Today San Francisco-based kids resale marketplace thredUP announced it has closed $14.5 million in Series C funding from Highland Capital Partners, with participation from its existing investors Trinity Ventures and Redpoint Ventures. While thredUP has traditionally focused on children’s items, the company will be looking to expand beyond kids clothing to teen, maternity and adults, a move that would put them into competition with other popular resale marketplaces like Twice and eBay.
ThredUP lets parents shop for used kids clothing and accessories, while letting parents sell their existing kids clothes that aren’t being worn. Co-founder and CEO James Reinhart said in an interview that the funding will be used to scale out their operations and to increase the amount of clothes they can process in any given day.
“Specifically, we plan to invest resources in building the tech and infrastructure needed to bring online resale to millions of mainstream consumers,” Reinhart said. “This means opening new processing and distribution centers. It means hiring significantly on our operations engineering team. And it means developing proprietary technology to automate the clothing evaluation process at tremendous scale.”
The company now has one 60,000 square foot distribution and processing center in San Leandro, CA, which is run by recent hire and former Netflix DVD executive John Voris. They will be using the funding to open several more centers across the U.S. While right now they’re putting 3,000-5,000 new items online every day, they want to increase that to 25,000 items at this time next year.
In order to sell on the site parents request a bag, fill it with their unwanted clothes, and thredUP pays for the shipping. ThredUP’s team evaluates the items in the bag, and pays parents for the items they can use, typically 30 percent of each item’s value (the items they don’t use are recycled, parents don’t have the option to get the other items back). The company takes care of photographing and posting the items.
The company’s item submission process, along with the fact that they evaluate and post every item on the site rather than letting users upload them themselves, is what sets it apart from resale marketplaces like HipSwap, eBay and Copious. Others are tackling the thredUP model though, with startup Twice essentially offering the same service but for women’s clothing. Reinhart said the expansion is due to user demand, and it could have an edge since parents will likely send in their own maternity clothes at the same time they send in kids items.
“We hear repeatedly from our customers, primarily moms, that they want a similar service for their clothing,” Reinhart said. “We think the value and convenience of online resale is something all consumers should be able to tap into.”
Ultimately Reinhart believes that their role as a middleman between the seller and the buyer is what sets them apart from other online marketplaces, and what will allow them to succeed when it comes to expanding to other verticals.
“What we’ve found is that in the second-hand apparel market…quality and condition of clothing are really important,” he said. “By taking control of the inventory and having it sent to our processing center first, we are able control the customer experience, and has thus drive incredible loyalty.”
ThredUP is currently only available to U.S. consumers, both on the buyer and seller side, and Reinhart said they plan to focus on that market for now and grow their verticals rather than locations. He also said they’re hiring engineers on their mobile team, and will continue to build out and improve upon their mobile apps. ThredUP has raised over $23 million in funding to date, and with a solid base of clothing coming online daily, with plans to expand both their processing capabilities and verticals, it’s poised to become a leader in the online consignment space.
