Resale is winning in the tariff economy — here’s how ThredUp, Depop, OfferUp and Goodwill plan to keep shoppers coming back

That mindset helped the resale platform record its best two quarters of customer acquisition ever, with new buyers up 95% in the first quarter and nearly 75% in the second. ThredUp’s financial performance underscores the point: Revenue rose 16% year-over-year to a record $77.7 million in the most recent quarter, while gross margin approached 80%. The company also raised its full-year outlook for revenue and adjusted EBITDA margin.

Online fashion reseller Depop is experiencing a similar tailwind. The Etsy-owned platform posted 35% global gross merchandise sales growth in the second quarter, with U.S. sales surging 54% year over year, Steve Dool, Depop’s senior director of brand strategy and creative, told Modern Retail. In its earnings report, Etsy said Depop’s gross merchandise sales were “the highest since the business was acquired in 2021.” According to Dool, tariffs have broadened the platform’s audience, as well. Once driven almost exclusively by Gen Z, Depop now sees older shoppers experimenting with resale as disposable income tightens.

The secondhand shopping boom has arrived at a crucial time for the resale industry, which has largely struggled with profitability. Online resale is no longer a nascent industry, but despite its growing popularity — one estimate projects the U.S. secondhand apparel market will grow to $74 billion by 2029 — profitability remains a struggle among even its biggest players. Luxury resale marketplace The RealReal became profitable for the first time in the fourth quarter of 2023 after the company refocused on luxury consignment. In the most recent quarter, ThredUp reported its net loss narrowed to $5.1 million from nearly $14 million a year ago.

Resale companies are under pressure to sustain the surge — pouring money into AI tools, rolling out new app features and striking more brand partnerships.

“There is some cyclical aspect to resale that we might continue to see,” said Sky Canaves, principal analyst at eMarketer. “But the companies now have really honed in on making a lot of improvements to their operational efficiency. They’re also doing a really strong job on getting more supply and creating incentives for sellers to join their platforms. That, in turn, helps to bring buyers.”

Scaling up to meet demand

At a time when U.S. companies are expecting hiring to slow, ThredUp’s Reinhart said the Oakland, California-based company has ramped up hiring at every level.

“We’re adding staff to our distribution centers to meet incremental demand from customers buying stuff, but also for all the processing that we have to do to put supply online,” Reinhart said. He added that the company has been “hiring reasonably aggressively, both in our corporate office and in our distribution centers, really, to meet the moment.”

Higher tariffs on imported luxury goods are steering consumers to secondhand.

At The RealReal, revenue climbed 14% in the latest quarter to $165 million, the company’s strongest showing to date. Average order values rose 8% to $581 as buyers flocked to handbags and jewelry. (The RealReal did not respond to an interview request from Modern Retail.)

“Resale is a smart choice for a luxury-minded consumer, and price increases in the primary market due to tariffs or other factors make our value proposition even more compelling,” The RealReal’s CEO, Rati Levesque, said on the earnings call.

A similar trend is also playing out on peer-to-peer resale marketplace Poshmark, where Burberry sales have risen nearly 30% year-over-year, the company told Modern Retail.

“It makes sense; if prices on goods rise, shoppers will be looking for stylish and affordable alternatives, and that’s exactly where resale shines,” said Kate Franco, Poshmark’s vp of marketing, who added that the platform has seen a 24% rise in new users since April.

OfferUp, a peer-to-peer resale platform that focuses on localized selling by connecting sellers with nearby shoppers, is seeing similar behavior play out across categories disproportionately impacted by tariffs. Ken Murphy, OfferUp’s svp of product, said e-bikes and baby products suddenly appeared among its top search categories once duties took effect. Sellers are even explicitly referencing “inflation” and “tariffs” in product descriptions for Italian leather sofas and toaster ovens, positioning their offers as a way to beat price increases.

Users are also spending more time on OfferUp’s platform. Murphy didn’t provide exact figures, but he said the company has seen “a pretty significant year-over-year increase in sessions per user on our site,” as consumers seek out duty-free goods.

The tariff tailwind extends offline. Evergreen Goodwill, one of the largest Goodwill organizations in the country, is seeing traffic far above its historic pace. Evergreen Goodwill runs 21 stores in Washington state, and its flagship Seattle store now draws 16,000 weekly visitors, up 9% from a year ago. Across the network, sales are running more than 6% ahead of last year — double the chain’s typical growth.

“We’re excited to see the additional traffic and how that’s translating to sales performance,” said Derieontay Sparks, svp of retail operations.

To keep up, Evergreen is testing AI tools that can scan donations, generate item descriptions and suggest pricing. Sparks said the system, which is built with support from a Microsoft “AI for Good” grant, will debut in Seattle this month.

The anecdotal gains are backed up by app metrics. Resale app downloads in the U.S. jumped 20% year-over-year between April and July, while monthly active users rose 10%, according to Sensor Tower. Depop led the field with a 110% surge in downloads, while ThredUp’s monthly users climbed 13% in the same period.

While executives at resale companies agreed that tariffs are driving cost-conscious shoppers to their sites and stores, they also believe the trend is more than a temporary blip. For example, Depop claims more than three in five purchases on its platform displace the purchase of brand-new items, while 71% of buyers will walk away rather than buy new if they can’t find what they want secondhand.

Building stickier platforms

From OfferUp to ThredUp, resale companies are adopting a range of strategies to not only attract new customers but also retain them.

OfferUp, for instance, recently rolled out a new feature that allows users to ask questions about used items and crowdsource advice from fellow buyers and sellers. Based on early tests in Seattle, the feature has already shown “remarkable adoption,” not only in terms of questions posted but also in the number of responses, Murphy said.

To Murphy, the tool fills what he called a “knowledge gap” in resale — the absence of reliable reviews and guidance that exist on traditional e-commerce sites.

On Amazon, for example, a buyer can see hundreds of reviews about whether a coffee maker works as advertised or how a sofa holds up over time. On resale platforms, however, that information typically isn’t available, which can make purchasing a used item feel like a gamble. The new community feature is designed to close that gap by letting prospective buyers ask other users if a refrigerator is likely to last or what to look for when buying a secondhand bike.

The tool is also aimed at helping sellers, many of whom are unsure how to price or present their listings.

Meanwhile, ThredUp has been laser-focused on growing its higher-margin resale-as-a-service offering, which helps brands launch their own resale programs in partnership with ThredUp. In May, the company eliminated upfront and monthly fees to attract more retail partners. “Since then, we’ve had just a ton of re-engagement with ThredUp’s resale-as-a-service offering,” Reinhart said, noting that ThredUp is in discussions with “more than 60 brands.” Reinhart has touted resale as a tariff defense for brands who want a supplemental revenue stream that relies on domestic goods.

ThredUp is also betting that smarter technology will be the key to turning a surge of first-time buyers into repeat customers. Reinhart said the company is working hard to make shopping easier and more tailored for each customer. This means helping people quickly find clothes they like, in their size and style, with as little hassle as possible. The efforts build on AI-powered search tools ThredUp rolled out last year, aimed at helping shoppers more easily navigate its 4-million-item catalog.

“We really had to invest in the onboarding flow for new customers, including how they get the high-quality product in as few clicks as possible by reducing friction for search prediction and reducing friction for finding something in their size,” Reinhart said. “It’s really been all hands on deck to capture this new set of customers, and the team has done an exceptional job continuing to make it easier for people to shop secondhand.”

Poshmark and The RealReal have also bet on AI to turbocharge business, introducing AI-powered listing tools and authentication features. The RealReal’s Levesque told Vogue Business the company is grappling with how tools like ChatGPT will impact how consumers find and purchase secondhand goods.

To eMarketer’s Canaves, one of the major differences between now and past boom-and-bust cycles is the role AI is playing to help resale companies reduce their costs.

“Resale can be costly to do well. With AI tools, they can automate a lot more, particularly on imagery and the copy,” she said. “Profitability is still on the horizon for them, but they’re getting there a bit faster than they would certainly without these tools.”