ThredUp co-founder and chief technology officer Chris Homer talks to Retail Week about the online platform’s plan to power the worldwide resale market and tackle fast fashion’s sustainability crisis. 

ThredUp – an online clothing resale platform – was co-founded by chief executive James Reinhart and chief technology officer Chris Homer in 2009, originally as a men’s shirt-swapping company. At that time, resale was not the hot retail category it is today, and the co-founders’ initial business pitch was rejected by no fewer than 27 venture capitalists.

Fast forward 10 years and the business’ fortunes have turned around significantly. ThredUp’s platform is now a force to be reckoned with in fashion resale, selling around 35,000 clothing brands at up to 90% off the retail price, and counts Goldman Sachs and Park West Asset Management among its investors.

And, if market trends are anything to go by, ThredUp’s growth trajectory shows no signs of slowing down. According to research produced by the platform in collaboration with Globaldata, the resale market is currently worth $7bn (£5.6bn) and its value is set to rise to $23bn (£18.5bn) by 2023.

With an MBA from Harvard and a degree in mechanical and aerospace engineering from Princeton, Homer now spends his days – with the help of engineers, data scientists and merchandisers who are counted among ThredUp’s 750-strong workforce – developing algorithms to enhance the ThredUp customer journey.

“I spend a lot my time thinking about machine learning, how it applies to merchandising, managing the marketplace, sticking with the flow of inventory, how we’re getting better supply, how we make sure it moves through the system efficiently and how we make sure the customer on the other end is having an amazing experience,” Homer explains.

20161212 Cleanouts and Categories-028 (2)

Technology empowering people

Unlike other resale platforms such as Depop and eBay, which require users to photograph, price and post listings, ThredUp does all of the heavy lifting for its customer base.

And unlike sites such as The RealReal – which focuses on one-off designer pieces – ThredUp collects bundles of clothing and accessories from its users for resale in a freepost collection bag.

With more than 40,000 new items added to the site every day, ThredUp’s inventory is gigantic and continuously growing – creating a unique challenge for the retailer.

Unlike online retailers, which have hundreds of SKUs of the same product, Homer and his team have developed technology – which he describes as a “scalable infrastructure” – that is able to process the thousands of individual, one-of-a-kind items coming through its distribution centres every day.

“There are millions of garments hanging in our automated distribution centres that are turning and moving through the facility every day,” Homer says.

“With that is a proprietary, first-of-its-kind dataset that our systems are designed to handle, and we can identify any item we receive and make sure we can maximise its value on the marketplace.”

Homer says that upon entering one of ThredUp’s four distribution centres, items of clothing are categorised based on a variety of attributes, including “brand, product category, colour, size, pattern, neckline, sleeve and more”.

“We try to tag as many different dimension as we can, and those power everything from what we think is acceptable and can be put into the marketplace, to how we price it, how we photograph it and, depending on the value of the item, how much we invest in it,” he explains.

”We’re using these data points everywhere throughout how we handle the merchandise, as well as how we deliver the customer experience in terms of personalisation and recommendations.”

But even with all the new technology powering the platform, Homer says ThredUp is still a “place where the algorithm and the human involved work together” to enhance the customer experience – particularly in the platform’s retail partnerships.

Retail partners share trends they’re seeing in their specific market to indicate which products are suitable for their store. ThredUp then uses algorithms to match up the inventory it has in stock that can best fit the bill.

Although there are cases when ThredUp’s inventory selection, both for its customers and retail partners, is “all done by algorithms”, Homer says the technology ThredUp has developed is always “improved by humans being a part of it” by moderating and confirming decisions to “make sure the experience for the customer is great”.

ThredUP_101718_3679 (3)

Retail partners

ThredUp recently signed concession partnerships with American department stores Macy’s and JCPenney, which have “plugged in” to its infrastructure to “deliver resale experiences” to their customers in several bricks-and-mortar locations.

Both businesses have teamed up with the resale platform in a bid to boost their respective appeal with younger shoppers.

Globaldata managing director Neil Saunders tells Forbes that Macy’s partnership with ThredUp is an example of the struggling retailer ”looking at how they can use space more effectively and what new concepts and ideas – such as off-price, resale and curated areas – are needed in a modern department store”.

Similarly, a spokeswoman for JCPenney told Fortune that its tie-up with ThredUp creates a “treasure-hunt atmosphere that attracts younger customers and gives them more reasons to come back”.

And, as the resale market has grown 21 times faster than new clothing sales over the past three years, according to ThredUp and Globaldata’s 2019 research, ThredUp’s department store partnerships look like they could be a win-win for both parties.

Homer explains that retailer partners can “plug in” to ThredUp’s data, algorithms and infrastructure in three ways.

Partners can distribute ThredUp collection bags to customers, who can give clothes to the resale platform in return for credits that can be spent at that specific store or website; by dedicating retail space to the platform’s inventory, as Macy’s and JCPenney have done; or by offering white-labelled recycling programmes on a retailer’s own site that ThredUp powers.

“We’ve designed our systems and how we partner with the retailers to be as seamless and as easy for them as possible,” Homer says.

“We think of ourselves as the backbone of the resale market for everybody so it’s really exciting.”

And he’s not the only one who is excited. In August, the resale platform raised $175m (£145m) of funding, led by Park West Asset Management and Irving Investors, to invest in its “new [retail partner] service, expand infrastructure, and to support the growth and scale of [the] core ThredUp marketplace”.

This latest investment takes the platform’s overall funding to date to $306m (£246m).

ThredUP_101818_4868

Global ambitions

ThredUp currently only ships to America and Canada, but Homer says it’s ”a question not of if, but when” the resale platform will roll out to the UK and other international markets.

“This isn’t a problem that’s US-only – it’s a problem both in the sustainability angle on fashion, but also more broadly in terms of people wanting to upgrade their closets and find a home for the items they’re not wearing,” he adds.

And retailers this side of the pond are discovering the benefits of the resale market. Selfridges launched a pop-up shop in collaboration with Depop in August, offering customers a curated selction of Depop’s best sellers.

The issues of fast fashion, sustainability and recycling won’t be going away any time soon.

In the UK alone, consumers buy more than 1 million tonnes of clothing every year. Of that, 300,000 tonnes still either goes to landfill or is burnt, and less than 1% of fibres used to make garments are recycled into new clothing, according to Ethical Corporation.

But as consumers become more conscious of the environmental impact they are having when buying clothes, ThredUp seems to have designed a model capable of not only weathering, but calming the fast fashion storm. 

Tech. 2019

Chris Homer is one of the keynote speakers at this year’s Tech. festival.

He will be speaking about ThredUp uses machine learning to supercharge its merchandising.

Chris will also be on a panel with other game-changing retailers – Picnic and Stitch Fix – discussing the issues keeping retailers awake at night, that you will not hear anywhere else.

To see who else is on the packed programme and reserve your place and the festival, visit tech-festival.com.