Adapting models
Resale platforms have had to adapt their business models in order to balance their “cost buckets” and work towards profitability.
Reinhart said ThredUp is prioritising technology innovation, launching AI tools to improve customer experience and grow its Resale-as-a-Service (RaaS) offerings. It also plans to explore new opportunities, including peer-to-peer and social commerce.
ThredUp has also announced plans to exit the European market and explore strategic alternatives for Remix, a resale platform it acquired in 2021.
“We believe this separation will benefit both companies,” said Reinhart. “This allows ThredUp to concentrate on growing its core business in the US and will enable Remix to access capital independently and grow its presence in the EU.”
Other platforms are also refining their approach. Depop has eliminated seller fees to incentivise sellers and boost the marketplace, while Vestiaire Collective has launched partnerships with brands like Burberry to integrate resale into luxury retail.
Trove has taken a distinctive approach to resale, transitioning from a physical fulfilment operation to a software-focused model over the past two years.
“We made this change because our customers increasingly wanted more options and flexibility with their logistics,” said its CEO, Terry Boyle.”Today we can deploy inbound and outbound resale operations in any facility, and our software is configurable to any inventory type.
“This strategic shift came with stronger unit economics, greater capital efficiency, and more potential to scale. Looking ahead, scale will be our primary driver of profitability.”
By minimising logistics and marketing costs whilst scaling technology, Trove has enhanced profitability potential—and now manages 75% of branded resale after recently acquiring competing platform Recurate.
Policy hurdles
Resale platforms in the US face additional financial challenges due to policy barriers such as double taxation, where goods are taxed twice – once when originally sold and again when resold.
Kibbe, who is pioneering ACT’s #EndDoubleTaxation campaign, described this as “an outdated approach” that penalises both resale businesses and consumers.
“Our goal for this campaign is to raise awareness to state lawmakers that resale in their state will be financially more viable and attractive for brands and consumers, potentially leading to greater adoption of resale across the industry,” Kibbe added.
ACT, alongside founding members such as ThredUp, has also contributed to the recent approval of California’s SB707 bill, which aims to reduce landfill waste and support the resale sector.
How might these policy initiatives foster a more financially viable resale market? “The more we can support these businesses through common sense policies, and eliminate outdated policies that hinder circularity, the easier it will be for circular businesses to scale and drive meaningful impact,” explained Kibbe.
Is profitability possible?
Retail giants are increasingly adopting resale models, with Zara’s launch of its in-house resale platform marking a shift in the market. A 2023 GlobalData report suggests that in-house resale poses a threat to third-party platforms like Depop and Vinted, since retail brands have stronger consumer awareness.
On the other hand, third-party resale platforms could divert customers away from brands’ ecosystems and impact their direct revenue, which Ruben sees as a tailwind to resale service providers.
Ruben argues that brands risk losing market share if they don’t integrate resale into existing operations. “The brands progressing are putting together the efficiency of being a brand and adding this to their existing bucket,” Ruben explained.
“They’ve already got a bucket of logistics costs, customer acquisition and attention. They don’t have to market [resale] once it’s attached to new, so we’re seeing the shift in the cost buckets.”
But consumers want diverse options that cater to niche preferences, which third-party platforms offer and brands alone may not. Ultimately, resale’s profitability may depend on hybrid approaches, combining brand-driven initiatives with the innovation of independent platforms.
As companies refine their strategies, resale could yet turn a corner. The key lies in adaptation – and counting the pennies wisely.
