Used clothing is the hottest thing in retail right now - and even Goldman Sachs is taking notice
Many new companies that re-sell clothes are popping up, and venture capitalists are throwing money at them, Kim Bhasin at Bloomberg reports.
One of these companies, ThredUp, has raised a total of over $131 million, Bloomberg notes - and its latest round of funding (a whopping $81 million) was spearheaded by Goldman Sachs.ThredUp, which boasts the catchphrase, "like-new clothes from brands you love," has a relatively large online fanbase - 11.7 Instagram followers. The brand has capitalized on social media by encouraging followers to post their "unboxing" photos for a chance to be featured on the company's Instagram feed.
In January, Re/code reported that Tradesy landed $30 million round of funding from Kleiner Perkins. In September, Business of Fashion reported that luxury consignment shop Vesitaire Collective raised $37 million.
There are more competitors emerging, too, Bloomberg adds - including Poshmark, Vinted, and RealReal. And that's just the short list.Not at all analysts think this will work out in the long run. With so many competitors doing the same thing, it's an incredibly tough field.
"I don't even know if there is going to be one winner," Forrester Research analyst Sucharita Mulpuru said to Bloomberg. "This model is never going to take over the world."
Some venture capitalist believe it's all about execution.
"This is an execution business," Brian O'Malley, a partner at Accel Partners, a venture firm that has invested in Vinted, said to Bloomberg. "They're all competing over that same closet space."
And don't forget about the elephant in the room: eBay.
The "problem" that these startups are aiming to solve is that of Internet behemoths eBay and Amazon - they lack a level of curation, which these smaller startups possess, Bloomberg reports.
Still, eBay still remains the biggest online re-seller, Bloomberg notes, adding that eBay is working to make its experience more seamless.eBay also boasts breakout success stories, like Linda Lightman, who told Business Insider she makes $25 million a year in sales with her online consignment shop, Linda's Stuff.
Consignment shopping is already a wildly profitable industry - popular consignment stores like Buffalo Exchange and Second Time Around offer shoppers opportunities to sell their used clothing and purchase luxury clothing for less.
Even Goodwill has made over some stores to resemble Urban Outfitters stores.