ThredUp reports a 32% increase in new customer volume, attributing growth to AI-driven strategies and a surge in demand for secondhand apparel.
ThredUp, a prominent online clothing resale platform, has reported significant growth driven by advancements in artificial intelligence (AI). CEO and Co-Founder James Reinhart highlighted in a recent earnings call that new customer volume increased by 32% compared to the same period last year, crediting AI as a central component of their business strategy.
Reinhart elaborated on the company’s progress, stating, “We’ve made substantial progress in reaccelerating growth in the U.S.” He emphasized the effectiveness of customer acquisition and retention strategies, stating that generative AI is poised to greatly improve the second-hand shopping experience. ThredUp has focused on enhancing user engagement through AI-powered tools, including an image search feature that allows customers to find products by uploading images. This innovative approach has resulted in sessions with image searches achieving 85% higher conversion rates. Reinhart characterized the development of their AI strategy as a “deeply calculated approach” designed to ensure a competitive advantage over time.
Amid financial constraints affecting consumers, particularly those living paycheck to paycheck, there has been a surge in the demand for secondhand apparel. A report by PYMNTS revealed that 43% of individuals surveyed have recently purchased secondhand products, especially in the clothing and accessories sectors. Economic challenges have compelled retailers to adjust to the needs of cost-conscious shoppers, with data indicating that 67% of U.S. consumers are currently living paycheck to paycheck. The same report suggested that when consumers choose to spend on nonessential items, they are predominantly purchasing clothing.
In addition to enhancing customer experience, AI is instrumental in scaling ThredUp’s operations. Reinhart noted the implementation of AI-powered automated digital measurements, which have improved the accuracy of item listings and inventory management. These technological advancements support ThredUp in managing increased demand while ensuring a quality shopping experience. By streamlining processes and automating manual tasks, AI plays a crucial role in meeting the growing appetite for secondhand apparel.
ThredUp also provided an update on its financial performance. In the fourth quarter of 2024, the company sold 91% of its European business along with its Bulgarian subsidiary, Remix Global EAD. The company’s revenue for the quarter reached $67.3 million, reflecting a 9.5% increase, and total orders rose by 2.2% to 1.23 million. For the full year, revenue climbed 0.6% to $260 million, although total orders experienced a decrease of 0.6% to 4.85 million.
Looking forward, ThredUp anticipates revenue for the first quarter to fall between $67.5 million to $69.5 million, and projects annual revenue to reach between $270 million and $280 million, equating to growth of 6%. Reinhart remarked on the uncertain consumer environment and the potential impact of tariffs, suggesting that second-hand clothing may become increasingly appealing to shoppers. He expressed satisfaction with the company’s return to growth and conveyed optimism for leveraging infrastructure and technology investments in 2025 to further accelerate growth while aiming for long-term profitability.
Source: Noah Wire Services
