Businessmodel of thredUP

Customer Segments

thredUP has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:

• Sellers – Consumers who want to get rid of their used clothes and make money off of it
• Buyers – Consumers who want to buy secondhand clothes that have been vetted for quality ### Value Proposition

thredUP offers five primary value propositions: accessibility, convenience, risk reduction, cost reduction, brand/status.

The company creates accessibility by making a useful service available. It allows people who want to get rid of their used clothes to earn money from them. It also enables people who want to buy secondhand clothes to have them evaluated for quality before making a purchase.

The company offers convenience by making its service easy to use. People who want to sell their used clothes can order a “Clean Out Bag” from its website. Once they receive the bag, they fill it with their items and send it back to thredUP; alternatively, they can schedule a day and time for someone to collect the bag at their residence. The company sends a confirmation e-mail when the bag has arrived and identifies an estimated date when it will be processed. It sends another e-mail after processing, indicating how much the items will sell for, and pays them when the clothes have sold.

The company reduces risk through high standards. It conducts significant quality control and inspection – carefully assessing all items it receives and only reselling those deemed to be of a certain standard – specifically, “like new”. These clothes must hold their original shape, have no pilling, and be stain-free, tear-free, and odor-free. Even the smallest imperfection will prevent them from being resold. Sellers whose items are not accepted may request to have them returned.

The company reduces costs in a number of ways. For sellers, it provides a pre-paid shipping label for their Clean Out Bags, enabling them to ship it to thredUP for free. For buyers, it offers discounts of up to 90% on the items featured on its website. It also offers free shipping on purchases over $79 and free returns. Lastly, through a program called thredUP Everyday Works, if buyers spend more than $150 in a given calendar month, they are awarded unlimited free standard shipping through the end of the next calendar month. They will still qualify for regular promotions and referral credits.

The company has established a strong brand due to its success. It touts itself as the world’s largest online marketplace to buy and sell women’s and kids’ secondhand clothes and accessories. Its inventory includes a high number of popular brands, including J.Crew, Gap, Baby Gap, Gap Kids, Marc by Marc Jacobs, Gymboree, Vince, Free People, Alice + Olivia, Splendid, Crewcuts, and Mini Boden.

Channels

thredUP’s main channel is its website. The company promotes its offering through its social media pages and participation in conferences.

Customer Relationships

thredUP’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees.

The company’s website provides self-help resources such as answers to frequently asked questions, a blog called thrEDIT that provides shopping tips, and a customer-owned online account that sellers can use to check the sales status of their submissions. That said, there is also a personal assistance component in the form of phone and e-mail support.

Key Activities

thredUP’s business model entails maintaining a robust platform for its customers. The platform includes its website and mobile app.

Key Partners

thredUP invites third parties who are “influencers” – people who have large audiences through social media websites or other platforms – to promote its service. These individuals can reach out to the company, identifying their channels and the nature of their audience, and the firm will be in touch if they decide it is a good fit.

Key Resources

thredUP’s main resources are its human resources, who include the employees that perform quality control and inspection on its clothing submissions, the technology staff members that maintain its website, and the customer service personnel that provide support. The company has important physical resources in the form of its distribution centers located across the United States.

Lastly, as a startup it has relied heavily on funding from outside parties, raising $131.12 million from 10 investors as of September 2015.

Cost Structure

thredUP has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely marketing expenses, a fixed cost. Other major drivers are in the areas of customer support/operations and administration, both fixed costs.

Revenue Streams

thredUP has one revenue stream: the commission it charges on sales of items submitted by sellers to buyers.