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Thursday, 22 August 2019

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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Apple Card vs Chase Freedom Unlimited

Heads up! We share savvy shopping and personal finance tips to put extra cash in your wallet. iMore may receive a commission from The Points Guy Affiliate Network

The Chase Freedom Unlimited® card is one of the best no-frills cashback cards on the market, so how does it compare to the newly released Apple Card?

Our Pick

Apple Card

Apply at Apple

Pros

  • Daily Cash
  • Money management tools
  • No fees
  • Privacy

Cons

  • No welcome bonus
  • Lack of additional benefits

Apple Card is a simple cashback rewards card that is built to help cardholders understand their spending habits. It also the first credit card in the industry to feature new levels of security and privacy for its users.

Cashback companion

Chase Freedom Unlimited®

Apply at The Points Guy

Pros

  • Solid welcome offer
  • 0% intro APR for 15 months (then 17.24-25.99%)
  • Rewards redemption options

Cons

  • Lacking in money management features
  • Foreign transaction fees

The Chase Freedom Unlimited® is a solid cashback credit card that features an impressive welcome offer to earn extra rewards in the first year as well as many ways to redeem your rewards.

Apple Card, now available to all iPhone customers in the United States, is by far one of the easiest to use credit cards on the market. With its simple Daily Cash rewards program and it's helpful card and money management tools, its a card that anyone can pick up and get a better understanding of their spending habits. However, the Chase Freedom Unlimited® gets very enticing with its first year welcome offer, its abilitiy to earn more cashback when using the physical card, and giving you a ton of ways to redeem your rewards.

Apple Card is made for education, security, and privacy

Apple Card is trying to revolutionize the credit card industry with a credit card built to help you live a healthier financial life. The Wallet app on the iPhone, where you manage your Apple Card, features money management tools to help you understand your spending trends and make smarter financial decisions. Daily Cash deposits cash back into your Apple Pay Cash card the day after the purchase which you can then use to send friends money, transfer to your bank, or even pay your bill.

Apple will automatically track your spending, sort it into categories, and group your purchases by the merchant. It displays all of this information to you in weekly and monthly summaries to educate you on your spending habits and promote better financial decisions. It even shows you in real time how much interest you'll be charged if you don't pay the full amount due on the card, and encourage you to increase the payment, showing you the effect it will have lowering the interest you owe.

Apple is paving the way in the industry with the privacy features of Apple Card. Apple will never know how much you spend, where you spend it, or what you spend it on. Its partner on the card, Goldman Sachs, has also promised not to share any of your information with marketers or advertisers. The physical titanium card, which earns 1% cash back when used, does not display any card numbers, expiration dates, or signature.

Apple Card Chase Freedom Unlimited®
Rewards 3% cash back on purchases at Apple
2% cash back when using Apple Pay
1% on all other purchases 1.5% on all other purchases
Welcome bonus None 3% cash back on all purchases in the first year up to $20,000 spent
Fees None 3% foreign transaction fee
Interest Rate 13.24% to 24.24% APR 17.24% - 25.99% APR

Chase Freedom Unlimited® is all about simple cash back

While Apple Card will be a great card for many, the Chase Freedom Unlimited® puts up a solid fight in the way of rewards. With a welcome offer that doubles your cash back for the first year, and a consistently simple cash back rewards program that beats out Apple's beautifuly crafted titanium card's cash back earnings.

New cardholders of the Chase Freedom Unlimited® card will earn 3% cash back on all purchases in the first year up to $20,000 spent. After that, you'll always earn an unlimited 1.5% cash back on all purchases, and your cash back never expires. The card also features a 0% intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 17.24-25.99%.

Chase adds in a few extra benefits that you won't find on Apple Card. For instance, you can redeem your rewards in a number of ways, choosing to deposit the cash back into your bank account, instantly redeem them for purchases at Amazon.com, or use them with Chase's Ultimate Rewards program. It also comes with purchase protection and extended warranty protection.

Which one should you get?

If you are looking for a card that has a simple cash back rewards program, helps you manage and build better spending habits, and protects your private information, then Apple Card is for you. However, if you are looking to maximize your cash back, enjoy flexible rewards redemption and perks, and not lock yourself further into the Apple ecosystem, then the Chase Freedom Unlimited® might be a better fit for you.

Our pick

Apple Card

A card for everyone

Apply at Apple

Apple Card provides tremendous value with a rewards program designed for anyone to benefit from, and the most impressive money management and privacy features that have ever existed for a credit card.

Even simpler cash back

Chase Freedom Unlimited®

For double cash back

Apply at The Points Guy

With its solid welcome offer of double cash back for the first year flexible rewards redemption, the Chase Freedom Unlimited® is a no frills cash back card that's built for simplicity and flexibility.



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