Fashion resale companies are actively pursuing acquisitions and investments as the demand for second-hand clothing continues to rise. The disruptions faced by traditional retailers, especially during the peak holiday shopping season, have led to this trend. Newcomers in the resale market, such as Poshmark and ThredUp, are strategically acquiring smaller competitors to protect themselves from competition from major apparel brands like Levi Strauss and Urban Outfitters, which have also entered the resale market.

Industry analysts highlight the importance of volume growth for second-hand clothing companies to generate consistent profits. This is particularly crucial in an industry with narrow profit margins and unreliable inventory. To demonstrate growth, companies like ThredUp and Poshmark are looking to acquire other players, including those in foreign countries.

The resale industry is expected to have a promising future, with projections suggesting it will grow 11 times faster than the overall retail clothing sector by 2025. This growth is driven by the increasing awareness of the environmental impact of fast fashion. As a result, the US second-hand apparel market is estimated to more than double in size and reach $76.4 billion by 2025. Given this potential, more deals are expected in the resale industry as companies aim to capitalize on this boom.

Poshmark, a peer-to-peer sales platform, recently made its first acquisition by purchasing a company specializing in sneaker authentication. The company now seeks further takeover opportunities, particularly in international markets. ThredUp also expanded beyond the US by acquiring European thrift site Remix Global, with plans for further expansion in Europe. Other players like Etsy have secured their position by acquiring secondhand fashion apps like Depop.

The supply chain disruptions faced by traditional retailers have benefited second-hand sellers. With retailers struggling to stock fresh styles, online out-of-stock levels for apparel in the US have reached their highest. This situation favors companies in the resale market, with Tradesy expecting strong holiday sales due to the scarcity of new apparel.

Established players in the fashion industry are also recognizing the potential of the resale market. Luxury reseller The RealReal’s CEO predicts more consolidation in the industry. Vestiaire Collective, a high-end thrift platform, raised $215 million this year, with French luxury group Kering acquiring a 5% stake in the company. Experts believe that larger clothing and fashion companies will either partner with, invest in, or acquire successful second-hand apparel startup platforms.

Boosting sales volume is crucial for success in the resale market due to slim profit margins. Urban Outfitters, for example, is focusing on a peer-to-peer marketplace model, where the company facilitates deals between individuals and earns a commission on sales. This model allows for greater scalability and faster growth as the company is not directly involved in sales and does not dictate the supply.

In conclusion, fashion resale companies are actively seeking acquisitions and investments to capitalize on the growing demand for second-hand clothing. As the resale market surpasses the traditional retail clothing sector, companies are expanding geographically and diversifying their offerings. With significant growth potential and increasing sustainability awareness, the resale industry is expected to attract more attention from major players in the fashion industry.

Useful links:
1. Poshmark Inc: https://www.poshmark.com/
2. ThredUp Inc: https://www.thredup.com/