Having Swapped Out Its Original Plan, ThredUp Gets $14.5M for Used-Clothing Sales

ThredUp, the marketplace for used kids’ clothing, has experimented over the years with various ways to run its business. Now it seems to have found one that’s working.

The site was initially a peer-to-peer swapping service, where parents listed and shipped boxes of clothing to each other, but now ThredUp has taken over processing and distributing all the used clothes itself.

Even though dealing with inventory is more expensive and difficult, customers are willing to pay for an experience that’s more reliable, said ThredUp CEO James Reinhart.

“The expectations in e-commerce are so much higher these days,” Reinhart explained. That’s the same tune we’ve heard from some ThredUp competitors, like Twice.

Some 7,000 new customers now join ThredUp per month, with a 46 percent retention rate, Reinhart said.

And now that things have clicked, investors have thrown down some more funding for the company to expand into clothing for juniors and adults and to open additional distribution centers.

The company has raised $14.5 million in Series C funding led by Highland Capital Partners and including previous investors Trinity Ventures and Redpoint Ventures, for a grand total of more than $23 million raised.