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Secondhand Fashion Surges as Costs Rise

Inside ThredUp’s massive 600,000-square-foot processing center in Suwanee, Georgia, more than 40,000 used garments move through the facility every single day. With four large-scale logistics hubs across the United States, the company’s fulfillment network now operates on a scale comparable to major fast-fashion manufacturers — but built entirely around resale.

“This is the largest garment-on-hanger system anywhere,” said Justin Pina, senior director of operations. “We can store more than 3.5 million pieces in this one building alone.”

The secondhand sector is exploding globally. Research from GlobalData projects the resale apparel market to reach $367 billion by 2029, expanding nearly three times faster than the broader fashion industry. What started as a trend driven by Gen Z is now becoming a mainstream shift fueled by rising costs, supply chain pressures and changing consumer values.

Tariffs Reshape Shopping Behavior

President Donald Trump’s tariff program aimed to revive domestic manufacturing, but its impact on fashion — one of the most import-reliant categories in the U.S. — has been significant. Roughly 97 percent of all clothing sold in America is sourced overseas, primarily from China, Vietnam, India and Bangladesh.

As duties push retail prices higher, shoppers across income levels are turning to resale platforms for affordability.

“When tariffs push prices up 20 to 30 percent, resale becomes the obvious alternative,” said Jasmine Enberg, co-CEO of Scalable. “It’s not a trend anymore. Tariffs are accelerating changes that were already underway.”

Analysts say pre-owned clothing gives retailers a unique advantage: secondhand goods are not subject to import duties at all. According to Dylan Carden of William Blair & Company, that difference alone can immediately shift demand toward platforms like ThredUp.

ThredUp Sees Record Growth

For ThredUp CEO James Reinhart, the impact is already showing up in the numbers.

“The business is free-cash-flow positive with double-digit growth,” Reinhart explained. “Gross margins are around 80 percent, and everything we do is built inside the U.S.”

In the most recent quarter, ThredUp reported:

• 34 percent revenue growth year over year
• A 54 percent increase in new buyers, the highest new-customer acquisition quarter in company history

The company credits its domestic infrastructure and automation-heavy operations for keeping costs efficient while scaling rapidly.

AI Becomes the Engine of Modern Resale

Inside the Suwanee facility, machinery, robotics and human workers operate side-by-side, but the true accelerator is artificial intelligence. ThredUp’s AI tools now photograph, categorize and price thousands of items every hour, speeding up throughput and improving product matching for buyers.

“AI has dramatically improved how customers discover items,” Reinhart said. “It’s powering personalization, styling recommendations and search in ways manual processes simply can’t.”

The technology shift goes far beyond ThredUp. New fashion-tech startups are emerging to meet the surge in resale demand. Phia — founded by Phoebe Gates and Sophia Kianni — uses AI to scan thousands of listings from both traditional retail and resale markets in seconds. The startup has already facilitated millions of dollars in resale transactions.

“Shoppers want smarter, more affordable ways to buy clothes,” Gates said. “These tools make that possible.”

A New American Fashion Ecosystem Emerges

ThredUp believes its combination of domestic warehousing, automation and advanced AI will keep it ahead in a market transforming faster than any time in recent history. Ironically, tariffs designed to revive U.S. manufacturing may be helping fuel a different kind of American fashion boom — one centered on reuse, cost savings and sustainability.

“The future of fashion will be more sustainable,” Reinhart said. “And secondhand will sit at the core of that new economy.”