For example, neither the American company ThredUp nor its luxury cousin The RealReal are profitable, disappointing investors and dragging share prices below their IPOs. In 2022, less than two years after going public, the American peer-to-peer resale site Poshmark was acquired by a Korean tech company for $1.2bn (£950m), one-sixth of its IPO valuation. While the service is still available to American shoppers and sellers, the company no longer operates in the UK market.
The Lithuanian peer-to-peer fashion resale start-up Vinted has taken over in the UK, posting a pre-tax loss of €47.1m ($51m; £40.3m) in 2022. The British second-hand marketplace Depop posted a loss of £59m ($69m) in 2023. The bright spot is Vestiaire, which focuses on luxury resale. If its optimistic forecast is to be believed, it might be profitable by the end of the year.
This struggle affects every size, type and location of resellers. For-profit second-hand clothing sorters in the UK have gone out of business, citing high labor costs and the degrading quality of the clothing they receive. In New York City, Brooklyn residents bemoan standing in line for an hour to consign clothes at the famous store Beacon’s Closet, and getting paid just $18 (£14.20) for a full bag of old designer clothes. As early as 2016, market resellers in Ghana – one of the largest recipients of second-hand fashion from Europe – were also complaining about declining quality and profits, and it has only gotten worse since then.
The problem is one of economics. With the rise of ultra-fast, ultra-cheap fashion brands, the volume of clothing produced and shipped globally continues to explode, and consumers are offloading more of it after just a few wears.
According to a 2023 study, one large Swedish charity has to pay to have 70% of donated clothing incinerated because it is too low quality to sell in-store or export. Of the clothing that is exported to Ghana, 40% of the average bale leaves the market as waste.
“There’s an oversupply of clothes,” says Liz Ricketts, co-founder and executive director of The Or Foundation, a non-profit that researches Ghana’s Kantamanto market, one of the world’s largest clothing exchanges. “And it’s lowering the perceived value, and the real value, of everything.”