ThredUP Site Aims to Tie Together Loose Strings of Children’s Used Clothing Market

4/8/10Follow @xconomy

Cambridge, MA-based thredUP‘s mission is simple: to be “the place where America’s busiest families exchange clothing for kids,” says co-founder and CEO James Reinhart.

The idea came to him in November 2008, when he was staring at a closet full of clothes that he no longer wanted to wear, he says. Last October, the company launched an e-commerce site for peer-to-peer exchanges of men’s and women’s shirts, but it has quickly evolved to focus on more miniature clothing consumers.

ThredUP seeks to get apparel that kids have outgrown in the hands of others it would fit. The average U.S. family spends about $1,000 a year outfitting their rapidly growing tots, says Reinhart. “Our goal is to supplement that experience to save parents money,” he says.

Setting up an exchange on thredUP is designed to take about 10 minutes from start to finish. Users can browse boxes containing 10 to 18 children’s clothing items, based on factors such as gender, size, season, or clothing items. Once a user selects a box they’d like, the thredUP site automatically sends the box’s creator an e-mail instructing them to ship it.

Once a user has picked a box, it’s expected they’ll put together a box themselves; a process the site walks them through. They select the child’s age, gender, and size from dropdown menus. Next they choose exactly how many of each clothing item they’re packing, and further qualify that by selecting the season of the clothing, at least three brands the box includes, the most prominent colors in the collection, and any additional descriptions.

The site even automatically generates a shipping label for the exchange, which users can print out on their home computer, and stick on free postal boxes.ThredUP helps users order the postal boxes, and schedules the time when the clothes can be picked up right from their home.

“The whole thing has been designed for super ease of use,” says Reinhart, who’s expecting his first child this summer. “We think so many websites don’t button it up the full way.”

At this point users can build kids’ boxes on the site, but the exchanges won’t go live until early next week. The kids’ site has accrued more than 1,000 users in the two weeks it’s been up, Reinhart says.

Shoppers pay $13 to send and receive one box, which mainly goes to shipping costs of the exchange. ThredUP makes less than $1 per each of these exchanges, and is mainly planning to profit from pro memberships that it will offer for $29.99 a year. Pro members will still have to pay the cost for each swap, but will have access to a greater range of features, such as giveaway offers, more detail on the brands and contents of the boxes they’re browsing, and the quality, style, and reliability history of the user that’s shipping those boxes.

They also get an unlimited number of people in their inner circle, which is basically your social network that’s also using thredUP. The free membership limits a user’s circle to five people. The inner circle gives thredUP a more personal touch, ultimately allowing shoppers to swap kids clothing with their friends who are far away. (Think of your old college roommates who have since moved across the country but are now having kids). When searching the marketplace, users have the option of viewing only their inner circle’s available boxes.

In most cases, the clothing never even hits thredUP’s office space. The company only gets its hands on the exchanges for quality checks. As users complete a box, the site asks them if they’d describe it as new or like new if they were selling it on another e-commerce site. This on-your-honor system has earned about an 80 percent quality rating for the men’s and women’s version of the site, Reinhart says. Because the peer-to-peer exchange practically runs itself, thredUP is still holding onto the adult clothing exchange, but is putting all its energy into the kids’ segment of the business, Reinhart says.

To control the flow of customer traffic when the kids’ site launches next week, it will initially be invite-only and have a waiting list for everyone else. (Readers, you can bypass the line by clicking here). ThredUP will let more people in as it grows comfortable managing customer numbers on the site.

The startup, founded in January 2009, has raised about $300,000 so far from angel funders here in Boston and on the West Coast, and is about to start the quest for institutional funding, Reinhart says. He’s exploring ways to establish partnerships with communities of moms through Facebook and even the military, where families overseas run into the problem of finding reliable children’s clothing, Reinhart says.

He sees the children’s clothing exchange as only the first step of a Web-based business focused on communities of mothers. “The long-range play is: what could you do with a platform of a million moms?” Reinhart says.

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