With $14.5M, second-hand kids’ clothing site thredUP looks to new verticals

Since launching in 2009, San Francisco-based thredUP has built a loyal customer base of parents looking to buy and sell used children’s clothing. But with $14.5 million in new funding, the company says it plans to expand beyond children’s clothing to become an even bigger online retailer for second-hand clothing.

Announced Wednesday, the Series C round of financing, which brings the company’s total amount raised to more than $23 million, was led by Highland Capital Partners, with participation from current funders Trinity Ventures and Redpoint Ventures.

With the new funding, the company intends to invest in infrastructure and customer acquisition, so that it can scale and add new resale verticals, including teens, maternity and adults, CEO and co-founder James Reinhart told me.

“As more and more customers turn to the internet to buy clothing, so far no one has really cracked the code of how to buy used online,” he said.

The site initially launched as an online marketplace for parents to exchange used children’s clothing directly with each other. But earlier this year it decided to focus on more of a consignment model, which allows the company to control the inventory and improve the customer experience, CEO and co-founder James Reinhart said.

Through the site, parents can send the company outgrown clothing in “clean out” bags (which are mailed to families free of charge) and earn about 30 percent of each item’s resale value. They can also browse the online store and purchase vetted, “like-new” used clothing.

Currently, the company has one processing facility in California, which helps it add 3,000 to 5,000 new items to the site every day.  But its goal is to open new distribution and processing centers across the country, including in the Midwest and the South, so that it can add 25,000 new items to the platform each day by this time next year, Reinhart said.

Other sites, including BabyOutfitter and StorkBrokers also help parents recycle kids’ clothing, and even online marketplaces like OfferUp, HipSwap and Copious could enable people to buy and sell secondhand clothing. But Reinhart said thredUP is distinguished by the volume of items it processes, as well as by technology that enables it to evaluate and itemize inventory.

The company declined to share user numbers but said it adds 500 to 1,000 new customers each day and that 50 percent of customers return to use the site again.