Online Resale Is Booming. Why Are So Many Users Unhappy?

Anja Tyson considers herself an early adopter of online resale. The New York-based writer and consultant said she’s been a loyalist of The RealReal since its 2011 debut and an eBay power user for even longer. Secondhand fashion makes up the bulk of her wardrobe.

But lately, she said something about the circular economy has felt broken. While buying remains a thrill, selling has become a source of exhaustion. The RealReal used to be her go-to because it was convenient to drop off clothes for consignment at the company’s SoHo store. But she stopped selling on the platform about three years ago after it lost several of her items. While she still occasionally sells pieces on eBay, the work required to create listings and field offers seldom feel worth the reward.

“Right now, there is no good option,” Tyson said.

The RealReal said it takes these incidents seriously. In Tyson’s case, the company wrote in a statement, it appears there was an incorrect address on file. “We now have a weekly automated messaging system to confirm & update addresses with consignors,” the company added. “Additionally, our system conducts weekly and monthly audits for returned packages.”

Tyson may be clashing with The RealReal, but if you look up any large online reseller on Reddit or TikTok, you will find thousands of grievances, from dubious products and bad customer service to complaints of shockingly low payouts.

Those complaints don’t appear to be hurting these companies’ financially as more and more newcomers enter the space. According to ThredUp and GlobalData, global secondhand fashion sales reached $227 billion in 2024. That represents a 15 percent jump from 2023, a growth rate five times faster than the primary apparel market. At eBay, the pre-owned fashion segment alone grew 19 percent last year. “Business is stronger than ever,” says Alexis Hoopes, VP and global head of fashion at eBay.

Most major players have also gotten a handle on the runaway losses that dogged online resale for most of its first decade, and doomed many once-promising startups in the space. The RealReal, for instance, posted positive earnings before interest, tax, depreciation and amortisation for the first time in March 2024 and has continued to increase its earnings every quarter. Others, including Depop and Poshmark, are now owned by companies with deeper pockets and logistical expertise, giving them breathing room to figure out the often maddening work of managing millions of bespoke listings.

Simon Whitehouse, a former LVMH executive and advisory member of Reflaunt, noted that third-party platforms increasingly benefit from waning competition from brands themselves.

What has yet to fully emerge is a better experience for customers. While most major resellers have made improvements to the look and feel of their platforms and the ease of listing, many essential frictions of the online resale experience remain. On this, the industry wavers between promising to do better and offering a collective shrug: take it or leave it.

“I’m unapologetic about how this service is put together,” said ThredUp chief executive James Reinhart, when asked about sellers’ complaints regarding low payouts on his platform and the addition of processing fees. “We value the fact that people have choices. If you want to go to your local consignment store, you can do that. If you want to sell on Depop, you can do that.”

Resale’s Shifting Power Balance

Today’s giants of the secondary market emerged in the 2010s touting an alternative to selling and buying from traditional brick-and-mortar consignment retailers like Buffalo Exchange. In place of the trek to distant storefronts and the judgmental stares of snobby clerks, they pledged a faster, easier, curated and reliable online experience, with potential higher rewards for sellers.

To be sure, online resale has in many ways made good on its promise, and platforms continue to roll out features meant to enhance the user experience. Most recently, Poshmark unveiled a redesigned mobile app last week with featured category curation and personalised recommendations for listings, a step above the endless grid format that e-tailers favoured in years past. On the selling side, Poshmark, eBay and Vestiaire Collective have all introduced AI tools to make the listing process less labour intensive.

The RealReal has made an effort to establish itself as the leader when it comes to convenience. Sellers can drop off their merchandise at one of 18 locations (it recently reopened its San Francisco flagship) or have it picked up directly from their homes. A team of “concierge” personnel help sellers through the entire process.

“Our moat is our service,” said Samantha McCandless, the company’s chief merchandising officer. “Where we’ve positioned ourselves is luxury consignment, and we really double downed.”

But a fundamental shift in the dynamic between resale giants and their users emerged in recent years: They went from competing for the best old clothes to drowning in them.

Following the pandemic, an influx of pre-owned fashion flooded the market as consumers cleaned out their closets after a prolonged period of working from home.

“Everyone wants to move on from their shit,” said Carly Ridloff, who founded The Exchange Project, a consignment service in her town of Westport, Connecticut. She said local sellers visit her shop every day, dropping off bags upon bags of merchandise.

With supply no longer an issue, resellers have the leverage to charge more for their services, whether that’s through complicated commission structures or simply higher fees.

ThredUp, for instance, used to be known for its free cleanout service, where users can send the company unwanted clothes and ThredUp would list viable pieces for free. Today, it charges a $15 processing fee that’s applied to sellers’ earnings.

“We’ve always had more supply than we needed,” Reinhart said, which “made it easy to add the fees.”

Peer-to-peer services like eBay, Poshmark and Depop (now under eBay) offer more favourable commissions than consignment platforms like The RealReal and ThredUp, but it’s up to the seller to do the hard work of photographing the item, publishing the listing and fielding negotiations with sellers.

“There is always a struggle of a balance between effort and reward,” said Klemen Drole, chief business officer of Vestiaire Collective, a luxury peer-to-peer resale platform.

These frustrations limit the overlap between buyers and sellers on a single platform, a key driver of customer loyalty. About a third of users on ThredUp are both buyers and sellers, Reinhart said. On Vestiaire Collective, that figure is about 20 percent, according to Drole.

Alejandro B., the creator behind the popular handbag meme account @y2kbags, said he sells almost exclusively to Fashionphile and The RealReal but buys on eBay and Depop. “I’m lazy, I’m 32 and just don’t have the time and attention span anymore,” he said.

Apathy, he theorised, is exactly why some platforms get away with occasional logistical mishaps.

“The business model is created for people who don’t care,” he said. “You see old ladies who only shop at Bergdorf or Neimans — they’ll never buy from The RealReal but they’ll sell there.”

The RealReal said 16 percent of its consignors made purchases on the website last year, but half of its buyers were consignors, an indication that the so-called “flywheel effect” is very much in motion.

Indie Resale Steps Up

Customer dissatisfaction with the existing options is one reason new entrants keep popping up. Europe’s Vinted, for instance, is making leeway into the US market by offering free listings, which means every purchase goes 100 percent to the seller.

Lisa Isinghood launched her app, Thriftful, for instance, because she saw a gap in the market for a truly curated experience. Thriftful connects stylists and professional “thrifters” with customers who are willing to pay upwards of $200 for multiple pieces selected based on their preferences.

Ridloff said The Exchange Project’s unique value proposition is a 50 percent payout fee — higher than The RealReal on lower-value items like apparel, as well as brick-and-mortar chains like Buffalo Exchange. She also hosts regular swap events in which shoppers pay $150 to select 10 items rejected from consignment, but still nice enough to be coveted. The sellers of these pieces are awarded 10 additional credits when they attend these events.

The swaps address an age-old issue in resale: the mismatch between the perceived value of a product and its actual worth to the market. Rather than recouping $20 on an old Reformation dress, entering it into an exchange could stretch its value in the form of trading your junk for someone else’s treasure.

“Really, resale’s problem is in distribution,” said Ridloff, a former educator. “We have so much stuff. Where is it all going?”