AI Enhancements, Consumer Tailwinds Boost ThredUp’s Buyer Growth

Online resale marketplace ThredUp credits AI-driven improvements and macroeconomic shifts for the record buyer growth and accelerating revenues seen its second-quarter results reported Monday (Aug 4).

The Oakland-based company, which specializes in secondhand apparel, added more new buyers in Q2 than at any time in its history. Active buyers rose 17% year over year to 1.47 million, with new buyer growth surging 74%.

“We’ve really got this … trifecta of great supply, great product experience and efficient acquisition,” CEO James Reinhart told analysts on the earnings call. “And what we’re seeing is that as those things continue to get better and better, we’re able to then deploy more dollars into the growth flywheel. … The marketplace is really humming on all cylinders.”

Internally, ThredUp is leaning heavily into artificial intelligence (AI). New features like Visual Search and AI-generated model images have contributed to a 60% increase in the sign-up-to-purchase rate, according to the company.

Additionally, the resale market has been buoyed by external forces, including the closure of the de minimis loophole, which Reinhart said may increase prices on low-cost imported fast fashion — potentially making ThredUp’s value proposition more attractive.

“We believe the closure … is likely to cause higher prices for ultrafast fashion goods and to reduce protection volumes,” Reinhart said. “Both of which could continue to be positives for ThredUp.”

PYMNTS Intelligence research indicates that in periods of high inflation, consumers turn to secondhand retail channels more.

The company also reported traction in its Resale-as-a-Service (RaaS) offering, having retooled it into a more open-source model. Reinhart said conversations are underway with more than 60 apparel brands, suggesting potential future partnerships that could expand ThredUp’s supply base and further entrench it in the broader fashion ecosystem.

On the seller side, premium cleanout kits — used to send in secondhand goods — grew 44% quarter over quarter, and a quarter of those came from first-time sellers.

For the quarter ended June 30, ThredUp posted revenue of $77.7 million, up 16% year over year. Gross margin reached 79.5%, with adjusted EBITDA of $3.0 million, or 3.9% of revenue. The company raised its full-year revenue forecast to between $298 million and $302 million.