This is Part 1 of a three-part series on the secondhand clothing market as I see it today, why it’s broken, and what we need to do to fix it. I’m sorry! It just got too long for one piece. But, I PROMISE the rest is coming soon. How do I know? Because it’s already written.
You might have noticed something unusual happening in online resale in the past year.
Major players, including Mercari, Depop, Poshmark, and eBay UK all announced that they were actually…lowering fees!? A nearly unheard-of headline in this so-called “greedflation” era.
And, they didn’t just lower seller’s fees, but in many cases eliminated them!
The best I can tell, here’s what’s changed for sellers on these platforms, all in the last year:
eBay (UK): 9-15% seller’s fee to 0% (clothing only)
Mercari: 10% seller’s fee to 0%, with $2 cashout fee
Depop: 10% seller’s fee to 0%
Poshmark: 20% seller’s fee to 6% plus $1-3
You’ve got my attention. I’m immediately intrigued. Why would these major players do something that seems on the face of it so against their interests? Something whacky must lie below.
The First Why: competition, silly!
A surface-level answer is that eliminating seller’s fees is a competitive move to keep up with fast-growing alternatives.
In the UK especially, this seems to be a move by eBay against Vinted, who grew revenue +61% in 2023 (on £370m revenue in 2022).
And if that growth number doesn’t speak for itself, I’ll say that every one of my British pals has without fail recently asked, “oh, do you not have Vinted in the US?!”.
(note: we do in fact, have Vinted, but the vibes don’t seem to be the same yet).
It’s probably not a coincidence that Vinted has had zero seller’s fees from the start. And this isn’t just a UK thing: newer players in the US like Teleport (no longer operating) have also built their platforms on the no-seller-fee model from day one.
So, these larger players like Mercari, eBay, and Depop probably feel like they need to clap back to keep attracting sellers.
The Second Why: There’s no such thing as a free lunch
All of this is fine and dandy, but you might realize that for a business to be a business, they’ve gotta make their money one way or another. If sellers aren’t paying, surely somebody must be paying. Surely?!?
Well, sellers are still paying credit card processing fees. This varies but is generally in the ballpark of 3% + $0.50 per transaction.
I find it interesting how the more you peel back the onion, the more you see that those fuzzy, “oh yeah, what do they do…?” type of companies who enable the transaction always get their money.
As a founder myself, I know that this fee is pretty much exactly what our payment processor, Stripe, incurs to us. eBay/Mercari/Depop, etc. are passing through an unavoidable cost that they themselves have very little control over. They aren’t making a profit on this bit. Or, if they are building in a small markup, it’s got to be SO slim that I question whether it’s even worth the sleight of hand.
Quick aside: don’t get me started on how mind-blowing it is that credit card processors have effectively instituted an invisible 3% tax on every. single. thing. we buy. It used to not exist, and we all pay for that now! It’s quite literally the cost of “convenience”. But, it’s buried so deep that we barely know these companies’ names and they get essentially no heat or consumer blowback for it. That’s a whole other post. ANYWAYS.
If eBay/Mercari/Depop aren’t making their profit on that fee, where are they making the margin that supports their business?
Mercari and Depop both instituted buyer’s fees.
That’s right, they’re swapping who pays for the pleasure of resale. I can’t undersell how fascinating it is for this to happen in a marketplace - and, it suggests an even deeper problem in the system that they’re trying to solve.
What about the others?
Vinted always charged fees to their buyers, much more cleverly marketed as a “buyer protection fee”.
eBay is in a different position as they have a much larger business than just clothes. They’re still charging fees to sellers on other categories (think: collectibles, books, art, etc.), so they have room to make a strategic choice to eliminate them on fashion.
But I think that also begs the question…why did they feel like they had to make this move in fashion specifically?
Well…
The Third Why: (clothing) resale is broken
The circular economy for clothing is broken, in large part because it’s still way too hard for potential sellers to sell.
We’re all thankful that secondhand shopping has become mainstream. According to ThredUp’s 2024 Resale Report, more than half (52%) of all U.S. consumers shopped secondhand last year. Not only that, but it’s still growing fast: the secondhand clothing market is expected to double again by 2028, growing 7x faster than the overall clothing market.
However, the very same report shows that only 25% of us sold clothes secondhand last year.
That’s a major gap, and it means that resale today is fundamentally supply-constrained. There’s not enough stuff being sold secondhand to fulfill the demand of all the people who now want to shop secondhand.
It’s not that the stuff doesn’t exist. We know we have enough clothing on the planet to dress the next six generations. The problem is that these clothes are:
Wasting away in our closets or aspirational “to sell” piles, waiting for us to have the time and/or energy to go to the trouble of listing until we simply throw up our hands and drop them off at Goodwill just to get them out of the house
Of such low value that they’ll never be re-sellable (we’ll dive into this in Part 3)
Right now, you’re asked to do all the work of creating a digital record (i.e., a “listing”) on eBay, Depop, Poshmark, Vinted, etc. (pick your poison) at the moment you’re least excited about the item. You just want it gone and out of your house, so of course taking pictures and inputting data feels like a major chore in that moment.
But…what if we moved that process up so that you’re doing that work when you are most excited about the item? Either when you’re trying to figure out how to style it, or even the moment you buy it.
Even better, what if we automatically passed that product listing directly from the brand you bought it from into your digital closet? That makes it no work at all! Then, at whatever point you decide to sell, listing secondhand is a trivial process. Tap, tap, tap. It’s done.
IMO, we’ve got to zoom out and stop treating resale so transactionally and make it a more integrated part of your entire journey with a piece of fashion. That’s what I’m building towards, personally, at Indyx.
But let’s get back to what’s happening today.
Today, resale is still massively supply-constrained. And so these major resale players have realized:
“Wait a minute, if our problem is that we need more people selling more of their stuff, then why the hell are we charging our sellers!?”.
That’s why they’ve shifted the marketplace cost from sellers to buyers, and made it “free” for sellers to list (more on that in Part 2!).
This move should help increase supply but may also tamp down demand. That works for them when the short-term goal is just to balance out your marketplace.
But, if we want to keep growing the secondhand market at the speed the ThredUP report predicts, our industry must achieve a bigger ‘unlock’ to supply so that all of us are not only secondhand shoppers, but also secondhand sellers.
Okay, but WTF happened with Poshmark?!
Discerning readers will notice that I mentioned Poshmark at the very top as a platform that dramatically reduced their seller’s fees. I then never mentioned them again. Why? I’ve had a version of this article sitting in drafts longer than I’d like to admit, okay?
Poshmark pulled a complete flip-flop: in October 2024, Poshmark announced their own significant reduction to seller’s feels, and then a mere three weeks later they pulled a complete 180 by reverting to their original fee structure.
So, what the hell happened there?!
That’s a case study for Part 2.
BUT WHY?!: Poshmark Pulls a Whoopsie with Sellers
This is Part 2 of a three-part series on the secondhand clothing market as I see it today, why it’s broken, and what we need to do to fix it. Part 1 explained why major resale players like Depop and Mercari have been eliminating seller’s fees. The short version? Resale today is fundamentally supply-constrained because selling secondhand is still just to…
I've been buying and selling on ThredUp for years (from when they only sold children's clothing!) and the structure has changed a lot, in neither the seller nor the buyer's favor.
The clean out bags used to be processed for free, now there is a $14.99 surcharge before you ever see any earnings, if any. If you are lucky, you can get a discounted clean out bag, but it is still $8-10 off the top. Commissions aren't high unless you are selling super high end and I can't afford to buy that stuff used much less new. I used to be able to make a decent commission on mid-range brands but even those are hit or miss now. I turn the money right back around for buying used from them, so I'm not running a business here, but I still feel cheated on some level because I remember how it used to be.
On the buying side, everything costs more and the listings are hard to sift through. Shipping is MUCH higher than it used to be and there are significant cost penalties to returns. They've gotten somewhat better with sorting, particularly with fiber offerings and better measurements/tag pictures, but it is still far from ideal if you are looking for something specific. There really aren't deals to be had. Just endless discounts on stuff that ends up making me feel like a sucker if I pay the full asking price. I rarely buy new clothing, and try to buy better brands second hand, with natural fibers, so the resale value should be decent, but often isn't.
I also question the thing about the market not having enough to offer. There are literally thousands of listings on ThredUp, more in a single category with filters than I can reasonably get through. Not cheap stuff either. I read all three parts of this series with interest, and will take a look at the other piece you linked at the bottom of Part 3.
Thank you for this great breakdown Devon. This is exactly why I won't buy from Vestiaire - their buyer fees are exorbitant at up to 25% of the item price. Such a shame because I love what they're doing to bring awareness to secondhand fashion.