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Digital thrift stores take bargain hunting online

October 12, 2012|By Peter Delevett
  • Colette Underwood prepares a Maggy London dress for a photo shoot at the Twice warehouse in San Francisco.
Colette Underwood prepares a Maggy London dress for a photo shoot at the… (Gary Reyes, San Jose Mercury…)

Hate that old blouse? Fear not: A slew of new start-ups are running virtual marketplaces where people can sell and buy secondhand treasures.

Companies such as Poshmark Inc., Twice and Threadflip are offering new twists on the yard sale and what they say is a more intimate experience than online mega-malls such as EBay Inc.

"It feels like it's become a new cultural shift, in terms of what women can do with their wardrobes," said Rosalie Yu, a Poshmark user who lives in Dublin, Calif. "It's changed how I shop."

The trend is closely tied to the rise of other "collaborative consumption" start-ups such as RelayRides, Airbnb and TaskRabbit, which let people easily rent their cars and spare rooms and find help with odd jobs.

"I like the idea of doing something environmentally sustainable that helps people save money," said Noah Ready-Campbell, chief executive of Twice. So when he and a co-worker at Google Inc. decided to create their own start-up, they saw a way to apply the collaborative concept to their own memories of childhood.

"We grew up wearing a lot of secondhand clothes," explained Ready-Campbell, 24.

His service, launched in March, sends users prepaid shipping labels with which to send in their used designer clothes. (Sorry, gents — the site, like most others in the space, handles only women's items, although that could change in the future.)

After vetting the items to make sure of their condition, Twice staffers make an offer and send cash on the spot. They then photograph the items and incorporate them into an online catalog.

Ready-Campbell said Twice typically sells clothing for 25% to 35% more than it pays for them, a margin he calls similar to those of high-end thrift shops. But with extras like two-day shipping and 24/7 customer support, "we basically can create a like-new shopping experience for the buyer," he said.

The business model isn't without risk. Twice — and a similar online marketplace called thredUP, which specializes in reselling children's clothes — must invest in warehousing operations, which can boost costs.

If that approach can be likened to that of Inc., Poshmark's is more like EBay's. The centralized exchange matches buyers to sellers and takes a cut of the action without ever handling the merchandise.

"With our iPhone app, users can take a photo of an item in their closet, like a handbag or dress, and convert that into a listing in less than a minute," Poshmark CEO Manish Chandra said. If a prospective buyer stumbles across that item in one of Poshmark's forums, the app's mobile messaging feature allows for quick communication between her and the seller. And once the sale is closed on the platform, Poshmark emails the seller a shipping label and keeps 20% of the item's price.

Chandra and others say this new generation of online retail is being driven by the ubiquity of mobile phones, the increasing sophistication of phone cameras and the rise of social networks such as Facebook and Pinterest, which enable users to discover new items by trolling their extended connections.

"We've already got women who are going into their closets and putting together little boutiques because they know other women love their tastes," said Chandra, who previously sold social shopping site Kaboodle to Hearst Corp. for a reported $30 million.

Yu said she has sold more than 60 fashion items in the last month using Poshmark; traffic picks up on Friday nights, when women are getting ready to hit the town. She also uses the platform to bargain-hunt for herself, sometimes while waiting in line. "I'm getting 50% off luxury goods that are in great condition," she said.

If you're not sure whether to ship your stuff to the pros or try to sell it yourself, you can try Threadflip, which offers both methods.

Like Poshmark, the service was launched this year to let users photograph their own clothing, upload the shots to a central catalog and find buyers. Although most of Threadflip's traffic moves that way, the company also offers what CEO Manik Singh calls a "white glove" service that lists items that users mail in.

"If you're a tech-savvy woman, you can pull out your iPhone and start selling," he said. "But what about people who just don't have the time to do that? A lot of our clients are moms with two kids and a job."

Delevett writes for the San Jose Mercury News/McClatchy.

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