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Business Operations Business Models

How Does ThredUP Make Money (Business and Revenue Model)

The ThredUP business model

ThredUP logo
Here’s what you should know:
  • What is ThredUP, and how does ThredUP work?
  • How does ThredUP make money?
  • Consignment Fees from secondhand sales
  • Product Revenue
  • ThredUP subsidiaries, acquisitions, and exits
  • ThredUP profit and revenue
  • What is the ThredUP business and revenue model?
  • ThredUP funding, net worth, and market cap

How does ThredUP make money and how is it so cheap? Well, here is a full, in depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the ThredUP business and revenue model, how much money ThredUP makes per year, and how ThredUP works.

What is ThredUP, and how does ThredUP work?

ThredUP is an online consignment and thrift store where shoppers can buy and sell secondhand apparel and accessories up to 90% off retail.

Founded in 2009 by James Reinhart, Chris Homer, and Oliver Lubin, ThredUP began trading on the NASDAQ on March 26, 2021, under the ticker symbol “TDUP”.

Today, ThredUP now sells more than 35,000+ brands across 100+ categories to its more than 1.69 million active buyers on its marketplace.

So, how does ThredUP work? To shop on ThredUP, you can simply download their app from the Apple App Store or Google Play store, or visit their website.

Once there, you can browse and shop from more than 35,000+ brands with up to 90% off discounts.

Some of ThredUP’s competitors include The RealReal, ASOS, SHEIN, Stitch Fix, FashionNova, and other online retailers.

ThredUP App in Apple App Store | ThredUP Business Model | How Does ThredUP Make Money? | How Does ThredUP Work?
Source: Apple App Store | ThredUP

How does ThredUP make money?

According to ThredUP, ThredUP sells more than 35,000+ brands, across 100+ categories to its more than 1.69 million active buyers on its platform. So how does ThredUP make money off of all these items and customers?

Below is a breakdown of how much money ThredUP makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how ThredUP makes money in 2022

ThredUP has a revenue model that makes money in two (2) ways; from the consignment fees it takes from secondhand sales and through the product revenue ThredUP owns and sells directly.

#1. Consignment Fees from secondhand sales

ThredUP makes most of its money from the consignment fees, “commissions”, they take from each secondhand apparel and accessories sale made on its platform. In fact, $186.1 million, or 73.9% of ThredUP’s total revenue came from consignment fees in 2021.

According to ThredUP, ThredUP processed 5.3 million orders* in 2021 alone. Of that, ThredUP takes between a 20% to 97% consignment fee of each order depending on the price of the item sold. You can see the simplified breakdown below or take a look at the full ThredUP commission chart.

*ThredUP has not disclosed the gross merchandise value (GMV) of those 5.3 million orders placed.

How much does ThredUP take? (ThredUP consignment selling fees)

  • 20% to 97% consignment fee (depending on the price of the item)
ThredUP secondhand sales chart | ThredUP Business Model | How Does ThredUP Make Money? | How Does ThredUP Work?
Source: ThredUP

Note: 73.9% of ThredUP’s total revenue came from consignment fees in 2021.

#2. Product Revenue

In addition to the consignment revenue ThredUP makes from selling secondhand apparel and accessories, ThredUP also makes money from the sale of items ThredUP owns.

Up until mid-2019, ThredUP has historically purchased all of its inventory from sellers before shifting to a consignment based business model.

But with the recent acquisition of their European operations, came the acquisition of their inventory of items as well. Which totaled $65.68 million of product sales for ThredUP in 2021.

Note: In 2021, product revenue made up 24.1% of ThredUP’s total revenue. But ThredUP expects that percentage to decrease in the long term as they roll out their consignment based business model into their European operations.

ThredUP subsidiaries, acquisitions, and exits

To date, ThredUP has made a total of 2 acquisitions, 1 investment, and 1 lead investment.

Mergers and acquisitions business model
Source: Crunchbase | ThredUP

ThredUP profit and revenue

In 2021, ThredUP reported $251.79 million USD in revenue.

Note: Because ThredUP Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of ThredUP’s publicly released financial reports, including annual reports, through ThredUP’s investor section on their website.

What is the ThredUP business and revenue model?

ThredUP makes money through a few revenue models that they combine within their company, they are:

  • Resale as a Service business model
  • Commission based business model
  • Transaction based business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model
  • Mergers and acquisitions (M&A) business model

ThredUP funding, net worth, and market cap

ThredUP’s Crunchbase profile shows ThredUP has raised $304.1 million over 8 rounds and has a market cap of $317.95 million as of August 2022.