What: Companies like The RealReal and ThredUp promised Wall Street that with scale comes profit but, operational costs and competition have kept them in the red.

Why is it important: Online resale is no longer a nascent industry, yet a decade into its maturity, profits remain elusive among even its biggest players. Lagging technology, growing competition and the constant need for new customers have kept costs sky-high.

In the beginning, the implied proposition was that the companies may be operating in the red today, but once it consolidated the market for secondhand luxury fashion, the economies of scale would kick in.

It turns out, that making money off other people’s clothing is hard. Processing and listing thousands of unique items requires complicated logistics that can’t easily be automated. Consolidation has proven elusive; while a few sites have been acquired or folded, more have launched, including fashion resale ventures from e-commerce giants like Farfetch.

Still, the market opportunity remains significant. In the US alone, the secondhand fashion market could grow 20% between 2020 and 2025 to reach USD 67 bn in size, according to estimates by BoF Insights. The RealReal and Poshmark combined only make up about 9% of the market.

 Is fashion resale a profitable business?