ThredUp Reports Significant Growth Driven by Artificial Intelligence
Artificial intelligence (AI) is at the core of ThredUp’s strategy, propelling substantial growth and enhancing customer engagement in the online secondhand clothing market. According to CEO and Co-Founder James Reinhart, the company’s new customer volume increased by 32% year-over-year, with AI playing a pivotal role in this expansion. ThredUp is focused on providing a more personalized and convenient online thrifting experience that aligns with current consumer expectations.
Accelerating Growth and Customer Acquisition
“We’ve made substantial progress in reaccelerating growth in the U.S.,” Reinhart stated during the company’s fourth-quarter earnings call on March 3, 2025. He added, “Customer acquisition and retention strategies are at an all-time high. Generative AI can significantly enhance the second-hand shopping experience.”
ThredUp employs several AI-powered tools, notably its image search function, to shape the overall customer experience. This visual search tool allows users to upload images, making it easier for shoppers to locate exactly what they are looking for and, thus, boosting user engagement. Furthermore, the company’s Style Chat chatbot offers personalized style recommendations. Reinhart reported, “The sessions with image searches result in 85% higher conversion rates.”
“Our AI strategy was developed with a deeply calculated approach to build and sustain a competitive advantage over time,” Reinhart explained.
Consumer Behavior and the Rise of Secondhand Apparel
The rise in secondhand apparel sales is also driven by wider economic conditions, as consumers grapple with financial challenges. A PYMNTS Intelligence report, “Consumer Inflation Sentiment Report: Consumers Shop Secondhand Stores as Often as Other Retail,” revealed that 43% of those surveyed had purchased a secondhand product, particularly clothing and accessories. The pressure on consumers is significant, with 67% of U.S. consumers living paycheck to paycheck as inflation outpaces income growth. When consumers do allocate funds for non-essential purchases, clothing often takes precedence, with 70% of retail shoppers who buy “nice-to-have” items spending on apparel, according to the PYMNTS Intelligence report, “The Nonessential Spending Deep Dive Edition.”
AI’s Role in Scaling Operations
Beyond improving customer experience, AI is also instrumental in helping ThredUp scale its operations efficiently, according to Reinhart. The company has deployed AI-powered automated digital measurements to enhance the accuracy of item listings and streamline inventory management.
These technology advancements have allowed ThredUp to address increasing buyer demand while simultaneously upholding a high-quality customer experience. AI streamlines processes, automates manual tasks, and improves efficiency, thereby supporting ThredUp’s efforts to meet the growing demand for secondhand apparel.
In the fourth quarter of 2024, ThredUp sold 91% of its European business and the Bulgarian subsidiary, Remix Global EAD. The fourth quarter revenue increased by 9.5% to $67.3 million, and total orders went up 2.2% to 1.23 million. Full-year revenue rose 0.6% to $260 million, with total orders slipping 0.6% to 4.85 million.
Looking Ahead
Looking ahead, ThredUp projects revenue to be within the range of $67.5 million to $69.5 million in the first quarter and between $270 million and $280 million for the entire year, reflecting 6% growth.
Reinhart expressed optimism about ThredUp’s trajectory, stating, “Given the uncertain consumer environment and the impact tariffs might have, second-hand could become an attractive option. We are proud to have closed out 2024 with a definitive return to growth, while also delivering strong bottom-line results. In 2025, we look forward to leveraging our multiyear infrastructure and technology investments to accelerate growth while making steady progress towards our long-term profitability targets.”
