Sorted Scoop: ThredUp's Resale Service Expansion Bodes Well for Future Growth
ThredUp's third-party platform potentially generates more revenue compared to its resale of secondhand clothes, according to Wells Fargo's analysis.
ThredUp's side hustle, the resale platform aptly named RaaS (Resale as a Service), has seen a whopping 30% increase in clients over the past year. This growth spree isn't stopping anytime soon; according to a recent report by Wells Fargo, RaaS clients could skyrocket from the current 30 to over 200 in the next five years, and potentially reach over 300.
This robust growth is expected to bring in serious revenue for ThredUp, with their yearly earnings for RaaS jumping from $2 million in 2021 to an astounding $300 million by 2025. By 2029, these figures could balloon to a staggering $925 million, per the report.
ThredUp's RaaS partners include big names like Madewell, Walmart, Everlane, eBay, Farfetch, Gap, and most recently, adidas. These brands pay monthly fees and a portion of their sales to ThredUp.
E-commerce is a goldmine for logistical complexities and costs. To counter this, retailers can develop services and tech that prove beneficial for other retailers. Amazon has demonstrated this through its Amazon Web Services (AWS) cloud unit and other services for marketplace sellers, which consistently outperform retail sales.
ThredUp has hopped onto this bandwagon, leveraging its tech operations with its RaaS platform. Analysts at Wells Fargo predict strong margins for ThredUp via this RaaS platform, estimating EBITDA of over $50 million in 2025 and over $400 million by 2029.
″′While the spotlight from investors persistently focuses on the managed marketplace, this report takes a closer look at the highly overlooked RaaS model that ThredUp has gradually ramped up,″′ wrote Ike Boruchow, the lead analyst at Wells Fargo.
ThredUp's RaaS service benefits both the company and its clients. The service's success is also backed by the thriving resale market, which analysts view as the next major disruption in the retail industry, following the recent disruptions from e-commerce and off-price retailing.
The company's recent acquisition of European retail platform Remix is a smart move in light of projections that the European secondhand market will double by 2025, driving the combined U.S. and European resale market to approximately $68 billion in 2025**, according to Wells Fargo.
In a world where sustainability and digital shopping are on the rise, ThredUp's RaaS model is ideally positioned to offer budget-friendly, eco-friendly solutions for brands. By partnering with more brands, expanding its customer base, and integrating advanced technologies like AI and data analytics, ThredUp can further strengthen its position in the luxury resale sector.
- Analysts see the thriving resale market as the next major disruption in the retail industry, following e-commerce and off-price retailing.
- ThredUp's acquisition of European retail platform Remix is a smart move, given that the European secondhand market is projected to double by 2025.
- ThredUp is ideally positioned to offer budget-friendly, eco-friendly solutions for brands in a world where sustainability and digital shopping are on the rise.
- ThredUp's RaaS service benefits both the company and its clients, according to Ike Boruchow, the lead analyst at Wells Fargo.
- ThredUp's yearly earnings for RaaS are expected to jump from $2 million in 2021 to $300 million by 2025, and potentially reach $925 million by 2029.
- ThredUp's RaaS partners include big names like Madewell, Walmart, Everlane, eBay, Farfetch, Gap, and most recently, adidas.
- Amazon has demonstrated the potential of services and tech that prove beneficial for other retailers through its Amazon Web Services (AWS) cloud unit and other services for marketplace sellers.
