Threadflip goes full personalization, introduces a follow-based model for its peer-to-peer clothing marketplace
There’s a battle going on among startups trying to help women monetize their closets. At the same time, these peer-to-peer resale marketplaces are also helping women find pre-owned fashions and accessories at bargain basement prices. Given that most offer the same basic services and access to similar inventory, the question becomes, how do they differentiate from one another?Threadflip, which is among the category leaders, is introducing version 2.0 of its Web and mobile product today and making significant changes to the user experience with the hopes of further standing out amongst the crowd. Most notably, the platform is switching entirely to a follow model, where buyers follow sellers based on style and brand affinity (and soon size and body type). The company first introduced the option of following sellers in its mobile product earlier this year – 50,000 follow relationships already exist – but it was a secondary discovery mechanism, not the central paradigm of the platform. Nonetheless, the model was already driving increased user-to-user engagement, according to the company – call it true social commerce.
With today’s changes, each user will experience a personalized version of Threadflip based entirely on their expressed tastes and the users they follow. There’s always a risk of over-curation when marketplaces limit the items that consumers can encounter, but it seems to be outweighed by the need to separate signal from the noise of tens of thousands of listings once a platform reaches scale.
Threadflip users now have the option of receiving email and push notifications when sellers that they follow upload new items, in addition to the existing option when items that they’ve favorited change in price. Given that there is typically only one of each item available on the site at any given time, this immediacy is welcomed by Threadflip users, according to CEO and co-founder Manik Singh. The company already sees more than 60 percent of its sales as a result of price change notifications. With this knowledge, the company has instituted a “Smart Pricing” mechanism through which sellers can automatically decrease the price of an item by a fixed percentage per day as time passes and the item goes unsold.
These changes should have an even more pronounced effect on mobile, where the company has seen 600 percent revenue growth in the last four weeks – to more than 50 percent of all revenue – following its most recent app update. Over 80 percent of all listings are uploaded via mobile, which makes sense given the portability and camera availability. It takes users an average of 55 seconds, according to the company, to create a new listing via its mobile app, which is said to be far faster than its Web platform.
In addition to the traditional listings marketplace, Threadflip also offers a “White Glove” consignment service, through which women simply fill a prepaid shipping box with unwanted items and let the company handle the photographing, listing, and fulfillment upon sale. In exchange, the seller gives up a 40 percent commission, rather than the standard 20 percent for traditional listings on the site. The White Glove service focuses on higher value items, with the average transaction value rising to $120 within this segment of the business, as compared to $60 elsewhere on the site. White Glove now represents 25 percent of all of Threadflip’s net revenue, but importantly, its items demonstrate higher sell through rates and fewer returns.
The concept of “monetizing your closet” may seem trite, but Singh says that Threadflip sellers are making real money, offering a range of “between $400 to $2,000” in monthly sales for the average seller. Currently, approximately 40 percent of buyers become repeat buyers and 60 percent of sellers become repeat sellers.
Threadflip’s audience demographics are largely representative of the US as a whole. When the platform launched, it was more popular in large coastal cities, but this has shifted dramatically in the last two years, such that Columbus, Ohio is now the number one buying location in the country. The site serves what it calls high-low customers, a buzz word in the industry today that refers to a consumer who buys one high priced item (a purse or expensive jacket) and then pairs it with other low priced items (a basic tank top and gas station sunglasses).
Threadflip currently has 24 employees with 15 open requisitions (mostly technical). The company has raised a total of $8.1 million over two rounds of venture financing from backers including Shasta Ventures, Lowercase Capital, First Round Capital, Baseline Ventures, Slow Ventures, Forerunner Ventures, Greylock Discovery Fund, and Andreessen Horowitz Seed Fund. [Disclosure: First Round Capital, Greylock Discovery Fund, and Andreessen Horowitz partners Marc Andreessen, Jeff Jordan, and Chris Dixon are investors in PandoDaily.] According to Singh, the company still has the “majority” of this capital in the bank and has no immediate needs to raise additional funding.
The primary challenge facing Threadflip going forward is scaling its operation to accommodate growth. For example, the company currently has an eight hour average response time to support tickets. Singh admits that he’ll need to significantly reduce this time in the future, even as usage of the platform increases (hopefully). The company will face similar challenges scaling its resource-intensive White Glove service.
Peer-to-peer clothing marketplaces may not be a winner-take all category. It seems more likely that the category will striate along demographic and premium versus low-end lines. Threadflip will need to outmaneuver Poshmark, Tradesy, ThredUp, and others for market share and mindshare in this competitive category. Today’s updates should go a long way toward differentiating Threadflip’s user experience, but will likely be copied by others in the space should they prove successful.
It can be difficult to build a big marketplace business in a verticalized segment like women’s fashion. EBay succeeded, to a large extent, as did Craigslist, because it offered something for everyone and solved multiple needs for many people. Threadflip will have the advantage of knowing exactly what its audience wants and being able to cater explicitly to those desires. Today’s updates are a reflection of this fact.
Threadflip is now more personalized than ever before. Soon, we’ll find out whether its customers approve.