- ThredUp is an online sustainable fashion company founded by James Reinhart in 2009. Reinhart got the idea for ThredUp after realizing he had a closet full of clothes he did not want to wear and could not sell.
- ThredUp makes money by charging a commission on every piece of clothing sold on its platform. The exact commission depends on the listing price, which the company determines by analyzing the brand, size, seasonality, quality, and age of the item.
- ThredUp also charges customers a fee if they want to have their old clothing items processed by the company within a week.
ThredUp origin story
ThredUp is an online sustainable fashion company founded by James Reinhart in 2009.
While Reinhart was a business school student at Harvard University, he realized that he had a closet full of clothes he never wore.
At the same time, he was averse to purchasing new clothes out of a desire to save money.
To make some extra cash, Reinhart took his used clothes to a thrift shop where he was informed that they didn’t want the brands he was selling. What’s more, they didn’t even accept men’s clothing.
Ultimately, this predicament gave Reinhart the idea for an online platform where men could exchange dress shirts.
Less than twelve months after the GFC, the trio believed ThredUp would be an instant success among businessmen looking to save money. However, initial performance was lackluster.
The company sent prepaid Clean Out Bags to customers who would then mail their old and unwanted clothes in return. The pivot was extremely successful since consumers could make money with very little effort.
Today, the ThredUp platform carries more than 35,000 brands with many used clothing items selling for up to 90% below the estimated retail value.
In addition to being the world’s largest fashion resale marketplace, the company promotes sustainable clothing and seeks to educate consumers about the global fashion waste crisis.
ThredUp revenue generation
ThredUp makes money by charging a commission on every piece of clothing sold on its platform.
Commission rates are based on the listing price and are set by a team of company pricing specialists. Pricing is based on seasonality, item age, quality, style, and existing inventory levels in the same size or brand.
In general, ThredUp collects a higher commission on lower-priced items than it does on more premium items.
The commission scale the company currently uses is as follows:
- For items priced at $5.00-$19.99, Thredup takes a commission of 85-95%.
- For items priced at $20.00-$49.99, Thredup takes 70-85%.
- For items priced at $50.00-$99.99, Thredup takes 40-70%.
- For items priced at $100.00-$199.99, Thredup takes 20-40%.
- For items above $200.000, the company takes a 20% commission.
Expedited Clean Out Bags
Customers can order Clean Out Bags from ThredUp when they want to sell or donate unloved clothing items.
A standard Clean Out Bag is free, but the company does charge $16 for consumers who want the bag of clothes they send back to be processed within a week.
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