Thrift shops and garage sales have existed for generations, but migrating to the secondhand business model online is yet another instance of the broader shift toward e-commerce. However, taking the brick-and-mortar model online presents a unique set of challenges for the online incumbents to the secondhand space.

Consider the process of selling a pre-owned sweater online. First, the seller ships the sweater to the company’s distribution center. Then, the sweater must be photographed from multiple angles, described with detailed information about materials, dimensions, brand, and condition, and priced appropriately. This high-touch, labor-intensive process is difficult to scale, as the effort spent on one listing does not carry over to future listings. For buyers, online secondhand shopping is often more time-consuming than browsing physical thrift stores or mainstream e-commerce platforms. Inefficient search functions and the inability to try items on before buying add further friction.

Since 2019, four companies relevant to secondhand shopping have gone public, yet some have faced challenges with profitability and user retention. The cost of managing individual items, like a single sweater, has made consistent profitability difficult. At the same time, these companies have spent heavily on marketing to attract buyers and sellers. User growth and engagement can also be inconsistent, as active participation from both sides of the marketplace is essential to driving sales.

Despite profitability challenges for industry participants, the demand for secondhand shopping is more robust than ever. Since 2018, the U.S. secondhand market has expanded by 117 percent and is projected to nearly double by 2029¹. Secondhand has also gained a growing share of overall retail, making up nine percent of the total U.S. apparel market in 2023 and growing over four times as fast as traditional retail. Younger generations, in particular, are driving this trend, with lower stigma around wearing used items, a growing desire for sustainable consumption, and the accessibility of premium brands at discounted prices acting as significant motivators.

Exhibit 1: U.S. Secondhand Apparel Market

Source: ThredUp Resale Report 2025

Encouragingly, online secondhand platforms are now seeing two critical inflection points—the use of AI and the current macroeconomic environment—that make them well-positioned to capture the growing opportunity in the resale market and make the public companies in the industry more attractive investments than when initially listed.

Peer-to-peer marketplaces and consignment platforms are increasingly using AI to address operational inefficiencies and enhance the user shopping experience. For instance, a luxury resale platform has managed to reduce its inventory intake process from three weeks to under 15 days by employing AI-driven imaging tools, and it sees potential for that process to be as short as seven days. Similarly, another peer-to-peer platform now offers sellers AI tools to swiftly generate product descriptions and pricing recommendations. On the buyer side, sifting through countless listings has long posed a drawback of secondhand shopping. To address this, platforms have introduced natural language and image-based search functions, along with significantly improved recommendation algorithms. These innovations personalize the shopping experience, making it easier and more efficient for users to find items they want and increase the chance of repeat purchases.

Exhibit 2: Posh Lens: Image-Based Search Feature

Source: Poshmark

Secondhand platforms are also better positioned than traditional apparel retailers to navigate the current economic climate. Unlike traditional retailers, which face challenges such as tariffs, trade regulations, and supply chain disruptions, these platforms rely on a domestic supply from individual sellers’ closets. This structure keeps their costs stable and provides a pricing advantage during periods of inflation or rising production costs. Moreover, as consumers tighten their budgets in a challenging economy, secondhand platforms are well-placed to capture increased demand. Shoppers looking for value-driven alternatives are more likely to turn to these platforms, making them resilient during economic downturns.