clothing resale
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Curtsy, a clothing resale app aimed at Gen Z women, raises $11 million Series A
Curtsy, a clothing resale app and competitor to recently IPO’d Poshmark, announced today it has raised $11 million in Series A funding for its startup focused on the Gen Z market. The app, which evolved out of an earlier effort for renting dresses, now allows women to list their clothes, shoes and accessories for resale, while also reducing many of the frictions involved with the typical resale process.
The new round was led by Index Ventures, and included participation from Y Combinator, prior investors FJ Labs and 1984 Ventures, and angel investor Josh Breinlinger (who left Jackson Square Ventures to start his own fund).
To date, Curtsy has raised $14.5 million, including over two prior rounds, which also included investors CRV, SV Angel, Kevin Durant, Priscilla Scala and other angels.
Like other online clothing resale businesses, Curtsy aims to address the needs of a younger generation of consumers who are looking for a more sustainable alternative when shopping for clothing. Instead of constantly buying new, many Gen Z consumers will rotate their wardrobes over time, often by leveraging resale apps.
Image Credits: Curtsy
However, the current process for listing your own clothes on resale apps can be time-consuming. A recent report by Wired, for example, detailed how many women were spinning their wheels engaging with Poshmark in the hopes of making money from their closets, to little avail. The Poshmark sellers complained they had to do more than just list, sell, package and ship their items — they also had to participate in the community in order to have their items discovered.
Curtsy has an entirely different take. It wants to make it easier and faster for casual sellers to list items by reducing the amount of work involved to sell. It also doesn’t matter how many followers a seller has, which makes its marketplace more welcoming to first-time sellers.
“The big gap in the market is really for casual sellers — people who are not interested in selling professionally,” explains Curtsy CEO David Oates. “In pretty much every other app that you’ve heard about, pro sellers really crowd out everyday women. Part of that is the friction of the whole process,” he says.
On Curtsy, the listing process is far more streamlined.
The app uses a combination of machine learning and human review to help the sellers merchandise their items, which increase their chances of selling. When sellers first list their item in the app, Curtsy will recommend a price, then fill in details like the brand, category, subcategory, shipping weight and the suggested selling price, using machine learning systems training on the previous items sold on its marketplace. Human review fixes any errors in that process.
Also before items are posted, Curtsy improves and crops the images, as well as fixes any other issues with the listing, and moderates listings for spam. This process helps to standardize the listings on the app across all sellers, giving everyone a fair shot at having their items discovered and purchased.
Another unique feature is how Curtsy caters to the Gen Z to young Millennial user base (ages 15-30), who are often without shipping supplies or even a printer for producing a shipping label.
Image Credit: Curtsy / Photo credit: Brooke Ray
First-time sellers receive a free starter kit with Curtsy-branded supplies for packaging their items at home, like poly mailers in multiple sizes. As they need more supplies, the cost of those is built into the selling flow, so you don’t have to explicitly pay for it — it’s just deducted from your earnings. Curtsy also helps sellers to schedule a free USPS pickup to save a trip to the post office, and it will even send sellers a shipping label, if need be.
“One of the things we realized quickly is Gen Z does not really have printers. So we actually have a label service and we’ll send you the label in the mail for free from centers across the country,” says Oates.
Later, when a buyer of an item purchased from Curtsy is ready to resell it, they can do so with one tap — they don’t have to photograph it and describe it again. This also speeds up the selling process.
Overall, the use of technology, outsourced teams who improve listings and extra features like supplies and labels can be expensive. But Curtsy believes the end result is that they can bring more casual sellers to the resale market.
“Whatever costs we have, they should be in service of increased liquidity, so we can grow faster and add more people,” Oates says. “In case of the label service, those are people who otherwise wouldn’t be able to participate in selling online. There’s no other app that would allow them to sell without a printer.”
Image Credits: Curtsy
This system, so far, appears to be working. Curtsy now has several hundred thousand people who buy and sell on its iOS-only app, with an average transaction rates of three items bought or sold per month. When the new round closed late in 2020, the company was reporting a $25 million GMV revenue run rate, and average monthly growth of around 30%. Today, Curtsy generates revenue by taking a 20% commission on sales (or $3 for items under $15).
The team, until recently, was only five people — including co-founders David Oates, William Ault, Clara Agnes Ault and Eli Allen, plus a contract workforce. With the Series A, Curtsy will be expanding, specifically by investing in new roles within product and marketing to help it scale. It will also be focused on developing an Android version of its app in the first quarter of 2021 and further building out its web presence.
“Never before have we seen such a strong overlap between buyers and sellers on a consumer-to-consumer marketplace,” said Damir Becirovic of Index Ventures, about the firm’s investment. “We believe the incredible love for Curtsy is indicative of a large marketplace in the making,” he added.
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ThredUp, whose second-hand goods will start appearing at Macy’s and JCPenney, just raised a bundle
ThredUp, the 10-year-old fashion resale marketplace, has a lot of big news to boast about lately. For starters, the company just closed on $100 million in fresh funding from an investor syndicate that includes Park West Asset Management, Irving Investors and earlier backers Goldman Sachs Investment Partners, Upfront Ventures, Highland Capital Partners and Redpoint Ventures.
The round brings ThredUP’s total capital raised to more than $300 million, including a previously undisclosed $75 million investment that it sewed up last year.
A potentially even bigger deal for the company is a new resale platform that both Macy’s and JCPenney are beginning to test out, wherein ThedUp will be sending the stores clothing that they will process through their own point-of-sale systems, while trying to up-sell customers on jewelry, shoes, and other accessories.
It says a lot that traditional retailers are coming to see gently used items as a potential revenue stream for themselves, and little wonder given the size of the resale market, estimated to be a $24 billion market currently and projected to become a $51 billion market by 2023.
We talked yesterday with ThredUp founder and CEO James Reinhart to learn more about its tie-up with the two brands and to find out what else the startup is stitching together.
TC: You’ve partnered with Macy’s and JCPenney. Did they approach you or is ThredUp out there pitching traditional retailers?
JR: I think [the two companies] have been thinking about resale for some time. They’re trying to figure out how to best serve their customers. Meanwhile, we’ve been thinking about how we power resale for a broader set of partners, and there was a meeting of the minds six months ago
We’re positioned now where we can do this really effectively in-store, so we’re starting with a pilot program in 30 to 40 stores, but we could scale to 300 or 400 stores if we wanted.
TC: How is this going to work, exactly, with these partners?
JR: We have the [software and logistics] architecture and the selection to put together carefully curated selections of clothing for particular stores, including the right assortment of brands and sizes, depending on where a Macy’s is located, for example. Macy’s then wraps a high-quality experience around [those goods]. Maybe it’s a dress, but they wrap a handbag and scarves and jewelry around the dress purchase. We feel [certain] that future consumers will buy new and used at the same time.
TC: Who is your demographic, and please don’t say everyone.
JR: It is everyone. It’s not a satisfying answer, but we sell 30,000 brands. We serve lots of luxury customers with brands like Louis Vuitton, but we also sell Old Navy. What unites customers across all brands is they want to find brands that they couldn’t have afforded new; they’re trading up to brands that, full price, would have been too much, so Old Navy shoppers are [buying] Gap [whose shopper are buying] J. Crew and Theory and all the way up. Consistently, what we hear is [our marketplace] allows customers to swap out their wardrobes at higher rates than would be possible otherwise, and it feels to them like they’re doing it in a more [environmentally] responsible way.
TC: What percentage of your shoppers are also consigning goods?
JR: We don’t track that closely, but it’s typically about a third.
TC: Do you think your customers are buying higher-end goods with a mind toward selling them, to defray their overall cost? I know that’s the thinking of CEO Julie Wainwright at [rival] The RealReal. It’s all supposed to be a kind of virtuous circle of shopping.
JR: We like to talk about buying the handbag, then selling it, but plenty of people will also buy a second-hand Banana Republic sweater because it’s a value [and because] fashion is the second-most polluting industry on the planet.
TC: How far are you going to combat that pollution? I’m just curious if you’re in any way try to bolster the sale of hemp, versus maybe nylon, clothes for example.
JR: We aren’t driving material selection. Our thesis is: we want to stay out of the fashion business and instead ensure there’s a responsible way for people to buy second hand.
TC: For people who haven’t used ThredUp, walk through the economics. How much of each sale does someone keep?
JR: On ThredUp, it isn’t a uniform payment; it depends instead on the brand. On the luxury end, we pay [sellers] more than anyone else — we pay up to 80 percent when we resell it. If it’s Gap or Banana Republic, you get maybe 10 or 15 or 20 percent based on the original price of the item.
TC: How would you describe your standards? What goes into the reject pile?
JR: We have high standards. Items have to be in like-new or gently used condition, and we reject more than half of what people send us. But I think there’s probably more leeway for the Theory’s and J.Crew’s of the world than if you’re buying a Chanel dress.
TC: Unlike some of your rivals, you don’t sell to men. Why not?
JR: Men’s is a small market in secondhand. Men wear the same four colors — blue, black, gray and brown — so it’s not a big resale market. We do sell kids’ clothing, and that’s a big part of our market.
TC: When Macy’s now sells a dress from ThredUp, how much will you see from that transaction?
JR: We can’t share the details of the economics.
TC: How many people are now working for ThredUp?
JR: We have less than 200 in our corporate office in San Francisco, and 50 in Kiev, and then across four distribution centers — in Phoenix; Mechanicsburg [Pa.]; Atlanta; and Chicago — we have another 1,200 employees.
TC: You’ve now raised a lot of money in the last year. How will it be used?
JR: On our resale platform [used by retailers like Macy’s] and on building our tech and operations and building new distribution centers to process more clothing. We can’t get people to stop sending us stuff. [Laughs.]
TC: Before you go, what’s the most under-appreciated aspect of your business?
JR: The logistics behind the scenes. I think for every great e-commerce business, there are incredible logistics [challenges to overcome] behind the scenes. People don’t appreciate how hard that piece is, alongside the data. We’re going to process our 100 millionth item by the end of this year. That’s a lot of data.
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Kidizen raises $3.2M for a kids’ clothes resale app with a social twist
Kidizen, a marketplace for secondhand children’s apparel, has raised $3.2 million in Series A funding, the company announced today. The funding was led by Chicago-based Origin Ventures, which backed the startup following its more than 100 percent year-over-year growth in 2016 — which has allowed the business to reach more than a quarter million registered users across the U.S.… Read More
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