ThredUp is launching ThredUp Luxe, a new platform that caters to luxury sellers and customers. With Luxe, ThredUp’s expanding its reach beyond mass-market brands, and hoping to win over the pricier inventory of its existing sellers who might have otherwise sold their luxury goods to specialty marketplaces like The RealReal or Vestiaire Collective.
ThredUp, which launched in 2009 and has since raised more than $130 million in venture capital, carved out its presence in the crowded online reselling space by building an internal system that surveys and prices secondhand goods using machine learning and artificial intelligence. Sellers submit inventory by filling a ThredUp-branded duffel bag and shipping it back to one of the company’s warehouses. Machine algorithms then determine if the items are able to be sold; the company can assess up to 100,000 items per day. Depending on the condition, brand and other variables like trend and style, sellers will either be paid upfront by ThredUp or paid out once an item is sold. Items that don’t sell can be reclaimed by the original owner.
ThredUp’s original strategy was to cast a wide net and scale the business by processing massive volumes of clothing per day, something that doesn’t easily translate to the luxury process. Even the ThredUp duffels themselves weren’t designed to transport something like a $10,000 handbag from Hermès.
But there’s plenty of money to be missed by ignoring the luxury resale market: In a 2016 report, Goldman Sachs predicted that by 2025, the resale market would hit $25 billion in value, largely driven by big-ticket purchases. In 2016, a previously owned Hermès Birkin sold for a record-breaking $223,000.
To draw in that inventory, ThredUp overhauled its existing system. It redesigned the bags with a bullet-proof nylon material and tagged them with RFID technology to be able to track its location at all times. ThredUp also hired an authentication team to identify counterfeits — something its computer isn’t equipped to do yet. But ThredUp’s massive database of items that it’s already processed, which amounts to 20 million to date, still guides the judgment for luxury and high-end items.
Luxury sellers will also get high-touch customer service features, like a live video chat with the authenticator team that will let customers get estimates on pricing before sending products in. ThredUp’s pricing system will remain the same for luxury items: The team offers the seller a suggested price based on its internal data, and the seller can either accept that price or tweak it.
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