Why ThredUp and the secondhand retail market is booming in the U.S.
On: ThredUpApproximately 40,000 pieces of used clothing are processed each day at the company’s 600,000-square-foot warehouse in Suwanee, Georgia. The company’s logistics network (four facilities across the US) is now capable of competing with some fast fashion giants.
“This is the largest coat hanger system in the world,” said Justin Pina, ThredUp’s senior director of operations. “We can hold over 3.5 million items here.”
Second-hand shopping is increasing rapidly. According to GlobalData, the global second-hand apparel market is expected to reach $367 billion by 2029, growing almost three times faster than the overall apparel market.
President Donald Trump’s tariffs were billed as a way to bring manufacturing back home. But the measures hit fashion, one of America’s most import-dependent industries.
According to the American Clothing and Footwear Association, approximately 97 percent of clothing sold in the United States is imported, mostly from China, Vietnam, Bangladesh and India.
For years, Gen Z shoppers have been leading the rise of secondhand fashion, but now more Americans are following suit.
“When tariffs drive up those costs, resale platforms suddenly look like smart buys. This isn’t just a fad,” said Jasmine Enberg, co-CEO of Scalable. “Tariffs are accelerating trends that are already reshaping the way Americans shop.”
According to ThredUp CEO James Reinhart, the company is already seeing this happen.
“The business is free cash flow positive and showing double-digit growth,” Reinhart said. “We feel really good about the economy, gross margins close to 80% and operations run entirely in the U.S.”
ThredUp reported that revenue rose 34% year over year in the third quarter. The company also said it acquired more new customers this quarter than at any time in its history, and new buyer growth was up 54% compared to the same period last year.
“If tariffs contribute 20% to 30% to retail prices, that’s a big advantage for resale,” said William Blair & Company research analyst Dylan Carden. “Second-hand products are not subject to these taxes, so demand naturally changes.”
Inside the ThredUp warehouse, where CNBC got a behind-the-scenes look. Automation hums along with human workers. Artificial intelligence systems photograph, categorize and price thousands of garments per hour. According to Reinhart, technology is key to scaling resale like retail.
“AI has really accelerated adoption,” Reinhart said. “It helps us improve discovery, styling and personalization for buyers.”
This technology wave extends beyond ThredUp. Phia, the fashion tech startup co-founded by Phoebe Gates and Sophia Kianni, uses artificial intelligence to scan thousands of listings in retail and resale in seconds.
“The fact that we have achieved millions of transaction volumes shows how great this need is,” Gates said. “People want smarter, cheaper ways to shop.”
ThredUp argues that domestic infrastructure, automation and artificial intelligence will keep it ahead of others, and that tariffs aimed at stimulating US manufacturing could power a new kind of American fashion economy.
“The future of fashion will be more sustainable than it is today,” Reinhart said. “And secondhand will be at the center of that.”
Watch the video to learn more.
