By Mark Seavy  

While the market for secondhand products continues to grow, profits for companies supplying that market have proven elusive. 

In a survey from online second-hand fashion retailer ThredUp, 67% of Millennials in the U.K. reported that they shop the pre-owned market. But the companies supplying those products face the twin challenges of serving both sellers and buyers in a business where consignment sales dominate. 

The secondhand market has its roots in fashion (ThredUp was founded 16 years ago) but the business is spreading to other categories despite the costs of acquiring and sorting used products. The secondhand market for toys, for example, could grow to be 15% of the overall business during the next 10 years, Rory Partis, Director of U.K. and European toys at research firm Circana, said during the recent Licensing for Retail Day conference in London. 

Yet despite the promise of the secondhand business and its contribution to sustainability goals, the labor costs and need to ensure the quality of goods—which are sometimes sourced from fast fashion—have weighed on the business’ potential. 

ThredUp’s net loss, for example, expanded in 2024 to $76.9 million (up from $71.2 million a year earlier), while RealReal narrowed its net loss to $134.2 million (compared to $168.4 million the year before). Both companies posted sharp gains in annual revenue although, in the case of ThredUp, the number of active users fell 6% to 1.2 million. RealReal’s active users, meanwhile, rose 5% to 972,000. 

As a result of these obstacles, many secondhand companies have shifted some of their attention to more premium brands and services. ThredUp, for example, offers brands like Kate Spade, Veronica Beard, Pinko, and LoveShackFancy in premium kits that are priced at $34.99 and offers more tools for sellers as well as longer consignment windows. Premium brands have grown to account for more than 10% of ThredUp’s newly listed items and have been increasing since mid-2024, CEO James Reinhart said. RealReal, which focuses on premium goods, said its average order rose to a record $579 in 2024.  

“We have an attractive consignment demographic,” RealReal CEO Rati Levesque said. “It’s a diverse group that skews younger, affluent, and fashion focused. About half of our consignors are Millennials or Gen Z and they’re loyal, selling with us multiple times per year.” 

With tariffs now in place and retail prices expected to rise, the secondhand industry is forecast to benefit, licensing executives said.  

More than 60% of consumers surveyed by ThredUp said they were concerned that U.S. government policies around tariffs and trades will make apparel more expensive, Reinhart said. As a result, 59% of consumers surveyed said they will seek more affordable options—like secondhand products. 

“We are seeing an uptick in supply, and it isn’t just ‘more stuff’ to chase revenue growth,” Reinhart said. “Rather, this is increasingly more desirable and premium apparel targeted at our core resale market.”