have found themselves ripe for investment from
more established players. High-end thrift platform Vestiaire
Collective raised $215 million this year as part of a financing
round that included French luxury group Kering  PRTP.PA  taking
a 5% stake in the company.
    "I can't imagine any large clothing or fashion player not
either partnering with or investing in or acquiring a successful
(second-hand apparel) startup platform," said Jon Copestake, a
senior analyst at EY's Global Consumer group.
    Levi Strauss launched its own thrift website "Levi's
Secondhand" last year where it sells authenticated used denim it
sources in large part from its own customers. 
    Other apparel companies such as Urban Outfitters are opting
for a peer-to-peer marketplace, where the company connects
buyers and sellers of used clothes and collects a 20% commission
on sales.
    With margins slim, beefing up sales volume counts. Urban
Outfitters says focusing on a peer-to-peer model, in which a
company provides a platform for deals between individuals rather
than involving itself directly in sales, is key to making its
business model work.
   "This is a volume play. In a peer-to-peer marketplace model,
scale is much more possible and there's much more potential to
do it quickly, because the platform is not the arbiter of
supply," its Chief Technology Officer David Hayne said.

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Thrifting boom    https://tmsnrt.rs/3CkAdJL
Thrifting boom    https://tmsnrt.rs/3mjq1fd
Secondhand apparel gaining market share    https://tmsnrt.rs/3BlwEBG
Secondhand apparel gaining market share    https://tmsnrt.rs/3CnjlC7
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 (Reporting by Uday Sampath in Bengaluru; Editing by Anil
D'Silva and Jan Harvey)
 ((UdaySampath.Kumar@thomsonreuters.com; within U.S.+1 646 223
8780; Twitter: https://twitter.com/sampath_uday  ;))