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June 2, 2020 | 6-minute read (1082 words)
Ever since eBay and Craigslist launched, the market for pre-owned items moved far beyond thrift stores. The demand for affordable, refurbished goods and discounted clothing has significantly increased in the past few years. According to the National Retail Federation, nine in 10 shoppers buy from discount stores, and 75 percent look for clothing deals, making the market for pre-worn clothing a natural offshoot of the used goods category.
Advancement in technologies has made buying and selling second-hand products more accessible than ever. The opportunities in this space appear to be continuing to grow, and many firms are creating startups to meet the need for more used items. According to a report by Cowen & Co., the current resale market in the US is valued $20 billion, with the potential to reach $33 billion by 2022.
Companies Involved in the Pre-Owned Space
Already available apps and websites are growing in size every day, offering different ways for individuals to buy or sell a wide range of used items, from apparel to electronics to cars to furniture and beyond. Many multibillion-dollar companies are thriving in the pre-owned market across different countries and verticals. Following is a list of a few such companies, including their growth history and what worked best for them.
eBay is a global online auction and shopping website launched in 1995, in which people and businesses can buy and sell everything from books to electronics to doll clothes to cars nearly anywhere to anyone. In March of 1998, eBay achieved half a million users and $4.7 million in revenue. By the end of 2000, eBay had 12 million registered users, and by 2018, the firm had over $10 billion in revenue. The key growth factors of eBay were its implementation of safe and transparent trading, and a feedback system for buyers.
According to Edison Trends, the top-selling product categories on eBay in 2018 were electronics and accessories (17 percent), with books and clothing/accessories tied for second place at 16 percent each.
Craigslist began with a free email distribution list of forthcoming local events in 1995. It became a web-based service in 1996, and soon, word of mouth led to its rapid growth. Now, Craigslist enables sellers to list anything from furniture to leftover construction materials in their local communities and neighborhoods. The site now covers 70 countries and has 55 million monthly visitors. With over $1 billion in revenue during 2018, it's clear that the market for used goods is continuing to remain steady.
5miles is another app for local selling and buying. Launched in 2014, it has users in more than 100 countries, with a strong base of customers in the United States. 5miles checks every item to make sure they match safety guidelines and identifies and quickly disables any account with suspicious or fraudulent activity. 5miles provides many safety-conscious features to recommend safe buyers and sellers in your area.
ThredUP, first launched in 2009, is an online resale marketplace that enables individuals to buy and sell pre-owned clothing and accessories for kids and women — without leaving the house, taking photos or managing the transaction. ThredUP offers 35,000 brands across multiple ranges and provides up to 45,000 additional items daily. ThredUP net sales in 2019 were $380.6 million.
Poshmark is a United States-based social commerce marketplace for reselling designer apparel, accessories and makeup. It was founded in 2011 and sold more than one million items by 2013. In late 2017, Poshmark was valued $625 million, and the firm paid out $2 billion to its community of 7 million sellers by 2019. Daily posh parties within the app are a key growth factor that allow people to browse a particular theme, and ask questions about items for sale.
Poshmark went the eBay route, letting people follow each other and share their lists. By September 2019, the company had more than 50 million users nationwide and over 7,000 brands with new items added every day.
The RealReal, founded in 2011, is a United States-based pre-owned luxury consignment marketplace that offers online and brick-and-mortar platforms for selling clothing, fine jewelry, watches, fine art and home decor from hundreds of high-end brands. The company employs more than 100 experts to verify all products for authenticity and value. This feature helped the company to build trust among its buyers, and achieve 9 million members by the end of August 2018.
The RealReal generated a gross merchandise volume of $1.008 billion and a revenue of $318 million in 2019. The company's uniqueness is its rigorous authentication process and partnership with brands in a few different ways. It shares resale data to consignment partners and maintains promotional relationships with like-minded brands for a shared mission. Vestiaire Collective and Tradesy (only for women) are other pre-owned market spaces that provide a similar product profile.
Mercari, an app created in Japan in 2013 and adapted for the US in 2014, is a consumer-to-consumer marketplace where anyone can buy and sell anything new or used. In less than three years, Mercari's US version surpassed 30 million downloads, and five years later, it achieved a total of 100 million downloads across Japan, the US and the UK.
Now, Mercari has more than 2 million monthly active users in the US, and around 1.5 billion items listed as of January 2020 with 150,000+ items added every day. It has achieved this growth by developing an analytical platform, pursuing proactive marketing strategies, improving UI/UX, prominent TV commercials and providing AI-based fraud monitoring for safe and secure transactions.
Opportunities in the Pre-Owned Space
It’s survival of the fittest in the pre-owned market space, so you'll need to provide a unique experience to your customers if you're interested in entering this space for the first time. If you're a traditional retailer thinking about taking your pre-owned items online, then you can join hands with an already existing renowned platform to scale your resale business in weeks like the following brands have done.