Sign up FAST! Login

Jan 2015: Tradesy Raised $30 Million Investment Led By Kleiner Perkins, Wants to Add More Data Science to Its Staff of 70


Stashed in: Kleiner Perkins, Couture, startup, @richardbranson

To save this post, select a stash from drop-down menu or type in a new one:

Tradesy has 70 people and wants to hire more?!

Tradesy, a Santa Monica, Calif-based company that operates an online consignment shop, has landed a $30 million investment led by Kleiner Perkins, CEO Tracy DiNunzio confirmed to Re/code recently. The investment, which comes just eight months after Kleiner led a $13 million round in the startup, values Tradesy around $100 million, give or take $20 million in either direction. Several other previous investors, including the billionaire Richard Branson and Rincon Venture Partners, also participated.

Tradesy runs a website and app where people can buy and sell used clothing, ranging from luxury apparel like discounted $2700 Louis Vuitton purses to a casual $50 pair of Toms shoes. The company keeps costs down by holding little to no inventory, in much the same way eBay does. It provides sellers with packaging and shipping labels so they can send goods directly to buyers.

The Kleiner-led investment underscores continued interest among investors in Tradesy and its peers who are attempting to build a version of eBay focused exclusively on clothing and accessories. Some, like ThredUp, which has raised $53 million, hold their own inventory so they can speed up delivery times and control more of the consumer experience. The company recently added an east coast warehouse to help with those goals.

Others — such as The RealReal, which has raised more than $40 million — focus exclusively on lightly-used luxury apparel. The company photographs each item it sells and makes sure they aren’t fakes.

Tradesy does none of those things. It touches up photos, but doesn’t take them itself. And it doesn’t proactively check that the stuff it sells is authentic. Instead, it says the fact that it has a name and mailing address for sellers helps keep fakes off the site, as does a lenient return policy. It also mines other data about sellers which it declines to reveal.

DiNunzio said Tradesy’s return rate is around 6 percent and the company is able to resell around 90 percent of the clothes and accessories that get returned. Its low-touch approach allows it to take only a 9 percent cut of each sale, believed to be one of the lowest commissions, if not the lowest, among its peers. That allows Tradesy to attract brick-and-mortar consignment sellers to the site, who can still eke out a profit since the startup’s commission is so low, DiNunzio said.

The investment marks a startling reversal of fortune for the company that DiNunzio launched in 2012 as a spinoff to her previous site, a bridal gown reseller called the Recycled Bride. In the fall of 2013, Tradesy had trouble finding investors interested in funding its Series B investment round, sources said. With money getting tight, DiNunzio was worried. So when the first Kleiner deal was announced in the spring of 2014, several investors contacted me in shock that Kleiner had participated in what had been a “stale” deal.

What these investors didn’t realize was that Tradesy had grown rapidly in the months between the failed fundraising attempt and the first Kleiner investment. A large chunk of that growth was built on the back of network effects that had started to take hold, thanks to Tradesy’s tactics for boosting traffic from Google. Tradesy built a technology that automatically organizes and supplements the unstructured product descriptions that sellers include on their listings with the terms and keywords used on similar products that have already sold on the site, DiNunzio said.

As Tradesy’s product catalogue grows, its descriptions improve. As its descriptions improve, its search rankings improve, driving new sellers to the site — who then add more products.

“That’s where the flywheel really kicks in,” she said.

Tradesy will use the funding to add to its staff of 70, especially on its data science team. It will also pump some of the new money into advertising, such as Google Product Listing Ads that run with photos alongside unpaid search results. DiNunzio said the majority of sales come from organic traffic, but declined to provide a specific breakdown. She also declined to disclose sales figures. Tradesy isn’t profitable, but could be next year, she said.

How does an entire article talk about Tradesy's growth without naming a single active user number?

You May Also Like: