ThredUp IPO Filing Could Define Winners and Losers For ReCommerce

Online second-hand retailer ThredUP has officially filed for its initial public offering (IPO) with the Securities and Exchange Commission (SEC). How many shares and their price in the offering of Class A common stock remain unknown thus far. But what is known is that ThredUP will list on NASDAQ under the ticker symbol TDUP, with Goldman Sachs, Morgan Stanley and Barclays leading as book-running managers for the offering.

ThredUP is one of the companies riding the reCommerce wave kicked off by the pandemic period. By 2029, ThredUP forecasts that secondhand goods will make up around 17 percent of a person’s closet space — up from just 3 percent in 2009.

With this latest filing, Thred-Up is far from the first player in the retail resale game to make a move on the public markets. Competitor The Real Real went public in June of 2019, while Poshmark first threw its hat into the public markets in early January.

Poshmark notably reported being profitable at the time of its IPO, turning its first profit in the quarter that ended June 30, 2020. Poshmark made $21.1 million in that quarter and $10.7 million in the Sept. 30, 2020 quarter. ThredUP, notably, does not enter its IPO able to make quite the same claim, reporting a net loss of $48 million on $186 million in revenue in 2020, compared with a $38 million loss on $164 million the previous year.

Moreover, life in the public markets can be a challenging transition to make. It’s a reality The RealReal has navigated through the last year for the category. When it announced earnings on Feb. 22, it showed Q4 result came in below expectations. The RealReal lost $53 million, or 60 cents a share, in the fourth quarter, compared with a loss of $23 million, or 25 cents a share, in 2019. Sales fell to $84.6 million from $93.7 million, the company said. GMV, however, was up.

“With improving trends in Q4, culminating in December GMV increasing 6 percent year on year, we exited the year with strong momentum,” Julie Wainwright, founder and CEO of The RealReal, noted in a statement. “Q1 2021 GMV grew 14 percent year on year quarter to date through Feb. 19, 2021, so that momentum continues, and we are optimistic about the year ahead.”

The RealReal has also been proactive in extending and expanding its service offering, partnering with Gucci last fall to sell authenticated Gucci goods on the marketplace.

Moreover, TheRealReal also reported active buyer figures were on the rise — up 14 percent as of the end of 2020. A figure inline with expert forecasts that now predict that reCommerce (including resale, rental and subscription models) will account for 14 percent of the apparel, footwear and accessories market by 2024, up from about 7 percent as of last year.

And consumer interest has increased, the race to rule the resale marketplace has become a more crowded great eCommerce shift that has exposed consumer preference.  It’s not only that big-name start-up players major name-brand players like Levi’s, Lululemon and Patagonia have entered the resale as of late, there are also the super small thrift-shop players that quickly transitioned online via digital outposts, and are increasingly deciding to stick with their newly created digital channels supported through social media sales and P2P payments.

“I’ve built up a community and [I’ve] been able to connect with them,” Instagram thrift-shop operator Kaitlyn McAlpine told the Canadian Broadcast Company about her plan to carry on with her digital side hustle ever after the pandemic has passed.

How the race will continue to shape up as the pandemic draws to a close and consumers adopt their lives once again to new circumstances remains to be seen.  ThredUp, however, remains confident that the consumers will still be there after their IPO and beyond, it will just be their job to catch them.

“Resale is here to stay,” said ThredUp Co-founder and CEO James Reinhart. “The next question is who wins and who loses.”

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