Tradesy raises $1.5 million Series A to kill clothing resale competition

Eliza Kern — Wed, 24 Oct 2012 11:00:25 +0000

Tradesy CEO and founder Tracy DiNunzio knows that the clothing resale market is crowded. There’s Threadflip and Poshmark and Twice, among others, all attempting to capitalize on one thing: clothing hanging in a woman’s closet that she doesn’t wear, that could be easily re-sold to someone else.

But despite the existing companies in the space, DiNunzio thinks she can beat the competition with Tradesy, launching Wednesday on web and mobile, by offering stellar customer service, a flexible return policy (unusual in the industry), a smart pricing recommendation tool, simple shipping and what she says is the easiest posting process you can imagine. Whether DiNunzio can successfullly capture the resale market remains unknown, but she’s already had past success at Recycled Bride and is announcing a $1.5 million Series A round from Rincon Venture Partners, 500 Startups, Dany Lev, Daher Capital, Bee Partners, Double M Capital and Launchpad LA.

“It’s become a little bit of a phenomenon, and it’s a really crowded space, because people realize it’s a big opportunity,” she said. “We’ve estimated that there’s $165 billion in resale value in women’s closets. But compared to other sites in the space, we believe we have a significant competitive edge with the best customer service in the industry.”

The competition is equally, if not more well-funded: Threadflip, one of the most successful so far, has raised a total of $8.1 million since its launch in April, and PoshMark raised $3.5 million in December. ThredUp, which has historically focused kid’s clothing resales but is expanding to teen and adult markets, has raised more than $23 million.

But DiNunzio argues that there haven’t been any huge successes in the industry so far and plans to outpace the competition with killer customer service focused on simple shipping (Tradesy provides you with a pre-labeled bag in which to drop your clothes and stick in any USPS mailbox) and a return policy (which most other sites don’t offer).

DiNunzio said every time she spoke with advisors and mentors about doing a fashion resale site, they all told her a return policy would be key to her success since it makes buyers more likely to purchase online. The competitors weren’t offering return policies because it was complicated — who wants to sell if you might have to take the item back and lose your money?

So DiNunzio is taking a gamble that offering complete refunds on “misrepresented” items and store credit for unfavorable or ill-fitting items will win over customers, even if it costs Tradesy in the short term. Neither Copius, which sells home decor and men’s clothing in addition to women’s clothing, or ThredUp offer returns. Y Combinator company 99dresses and Poshmark, a mobile-only resale app, offer returns only for defective items. Threadflip only offers returns if individual sellers agrees to it, and Twice offers a 30-day return policy, but doesn’t facilitate consumer-to-consumer sales like many of the others.

Tradesy also takes only a 9 percent commission on items you sell, as compared to 20 percent taken by Threadflip and Poshmark, and it generally includes shipping unless the item is unusually large or bulky. Hipswap takes 3.5 percent on items sold, and 99dresses takes no commission but requires users to pay for shipping.

Tradesy launched in alpha version in July, with 5,000 preliminary customers. Based on that data and her experiences at Recycled Bride, DiNunzio said she thinks Tradesy can achieve much higher sell-through rates than its competitors, which is a significant challenge for re-commerce sites. For instance, the sell-through rate on Poshmark was only about 15 to 30 percent as of August. While DiNunzio wouldn’t yet release numbers on Tradesy’s sell-through rates, she thinks she can do extremely well.

“We know a bunch of things that we can do to make items sell better based on what we’ve done on Recycled Bride,” she said.

“For women between college and childbearing ages, we have a lot of reasons to try and look good.” she said. “We’re either dating or going to events in our careers, and there’s a lot of pressure to be on trend and dress up. We’re advertised to a whole bunch, and then we all march in parallel to the mall, and open our wallets and then we all come home with our treasures. But what if we could just turn to each other and say, ‘I love your style.’ What if we could just benefit from each other and make it a win-win?”

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Tradesy raises $1.5 million Series A to kill clothing resale competition