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The market for trendy used clothes is huge and still growing – but no one is making a profit

by News Room
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For example, the American companies ThredUp and its luxury cousin The RealReal are not profitable, disappoint investors and drag share prices below their listings. In 2022, less than two years after going public, the Korean tech company bought American peer-to-peer sales site Poshmark for $1.2bn (£950m), a sixth of its IPO value. While the service is still available to American buyers and sellers, the company no longer operates in the UK market.

Lithuanian peer-to-peer fashion retailer Vinted has taken over in the UK, with a pre-tax loss of €47.1m ($51m; £40.3m) in 2022. British second-hand marketplace Depop posted a £59m ($69m) loss in 2023. The bright spot is Vestiaire, which focuses on luxury retail. If its optimistic forecast is to be believed, it may be profitable by the end of the year.

This battle affects all sizes, types and locations of retailers. Profit-seeking second-hand clothing sorting companies in the UK have gone out of business due to high labor costs and the deteriorating quality of the clothes they receive. In New York, residents of Brooklyn are complaining about standing in line for an hour to send clothes to the famous Beacon’s Closet, only to be paid $18 (£14.20) for a full bag of vintage designer clothes. Back in 2016, market retailers in Ghana – one of Europe’s biggest recipients of second-hand fashion – also complained of declining quality and profits, and the situation has only gotten worse since then.

The problem is economics. With the proliferation of ultra-fast and ultra-cheap fashion brands, the amount of clothing produced and shipped globally continues to explode, with consumers disassembling more after just a few wears.

According to a 2023 study, one large Swedish charity has to pay for 70% of donated clothes to be burned because they are of too low quality to be sold in stores or exported. Of the clothes exported to Ghana, 40% of the average bale leaves the market as waste.

“There is an oversupply of clothes,” says Liz Ricketts, co-founder and executive director of The Or Foundation, which studies Ghana’s Kantamanto market, one of the world’s largest clothing exchanges. “And that lowers the perceived value and the real value of everything.”

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