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Amid Soaring Prices, Resale Platforms Are Winning Over Buyers

Resale platforms aren’t immune to the current spending environment. But the leading companies are still attracting customers amid a tough spending environment.

Poshmark, The RealReal and ThredUp all recently reported an increase in active buyers using their platforms in Q2. The three platforms also saw increases in their quarterly revenues as well, though some experienced overall losses in net earnings.

After markets closed on Monday, ThredUp reported revenues for Q2 of $76.4 million, up 27% compared to last year. Its GAAP net loss was $28.4 million, or 37.2% of revenue. Following the release, ThredUp shares were up more than 3% in after-hours trading, and shares of Poshmark and The RealReal also initially surged on the news.

The global secondhand market, which includes resale and traditional thrifting, is projected to be worth $218 billion by 2026, according to ThredUp’s 2022 Resale Report. Within the U.S., the secondhand market is expected to more than double by 2026, hitting $82 billion.

Current economics are working in its favor. Poshmark CFO Rodrigo Brumana said in a call with investors last week that “an inflationary environment could benefit our marketplace, particularly for the more price-sensitive consumer as they search for value.”

With consumer prices reaching record-high levels, growing 8.5% in July from a year ago, consumers are pulling their spending in discretionary categories and shifting to shop more affordable options, such as resale and off-price.

On the seller side, Brumana said Poshmark offers an easy way for people to “monetize their closets and make extra cash.”

Poshmark in Q2 reported net revenue of $89.1 million, up 9% from 2021. The platform recorded 8 million active buyers in Q2 over the previous 12 months, a 14% increase from 2021.

ThredUp CEO and co-founder James Reinhart also noted how his platform’s model is “uniquely positioned to weather macroeconomic volatility.” ThredUp recorded 1.7 million active buyers in Q2, up 29% from last year. ThredUp has also continued to roll out its Resale-as-a-Service platform to help different brands, including Tommy Hilfiger, PacSun, Bernardo and Ozma, explore this business opportunity.

In addition to attracting shoppers who want lower prices, resale marketplaces — especially peer-to-peer platforms like Poshmark — are largely able to avoid the build-up of excess inventory that has plagued retailers like Walmart and Target.

Luxury resale platform The RealReal has the unique benefit of living at the nexus of resale and luxury, another high-performing category. Despite high prices, demand for luxury, which generally attracts higher-income consumers, has been comparatively stable.

The RealReal beat analysts’ expectations last week when it reported a loss of $0.56 per share. When adjusted for stock option expense and non-recurring costs, losses were $0.40 per share, beating estimates of a loss of $.043 per share. Revenues were $154 million, up 47% compared to 2021, also beating expectations. Over the last 12 months, active buyers reached 889,000, marking an increase of 22% over 2021.

In a call with investors, The RealReal president and interim CEO Rati Sahi Levesque said the platform has not seen consumers “trade down” to cheaper categories, despite high prices. These results parallel a general shift towards dressy apparel and footwear, as more consumers return to events and the office.

“While high value continues to perform, the second quarter mix more closely mirrored our pre-COVID product mix as consumers go back to the office, travel more and attend events,” Levesque said.

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