This post has been sparked because of the September 2016 issue of Inc. The September issue features the 500 fastest growing private companies in America. I always pay the most attention to the ones under the category ‘Consumer Products Services’ because it is where apparel companies, if any, are listed. This year I noticed a company called Shop Melee listed at 231 with a three-year growth of 1724.2%. Upon checking it out, it is a used apparel consignment shop. I was impressed, to say the least, so it got me looking into other online consignment retailers.
The one that most of this article will be written about is ThredUp, mainly because it is really well branded and probably one of the fastest growing and well known second-hand shops online. The site is competitive. I think they have great prices and products; however, even after narrowing it down to my sizes, when I scrolled to the bottom of the first page to hit ‘next’ my eyes widened when I saw there were 602 pages (57,772 items). How in the world am I supposed to get through all of that?! I mean, sure, I don’t have to but I feel like if I don’t I could be missing out on the most fabulous item just because I couldn’t (didn’t) hit ‘next’!
I also struggle because I have been going to my favorite consignment shop in Lake Forest, Illinois (image below) for quite some time and the prices and products are unbeatable. To list a few, I have bought a Henri Bendel sweater and a Neiman Marcus Cashmere sweater both for $10 and Christian Dior silk scarves for $5 so it makes it hard for me to press “add to cart” on a similar items that costs $60 or more.
During these thoughts I decided there is an incredible “hole” in this industry that someone could really use to build an empire. Similar to the model Everlane has built, by making the margins more reasonable and transparent it could really lead to turning a greater profit. Based on what I calculated from ThredUp’s website where they list what sellers receive when they “donate” (see above image) ThredUp is making gross margins of about 80% or higher (i.e. giving the seller an amount of $1.50 and turning around and selling it for $15).
There is, from what I have found, no used clothing site that shows the used apparel on a body. Most of the time they are dress forms. While that, undoubtedly, makes photography go faster since they are receiving so much product and want to turn it around as fast as possible, it is just not the same as seeing clothing draped on a real body. The photography is professional and high quality, there is no doubt, but there I think clothing being on a body is an essential element of getting the item sold.
As has been seen with new emerging companies from Loot Crate (featured in Inc. as #1 on the list with a three-year growth of 66,788.6% which is almost double the growth of the company sitting at spot #2), Rent the Runway, ZipCar, Ipsy, Trunk Club (Summer 2015 intern 👋🏼), Dollar Shave Club (also on Inc. 500 at #65 with a three-yearr growth of 4191.3%) etc., there is a huge demand for subscription services. The sharing economy is also greatly increasing, people are seeing the value in sharing gently used products as opposed to spending an eye-popping full price amount. With people seeing the value in both, this is another opportunity for those who enjoy thrifting and vintage to move into.
The greatest aspect of monthly subscriptions is the chance for the company to continually WOW the customer and make them continue the subscription indefinitely. This is scary, though, because it is also the area for the greatest failure. Each month the company MUST learn their customer more and more and make the subscription more tailored to his/her needs. If each box comes and is more like the customer than even THEY realize, then gold has been struck. If month after month the customer doesn’t feel as though their likes and dislikes are being taken into consideration, then the customer will likely not continue with the subscription. Consumers are expecting more these days in customer service and while a company may have thousands of subscribers each person should never feel as though they are just a number when their monthly gift arrives. If this is tapped and understood, profits will follow.
For vintage lovers and thrifters going on the treasure hunt is a part of all the fun. Keeping that element a part of a service is important and something that should be leveraged. I think a smart way of doing this would be to list where the item was gotten and some history (or as much as can be found) on it. This will allow the customer to pass the word on about the garment or accessory and also be a great way for word of mouth marketing. Making a vintage lover feel as though they were a part of the selecting journey will make it a really unique and personal experience.
All in all, I think there are strong vintage and used websites out there but I also think there is A LOT of room for growth and opportunity…it just needs to be found (no pun intended).
Here are some of the online consignment shops I looked into when writing this post: