October 21, 2021
While the pandemic may have devastated many retailers, it created a boom period for online consignment and second-hand platforms. Many of these second-hand retailers were already thriving before 2020, thanks to bargain-hunters, thrift shop enthusiasts, and consumers concerned about sustainability and climate change (fashion is one of the top polluting industries, contributing 10% of the world’s total carbon footprint).
Shuttered retail stores, a questionable economy and other factors also combined to create an environment that strongly favored these online platforms – and the IPOs followed. This year, the public markets welcomed at least three major consignment platforms – CarLotz Inc. (Tii:LOTZ) and Poshmark Inc. (Tii:POSH), both of which went public in January; and ThredUp Inc. (Tii:TDUP), whose IPO took place in March. These three join luxury fashion consignment platform The RealReal Inc. (Tii:REAL), the veteran of this space which raised $300 million via its June 2019 IPO.
While the estimated size of the online consignment market varies, ThredUp places it at $36 billion and projects the market size to double to $77 billion in five years. With such a massive market, expect competition to intensify in the coming years. Here is a quick look at some of today’s leading players in the online consignment space.
The online market for used cars has perhaps never been stronger. A lack of new inventory (caused by a pandemic-related disruption in the chipmaking supply chain) and strong demand from bargain-hunters created a surge in used car prices. These conditions are expected to continue for at least the next year or so. Among the beneficiaries of these dynamics is used vehicle consignment and retail remarketer CarLotz Inc. (Tii:LOTZ). The company’s 2020 net revenues, driven by double-digit growth in retail average selling price and financing and product revenues, increased 16% to $118.6 million.
That strength continued into this year. Net revenues for CarLotz’s second quarter ended June 30, 2021, increased 92% to $50.8 million from $26.4 million in the same period in 2020. As a result of this strong demand, CarLotz undertook an aggressive expansion plan that includes new hubs in California, Colorado, Florida, Georgia, Illinois, Missouri, North Carolina, Tennessee, Texas, Virginia and Washington State, with Alabama and Nevada coming soon.
A leading social marketplace for new and second-hand styles for women, men, kids, pets, homes, and more, Poshmark Inc. (Tii:POSH) is capitalizing on the consignment trend by expanding through acquisitions. The company recently announced its first acquisition – Suede One, a platform that combines machine learning, computer vision and expert human review to virtually authenticate sneakers. The company plans to look at other potential acquisitions in high-growth resale categories to fuel future growth. Poshmark has also grown organically, with a 25% increase in merchandise value and 22% year-over-year revenue growth for its second quarter ended June 30, 2021.
Billing itself as the world’s largest online marketplace for authenticated, resale luxury goods, The RealReal, Inc. (Tii:REAL) platform has more than 20 million members. Its authenticators inspect items each day and the shopping experience is designed to be effortless with free virtual appointments, in-home pickup, drop-off and direct shipping. The RealReal also maintains retail locations where customers can sell items and receive free valuations. Similar to others in the consignment space, RealReal is experiencing strong demand – particularly in its women’s apparel and shoe categories. This demand contributed to a 44% increase in September Gross Merchandise Volume (GMV).
One of the world’s largest resale platforms for women’s and kids’ apparel, shoes and accessories, ThredUp Inc. (Tii:TDUP) is also in expansion mode. The company, which has processed over 125 million unique second-hand items from 35,000 brands across 100 categories, plans to open a 10 million item flagship distribution center in the Dallas area. ThredUP expects the facility to employ 300 people at the location upon its opening, with later plans to employ 2,000 total. The company is coming off of a record-setting second-quarter performance in which total revenue increased 26.7% to reach $60 million.
Even though operations at brick-and-mortars have mostly returned to normal, online consignments are continuing to thrive. Eco-conscious consumers (and investors), current fashion trends and buyers seeking deals should continue to favor this sector for the foreseeable.
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