Well, good morning, everyone. Thanks for joining us today. My name is Alexandra Steiger. I'm part of the U.S. Internet research team here at Goldman Sachs. I'm very, very pleased to have James Reinhart, Founder and CEO of thredUP, and Sean Sobers, CFO of thredUP, with us today. Welcome to our conference. James, maybe let me start with a question for you. You founded thredUP a little over 10 years ago. As of today, you process over 125 million unique secondhand items from over 35,000 brands. Can you maybe remind the audience of your long-term vision for thredUP and what differentiates thredUP from other resale channels?
Sure. Yeah, I mean, when we started the business, ten years ago, the thesis was that there's tremendous disruption happening across consumer internet. People were listening to things on Spotify, and they were staying in Airbnbs, and they were booking Ubers, and all these consumer experiences were changing, and we thought retail, right, broadly speaking, would have to evolve. There was this movement around, you know, DTC and, you know, the way consumers were shopping. I thought at the time, like, secondhand, which was a much bigger industry than I think people appreciated at the time, was also gonna undergo this sort of technological transformation.
Our thesis then became, what does the future of secondhand look like, knowing back in 2010 that there had been very little innovation from eBay and Craigslist, right? Really for like almost 20 years, you know, since their inception. That's really what catalyzed the idea of what would be the future of secondhand online. We thought ultimately that would be a huge market. Our thesis was that the way that market would materialize and what would ultimately drive success in the market would be access to supply. Our core thesis is that ultimately all two-sided markets are supply constrained, and that if you can control the supply chain, you ultimately can control the demand over time.
Everything that we've been working on is in building infrastructure, operating capacity, data science, all of that work to control the supply chain. I think that is ultimately, you know, where we see our competitive advantage across infrastructure, buy, and data.
Before diving a little bit more into the business itself, maybe let me ask you one question on, like, the broader consumer environment. On your last call, you spoke to how trends in, like, the broader environment were affecting your active buyer base, specifically the budget, the discount shoppers. Can you maybe give us an update on how those trends have evolved since you last gave us that update?
Yeah, I mean, I think what we said on the call, which was three weeks ago. Time flies. It feels like three weeks ago. You know, I think what we said at the time was that we really saw this gap down in June, but that things had started to stabilize. I think that continues to be our point of view that things have stabilized. I think what we're looking for is consumers who, for many consumers who are sort of on the sidelines, who are not shopping apparel in the same way right now, for them to come back in market.
Because our thesis, my thesis remains that, you know, people will step aside from the apparel market for three months or six months at a time, but people don't typically sit out apparel for 12 months, 18 months, 24 months. Like, they do go back and shop. We're Americans. It's what we do, right? Europeans, they, you know, we still like to shop. I just think you're having this, like, moment where people are spending in other areas and maybe clothing isn't the highest priority. I think that will come back, and I think we're doing all the things we can do right now to ensure that we're there when the customer returns.
Have you actually noticed any change in, like, the promotional environment over the past few weeks? Could that potentially be an impact on your second half performance?
Yeah, I think what we said is we expect the second half to be challenging because of promotions. I think there's sort of the good and bad of what many retailers have said is, "Hey, we have too much inventory." That's the problem. The solution is we're gonna flush it pretty fast, or we're gonna put it away. I think what that means is that you're gonna have some pressure in the near term. I think when you get into 2023, I think more traditional retail, broadly defined, is gonna have pretty clean inventory. A clean inventory environment means that prices will actually stabilize and margins will stabilize. The thing that people should think about as it relates to thredUP is that that means that our prices are still going to be structurally lower.
Mm-hmm.
The value that we're gonna deliver to consumers as we get into 2023 will be superior to, say, the perception of value today. I think that's kind of what gives us a lot of confidence that our business will rezone pretty quickly.
Let me maybe follow up on your second half or Q3 outlook, and-
Mm-hmm.
Maybe that's a good one for you, Sean. You provided a revenue guidance for Q3 and the second half that reflected a more cautious outlook versus at least our initial expectations. Can you just remind us of the underlying assumption that went into that guidance, and where do we sit today?
Yeah. No, I think as James said, as we saw June end, we saw this gap down in the consumer kind of slowing down. We saw that continuing on in July, and then we saw kind of at the tail end of July, just stabilization. We took that assumption as we built out guidance for Q3, kept that assumption pretty much consistent for Q4, and then our thought process internally is it's probably about the same way through the first half-
Mm-hmm.
of 2023 and laid it out that way and built our assumption around spending and around cost cuts that we did and rationalization around expenses, so we can make sure we continue to march towards EBITDA breakeven, which we talked about on the call, hitting that sometime in the back half of next year, with revenue between $80-$85 million.
Got it. I also wanted to discuss category performance. Have you noticed any noticeable, like, trends or changes in category performance? To what degree can you actually adjust your product assortment or your sourcing strategy to cater to the more resilient upscale buyer?
Yeah, definitely. I think one of the advantages of being a marketplace, you know, having the vast majority of our product be on consignment, is that we actually can shape the assortment, and it doesn't take us months and months and months to do that, right? We can shape it, you know, very efficiently with the data. Yeah, we definitely have seen demand for more premium categories. We've seen demand for the sort of traditional, you know, going out stuff, whether that was wedding season in the summer or back to school. You know, today's the first day for kids in New York City schools, right? You definitely saw some return to some of that behavior.
I think, like, writ large, I think our strategy is to make sure that we're constantly shaping the assortment for the demand curve sort of in real time.
Mm-hmm.
I think that's a unique benefit and a real competitive advantage relative to traditional retail, right, which is buying six, nine, 12 months and having to really predict the future. We don't have to predict the future, right? We can look at what the customer is buying and shape the assortment to do that.
That's great.
I mean, to add on that, too, we have something like 4 million+ items available for sale today, but today we're gonna process 100,000 items, and tomorrow 100,000. You can all quickly do the math and figure out how could we shape this in two weeks or something like that.
Yeah.
Got it. Yeah. Can you maybe talk about, too, some of your, you know, key product initiatives like you're working on? From, like, a product innovation perspective, what are you most excited about for the next, you know, couple of, like, months?
I think every business that goes through this phase of growth that we've been in product selection ultimately gets to a point where it needs to sort of reestablish, like, how customers discover the right products, right? There's sort of a growth optimization path that every company goes on, and I think the things I'm really excited about is that the work we're doing on personalization and search and discovery-
Mm-hmm.
really making sure that, like, when you come to the site, if we've seen you before that. Every company says, "Yeah, we want it to feel personalized," but, like, our goal is really in that, like, first page of results, you're like, "Man, I like that." We're spending a lot of time and product energy building that fresh curation so it feels like when you show up, we know you so well, and we can put you right in the right spot. You know, we have something that's in test form right now called Hot or Not, and it's a very simple favoriting game, but the-
To the consumer, it seems like, oh yeah, this is like a, well, it's like a swipe right, like, yeah, like, oh, duh.
Oh, Tinder-type feature.
Duh. People have been doing that forever, right? Like, that isn't innovative. What's innovative on the back end is the data models we've built behind that are actually, like, very sophisticated to make sure that the impulse we're getting from you is correct. I'm really excited about that because I think one of the criticisms we sometimes get from new customers is there's so much amazing stuff, like, I don't even know how. You know, one thing we hear often from women is like, "I don't wanna, like, check out because I haven't seen all the dresses I could buy.
Mm-hmm.
Right? It's like, "I need to get to the 29th page," and then, you know, people. We're trying to just get better at that, and I'm really excited about that because I think it's great for returning customers. New customers, you know, I think we're seeing the conversion rates of those new customers be better, you know, with some of these new product initiatives.
Can you just remind us of, like, how you think about potentially expanding into other categories versus your core categories right now?
I mean, we are really focused on women's apparel. We do kids as well, accessories, handbags. We continue to kind of explore how to do men's, you know, over time. You know.
Mm-hmm.
Particularly, we've done some stuff with our RaaS partners right now, so we have men's-
Mm-hmm.
We're doing a small men's section for Tommy Hilfiger-
Mm-hmm.
For example. You know, I think we really wanna dominate apparel, and become the best in the world at that. I think that gives us permission to do other things. You know, you should expect to see us pretty focused, for the near term.
Great. Let's pivot to your international expansion. Most of your business is still U.S.
Mm-hmm.
You bought a European marketplace or resale platform, Remix, just one year ago. What's your view on thredUP's long-term international opportunity, and can you maybe walk us through some of the pros and cons of doing that organically versus through M&A?
I'll start and then, John, you-
Yeah.
I mean, I think that the problem that we're solving, right, of, you know, high quality secondhand goods not getting the life that they deserve, consumers wanting to shop secondhand, I don't think those are U.S. phenomena, right? These are global phenomena. I think they're more proportional to first world countries and sort of developed economies. I think globally, there's an opportunity for secondhand. We started by thinking about Europe, which I think is a natural extension for many U.S. companies. What we were looking for in the acquisition of Remix, which is a company I've known since 2016, is a company that really shared our DNA around operations and competitive advantage and supply. These were operators who really cared about logistics and technology.
We thought that they were, like, a great beachhead for us to establish in Europe. They operate in nine Central and Eastern European countries, but the vast majority of their business is in Bulgaria and Romania. They've built, like, a really great business in two pretty small e-commerce markets, which to us suggests, like, what they've built actually is nicely extensible in Eastern and Central Europe as well as Western Europe. We'll probably use them as a beachhead for the rest of Europe. I think we continue to look at what else is happening. I don't think we're going to be aggressive in M&A, you know, in the near term, but keep our eyes open and see what else pops up.
Remix is a little different in terms of, like, how they monetize-
Mm-hmm.
their business model. Can you maybe walk us through the difference here versus the core thredUP marketplace?
Yeah. Versus, like, core thredUP, core thredUP's mostly consignment. Remix is the exact opposite.
Okay.
It's almost 100% direct own. They only source a little bit from the people, which is essentially what all of what thredUP does. You know, they buy in bulk, they buy used returns, they buy overstock. You know, their margins, I think the last time we talked, their gross margin was around, like, the mid-30s%. Our direct business, our own business is in the 50s%. I think we have, like, a near-term opportunity just to take what we know about how we process, how we sell, how we're using pricing algorithms to help them take that 30s% to the 50s%. This is even before we get into the consignment transition, which we're gonna do over two to three years. The way we wanna do it is we don't want to take that business and turn it into consignment.
We want to actually add a majority of new revenue that's gonna be consignment, so we can come back and say, "Yeah, the majority of revenue at Remix or in Europe is consignment-based." That's, you know, for us in the U.S., that's about 74% last quarter. There's a lot of opportunity in the near term to move the direct business up, and then over time, the two to thre years to continue to move it up from a consignment transition.
Great. Maybe let's continue on margins. You know, just like walking through the P&L. Can you just walk us through some of, like, the puts and takes on the gross margin? What are some of, like, the near term, like, headwinds versus tailwinds? Then, like, how should we think about gross margins longer term?
Yeah, no, I think we're still consistent with where we think our long-term margins are gonna be on a gross margin basis, 75%-78% as a combined business. The U.S., I mean, I think we did some amazing work. We shot right to, like, 74%. We're so right on the cusp of the low end there. Then we added the European business, which we just talked about, is structurally different. Over time, we'll migrate the European business to be more in line with the U.S. I think what we've seen is, as shipping challenges and costs increase, we got more innovative and consolidated items per shipment, which really reduced the amount of shipping that we've done. We created an internal infrastructure that allowed us to ship from DC to DC.
Essentially, if you were a buyer and you bought three items at three different distribution centers, say in Atlanta, Phoenix, and Mechanicsburg, Pennsylvania, and you live in Miami, we would send everything to Atlanta and then do one shipment from Atlanta. That was a tailwind as we were migrating this way. I think from a kind of the further tailwinds in front of us, I think we have opportunity to automate more. You haven't been to a DC yet, but we'll take you there soon. You'll be able to see some of the things that, hey, this is still some of this is really manual, some of it is very automated, but there's lots of opportunities there. I think the headwinds in general are, shipping is still expensive.
Mm-hmm.
Labor is not cheap, although hiring has really improved the ability to hire. I think that's become less of a headwind in recent months. I think discounting and promotions, which you already talked about, I think are just near-term headwinds, just because I think everything's gonna be on sale. There's only so much that we can weather that.
Well, good for us as, like, a holiday shopper. By the way, I didn't ask that. Like, how do you think about, like, the upcoming holiday season? I know it's not a big season for you.
Yeah. I think it's sort of great in the sense that I want everybody else to give stuff away because that's not our where we win, right? Q4 is always, you know, typically our slowest quarter.
Yeah.
We'll let them. It can be bloody out there in Q4, and we'll see on the other side.
Got it. Just wanted to follow up on EBITDA. You briefly talked about, you know, your intention to achieve adjusted EBITDA breakeven in the second half of next year, end of next year. At the same time, you also laid out a plan to lower your expenses.
Mm-hmm.
Can you just provide us with an update on how those cost-cutting efforts are progressing versus the $70 million you laid out on the last call? How confident are you that you can achieve that goal into next year?
Yeah. We like we basically reduced costs and expenses by about $70 million on an annualized basis. Essentially, other than it, some of it has to pace and kind of come on, and we can realize it. By the time we start Q4, all of that reduction will be in place, and we're ready to go. Some of it, I kind of split the $70 million into two pieces. There's like directly variable to revenue, which I'd say is marketing and operations. In operations, thinking if the more we sell, the more we bring in. If we sell, one item goes out, one item comes in, that kind of scenario. As time progresses and demand comes back, that $35 million-$40 million of the $70 million will come back to some degree.
Then you have the rest of the $70 million, $30-$35 million, I would say is, I kind of call it semi-variable in a sense that it was people, it was professional services, it was things that aren't directly related to revenue, and that's probably comes back at 25%-30%. I think it's gonna be a real tailwind as we progress towards EBITDA positivity and then grow to cash, free cash flow positive, where once things start going in the right direction, especially on the demand side, we internally are super excited about there's gonna be some really positive news on the P&L. We talked about the back half of next year getting to break even EBITDA.
I think there's gonna be a lot of opportunity even further out because we've done this rationalization of expenses, and not all of the expenses are coming back. If you look even just at Q4, what's the spread between Q3 and Q4, you know, 'cause we were pretty explicit about the guidance, right? Around Q3 and Q4, and it's the gap in EBITDA is like an 800 basis points improvement, right? Like, we're really confident in, like, the ability to manage those expenses and sort of, you know, bridge to break even.
Got it. I'm thinking, like, longer term, I think you talked about, like, a 20%-25% EBITDA margin goal, like, long term.
Mm-hmm.
Like, beyond, you know, once you're break even EBITDA, what are kind of like the main sources of leverage going forward to potentially or to achieve that long-term EBITDA margin goal?
It's really two things. I mean, one is you grow into your fully utilized infrastructure, right? Right now our you know, we're still living in DCs that are, you know, seven to 10 years old, right? You're moving much more of your capacity through your most automated facilities, right? Atlanta is more automated than Mechanicsburg and Phoenix, and Dallas is more automated than Atlanta. You're pushing all of your revenue through facilities which just turn at higher rates, right? They cost less to you, right? You have all that.
Not just fixed cost leverage to those facilities, but true variable improvements in how we process goods. That's a huge advantage. The second is, you know, thredUP is a marketplace, and so it doesn't have, we don't have buyers, and we don't have merchants, and we don't have people who make stuff. Like, we don't have all of that stuff in the traditional retail world that I think, you know, stinks on margins. So a lot of, like, the leverage you get is on the SG&A side because you just don't have the number of people, right, that you would traditionally have in an apparel business. Those are kind of the two big buckets. Then the other piece to just keep in mind is 80% plus of our revenue comes from existing customers.
Mm-hmm.
Right? This isn't like a business that's spending 40% or 50% of revenue on marketing. Like, you know, we ultimately don't think those businesses work over time. thredUP, at 15% of revenue on marketing, is a business that can acquire a lot of customers and then retain them over time.
How should we think, like, long term about your fulfillment center strategy? You just briefly talked about it. You just opened a new fulfillment center in Texas.
Mm-hmm.
You have now, I think, two-
Mm-hmm.
processing facilities. How should we think about, you know, that, you know, footprint over the next couple of, like, years?
Okay. I was gonna say, I think we've publicly stated that we don't think we'll need another DC at least until the earliest of 2025. Not that this is, like, breaking news, but we have a lot of capacity, so it's gonna be further out than 2025, and that's. The Dallas facility itself will hold 10 million. We'll end next year probably with about halfway there, with 5 million of extra capacity. That'll put us at 11.5 million items. We have this massive amount of infrastructure now, and I think the thing that's changed as we started building Dallas is the amount of turns that we can run through that inventory in the infrastructure. So the more we turn it, the less we need the next distribution center. Does that make sense?
Yeah, no, absolutely. You know, thinking through, like, some of your older fulfillment centers, like, what are some of, like, the areas where you can still invest in, like, automation and drive that leverage?
I mean, there's stuff that's like, it's really simple. If you go to our older facilities, you'll see there's lots of people moving stuff around on racks and gaylords. There's now carousels and conveyors that move stuff around. That's a huge savings, right? It's dozens and dozens of people across, like, every shift. Even just, you know, photo processing. To give you an example, like today, we're generally taking a photo of everything. If we get that blazer in, we're like, we have to take a photo of it and say, "What is that blazer," right? We have to input some data from the tag.
A lot of the technology we're working on right now is that we're able to take a photo of that, and then in real time, shoot that against the database and say, "Oh, we've already seen and processed that blazer, and we know it's from X brand. It's this size," because it's actually a fixed mounted camera, and so it's a distance.
Mm-hmm.
At a fixed mount, so you actually can measure all the variables of it. You can be like, "Oh, we know it's a medium," right? Or whatever. We can see its buttons and the whole bit. That is like a gap up, right, in contribution margin when you don't have to do all that work on a per item basis. Keep in mind, that's like one piece, and then we're doing all the work with our RaaS partners, right? You know, through those collaborations, we think over time we can get even better data directly from them. All of a sudden, a lot of the manual work you're doing to identify the item and merchandise it all goes away. That's our self-driving car moment, right?
I think when you're processing hundreds of millions of items and all of a sudden you no longer have to touch them in the same way, there's a huge opportunity there.
Going back to some of, like, the marketing investments, I know you've taken a very prudent approach to, marketing investments. As far as we know, you haven't really spent any money to acquire sellers.
Mm-hmm.
That being said, you just recently hired a new CMO.
Yeah.
Does she have a different investment philosophy, or like, what are gonna be like her areas of focus going forward in terms of investing in marketing?
Yeah. Her name is Noelle Sadler. She's wonderful. She came from Lulus, which is, you know, a fast fashion retailer focused on young people. I think the two things that she brings to us is, one, I think she's very, very smart and capable, and focused on how young people are shopping.
Mm-hmm.
I think she adds a lot of competency to, you know, how we target and tell stories to Gen Z and millennials. That's a real added capacity for us. The second is, you know, coming from a fast fashion company and a merchandising background, I think she has a fresh and I think well-articulated sort of perspective on like how you merchandise to that group, right, in a secondhand context. Those are two areas that we, I think over the past year or two have felt like are a real gap that we could fill with bringing in somebody new. I'm pumped that she's on the team and those are definitely two areas she's gonna be focused on.
Great. One area we're always very interested about, just in the context of like marketing, obviously we have seen, you know, ad pricing.
Mm-hmm.
Really going up over the past couple of like months since IDFA. Is that something you've noticed as well? Does that influence the pace of your marketing spend going forward?
I mean, on the IDFA side, we've said a number of times that we just knew it was coming. We engineered around it. It has not had any material impact on like our acquisition costs. I'm always surprised when people point out the impact that IDFA has had, like it was a surprise, and yet people had a year of knowing that it was coming. Like, so I never quite understand that. I think we knew it was coming, and we engineered around it, and I think the team's done a wonderful job of making sure that we can navigate through that. You know, I think what we're seeing right now, and you can see it in the releases from Google and from Facebook, like ad rates are coming down.
Because of, you know, the broader macro economy, and I think we're seeing some of that. We're definitely seeing acquisition costs come down a little bit, which I think is good. I think what remains to be seen is how do LTVs-
Mm-hmm.
Track in an environment like this. I think people got a little burned in the beginning of the pandemic when acquisition costs were so low and people just locked on the same LTVs at that time. We know that that math didn't quite work out the way people thought. I think our point of view is, let's be disciplined on the acquisition side. Let's turn over a few more cards on the data side around LTVs. If they prove to be as good as we think they could be, then, you know, we can spend more. You can always spend more money later. One thing that's unequivocally true, you can spend it tomorrow, you don't have to spend it today.
Yeah. No, I agree with that. I also wanted to spend some time to talk about your RaaS or Resale-as-a-Service offering. You announced a few more RaaS partners-
Mm-hmm.
including Tommy Hilfiger over the past couple of, like, weeks. What's the value proposition for your brand partners, and how should we think about the revenue opportunity of RaaS in the long term?
I think the way that brands think about it is, one, it's ultimately about being relevant to a younger customer, right? I think customers, young people are particularly signaling their interest in shopping secondhand. For brands, it's like, okay, this is a way to get to a new customer who I can onboard to the brand at a lower price point, right? Because secondhand is structurally lower. I think they are thinking about young people from customer acquisition. I think they're thinking about sustainability, like Tommy Hilfiger in particular, you know, is very focused on their long-term sustainability goals. Selling resale product, secondhand product, is really good for the planet, right? It uses 82% less resources, like across the board, electricity, water, carbon.
Like, there's literally nothing more that they could do, you know, with us than kind of utilize our platform to do that. Young people, it's sustainability, and then I think they like a little bit of like the thredUP, like, zeitgeist, right? I mean, Tommy in particular, if you go and look at it's Tommy plus thredUP, right? It's a collaboration. I think they like the storytelling that we're doing around making the world a better place. I think brand partners all like that.
You haven't really talked much about the monetization model behind RaaS. Can you give us maybe some sense of how that monetization model could evolve as more and more brand partners sign up for the program?
Yeah. On the supply side, the way we think about it is, we're distributing our clean out kits, right, through our brand partners. Our customers, their customers, rather, are getting credit through the clean out service. Whether it's Athleta or it's Tommy or it's Madewell. It's a great loyalty and recycling program for their customers. When we process those bags, we make money every time, right? We charge them some money for that. There's a monetization on the inbound side that's better than our core marketplace fit. On the demand side, think about it as an additional point of distribution for us. Take an airline seat, for example. United, you maybe you flew and I flew in, right? United can sell it on their website. You know what?
They also sell that seat on Expedia, Travelocity, Orbitz, American Express, and Chase, right? Those are five more points of distribution that help them sell that seat faster. The way we think about our product and our facilities is that every RaaS partner we have helps us sell that product faster. The way the economics materialize, as Sean alluded to, is it drives turns. That has a huge impact on our P&L.
What's the number we should think about in terms of like RaaS partners by end of this year, end of next year? I'm sure you're getting-
Yeah. I mean-
a ton of demand.
We've said that, you know, we continue to be on track to be, you know, right around 40 partners, you know, by the end of the year. I think investors should just keep us honest on that and just sort of look. I don't think you're ever gonna see this like, you know, a 100 partners in a quarter kind of thing, right? I think what you should expect-
No.
Yeah. Yeah.
In a couple of years, I mean.
I'm saying not in a quarter, but I think you'll wake up a few years from now, and there'll be 150 or 200 or 250 partners on the platform. thredUP will be the only game in town powering resale for brands on the internet. I think that's a pretty powerful thing.
Yeah. No, absolutely. Maybe going back to you, Sean, on just your capital allocation strategy. What are your priorities right now, and did they change given the current macro, inflationary environment?
Yeah. No, they definitely changed in the sense that I think we understand, you know, right now cash is king. We're being very logical and thoughtful on how we spend CapEx. Obviously, we're spending money to run the business, and we're being smarter about overall expense allocations. It's. We also went through and thought about what do we need from a distribution center perspective, which is the driving force behind our CapEx purchases. We really right size what we need and when we need to spend it. We're gonna spend less than $20 million next year, which is a significant decrease from this year. Just being really thoughtful and logical, let's not build ahead of what we need.
Tying into what RaaS is doing, is just the more turns we have in the distribution center network, the less likely we need that next DC or those next 5 million slots at DC07, which is in Dallas. That's how we think about it.
Great. Maybe I'll pause here and just see quickly if there are, like, any questions in the audience. I'll just continue.
Yeah.
Everyone is shy on a Thursday.
They're freezing. They're just too cold.
I know, I guess. We talked about many areas, like, of the business. Like, is there anything, like, we haven't talked about in terms of, like, key initiatives, like you're working on, key product changes? You already talked about a few, like, innovation, things on, like, the personalization side, but we have missed and we should be really focused on.
I mean, I think that, like, the thing that, like, people just need to keep reminding themselves of about the business is, like, all the innovation work we're doing on the supply chain.
Yeah.
Because, again, like, you know, if you think about what constrains all marketplaces, as I said earlier, right, it is supply. For Airbnb, it's new hosts. For Uber, it's drivers. For OpenTable, it's restaurants, right? Like, all the work that we're doing is to improve the seller, like, value proposition.
Mm-hmm.
experience. You know, we've added donation programs to our selection, right? So people, if they don't wanna make money, they can donate, right, through our platform. They can send in a bag, order a bag, or they can just print a label at home since everybody now has more boxes than they know what to do with. They can pick up bags in store. We have our RaaS partners. We're now distributing in stores. You know, there's probably 25 of them within four miles of here in New York City, right, where you can pick up a clean out kit, or you can print them through one of our partner sites. I think those are, like, a lot of the things that people should be looking at.
Probably the other piece is just around the storytelling that we're doing as a brand.
Mm-hmm.
We just did a big collaboration with Priah Ferguson, star from Stranger Things. She did a whole-
I saw that.
You know, hotline on how to quit fast fashion, which I think has gone exceptionally well, and I think we're taking more of a stand around how bad fast fashion-
Mm-hmm.
is for the planet. We just, you know, last week launched something with Heinz Ketchup. You know, Heinz Ketchup came to us and said they wanted to do a whole collaboration, you know, celebrating the Heinz, like, drip. You know, you eat a hot dog, and, like, the ketchup, like, drips on your shirt. We launched a limited collection of Heinz drip shirts with them, which is funny, but I think my point is that increasingly, thredUP is sort of leading itself into, like, the broader narrative around, like, what's cool and I think that's a huge sea change for where secondhand was 10 years ago.
Yeah.
I think people should keep that in mind because I think it speaks for this broader momentum in the category.
One question we ask all the companies attending this conference is, what do you think about the consumer into 2023? Do you think it's going to be stable versus what you're thinking about it, you know, the rest of the year, is it going to be worse or better, or again, stable?
We should poll the audience. You know, like Who Wants to Be a Millionaire?
We're polling you.
Poll the audience. Phone a friend.
So-
Yeah, phone a friend. Yeah, no, look, I mean, I ultimately, as I said earlier, I don't think people are gonna sit out apparel markets or be constrained for, you know, for years, right? I think they will come back, and I think, you know, you see gas prices coming. You see some of these things that are better, so I think the consumer will be in a better place a year from now than they are today. I just don't know whether, like, you get momentum first half of next year or second half of next year. I do know, like, for sure, that retailers are not gonna be able to keep discounting at this rate, right?
You think about where our business sits in the value proposition chain. I feel very confident that a year from now, prices across retail are gonna be much higher than they are right now. thredUP prices are gonna be pretty much the same, which is gonna mean that the value proposition we deliver to customers is gonna be superior, you know, to where it can be today. I think that's really gonna be a good thing.
Great. Last question, before we close it off. What are you most excited about for thredUP in the next 3-5 years, and what's your most outside-the-box prediction over that timeframe? Maybe let's start with you, James, and then-
Um-
Moving on to Sean.
Yeah, I mean, I think, you know, if you think about, like, back half of last year, the business was growing 40%-50%. I think this is in a time where, like, there's a little bit of this, like, trough of sorrow of, like, everything sucks. I think, like, you're gonna see that all the tailwinds around the secondhand industry are just as intact a year or two or three years from now as they were two or three years from, you know, ago. I just think you have a little bit of this disillusionment right now. I'm pretty excited to sort of get to some state of normalcy, right? You know, pandemic, recession, inflation, you're just like, "What?" Right?
I think all the structural parts of the industry are well intact, and I'm excited to kind of lead through that. I think my second prediction is I think people should be prepared for there to be a lot of brands doing resale, and those brands are gonna be powered by thredUP, and so Sean?
I would say what I'm most excited about is really, this is gonna sound geeky, but just going through the expense rationalization, it's all gonna be about profitability and cash flow positivity. I know I'm personally sick of having that conversation, so being able to talk about it in two to three years about all the momentum there, because I think we've made some decisions that are just for the long term, they're gonna be really helpful in cash flow generation. That's what I'm most excited about.
Great, and with that, we're up on time. Thank you so much for-
Yeah.
For joining us today.
Thanks for having us.
Thank you.
Thank you.