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thredUP reinvents second hand clothing

Posted by Jason Keith  September 28, 2012 08:52 AM

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They say that there's a business for everything. In many cases there are more than one. Oftentimes it's a different spin on an existing business that succeeds. One of my goals for this blog is to higlight the business owners that have taken a chance in starting a business that's doing things differently and having an impact locally, nationally or globally.

One such unique business is thredUP, a start up born in Boston and now based in San Francisco. The idea was that with kids quickly outgrowing their clothes and massive amounts being stored in bins, bags and suitcases across the country, parents would be eager for a simple solution to not only get those clothes oh out of the house but make some money in the process. Outside of donating them or simply throwing them out, there weren't many options for parents. From that, thredUP was born.

Ceo James Reinhart, who attended harvard business school and Boston College, explained the inspiration for the company.

"The idea for thredUP started brewing when I was studying at HBS in 2009. One morning I was staring into my closet deciding what to wear, skipping over the dozens of shirts I was sick of looking at. I knew I wasn?t alone in this feeling of wardrobe fatigue, and it got me thinking about the inefficiencies in the second-hand clothing market. There was no easy way for me to trade in my old shirts for new ones. My co-founders (Chris Homer and Oliver Lubin) and I transformed the idea into version one of thredUP.com, a men?s online shirt swapping pilot. Soon after, I was expecting my first child and learned that this clothing dilemma hit families even harder. Kids outgrow their clothes at least every 6 months, and parents end up spending upwards of $20,000 replacing clothes that are practically new. So in spring 2010 we pivoted the business, launching an online platform for sharing and accessing gently-used kids clothing."

The business has since become a blend of online shopping and offline delivery and pick up. Anyone can sign up to get a thredUP bag which they fill with unwanted clothes and leave to be picked up (shipping is free). The clothes are then sorted and screened to see if they meet the company's stnadards for resell. If not, they are recycled. If clothes qualify, they are put on the sight, with the donators getting a portion of the sale, similar to a local consignment shop. Customers are paid 20%-40% of each clothing item?s estimated resale value, while thredUP takes a percentage of the item?s sale price after covering costs. Users who are curious to see how much money can be made can log onto the site and see real time numbers. The hurdle,of course, is getting people to buy used clothes, never a "mainstream" option.

"We?ve set out to make second-hand shopping a default option for families, which is really attempting to change consumer behavior," said Reinhart. "To get mainstream consumers shopping "used" we have to provide a great experience and eliminate the stigma. To get there we?ve invested heavily in selling only flaw free, practically new clothing. Not only do we have a rigorous clothing inspection and qualifying process, we also reject certain brands that typically show excessive wear after a few washes."

Early results have been encouraging for the company. It is receiving and selling thousands of clothing items each day (it has paid out more than $230,000 to families for sending in outgrown clothes, as well as recycling approximately 150,000 pounds of clothing) and recently moved into a 60,000 sq ft facility to manage the inventory and process. Reinhart projects they will be putting more than 25,000 items online everyday by next year at this time and is on track to have the largest online supply of pre-owned children?s clothing available for purchase anywhere on the web. There are nearly 100 people in the company.

While still relatively in its infancy, the company does have big goals, according to Reinhart. "We are working hard on building an infrastructure and team that will allow for massive scale, speed and efficiency. We also hope to open new distribution centers to offer next day delivery to our growing national customer base, and potentially extend to other verticals."

I asked Reinhart what advice he had for new business owners just starting out, having successfully done so himself. His reply was to hire people smarter than you or that can bring something to the business that it doesn't have but needs.

What do you think about thredUP? Is it a business you can see succeeding or will the "second hand clothes" market never truly take hold?

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About this blog

Jason Keith has been working for and with small businesses in the New England area for more than 10 years, specifically small, micro businesses. Born and raised in Massachusetts and a former journalist, he provides a unique perspective on the issues facing small businesses locally and nationally.To reach him directly email jasonpkeith@gmail.com.

This is a personal blog. The opinions expressed here are the author's alone.

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