The RealReal and thredUP are pulling back on accepting and selling these items

Third-party resale platforms need to run a business, too.

You might think of The RealReal and thredUP as occupying different ends of the third-party resale marketplace spectrum – The RealReal taking the higher-end and luxury consumers and thredUP appealing to more mainstreet, mass market consumers. And you’d be be right – but there’s one glaring commonality they both share: similar operational costs.

Think about it: mail in your stuff. They sort through it, decide what to accept, photograph the pieces, create the listing, manage inventory, and ship the pieces to the seller. In the event of a return, they handle that, too. And here’s where things get really fun: these operational processes essentially cost the same, no matter if you’re dealing with a $13.99 t-shirt or a $1,462 t-shirt.

In the example above, The RealReal is likely making a nice margin. thredUP, questionably so. And hence an example of the complicated economics of running a digital resale platform. (Yes, because The RealReal supports high-end and luxury consignment, their in-house authentication experts are an additional business cost line item – but their margins are still greater in this example.)

Here’s the “but”: both companies have yet to hit profitability, meaning the actual long-term viability of their businesses are at risk. And last week, both companies released their reported earnings (see: The RealReal and thredUP). Surprise, surprise: profitability is a major focus, and it inevitably comes with changes to the consumer experience.