Secondhand retail companies are finding success with shoppers focused on sustainability and hard-to-find items, while also avoiding the supply chain pressures being felt by traditional retailers.

Big box retailers like Walmart and Target have focused on keeping prices down, and have absorbed the increasing costs in shipping, labor, and materials for shoppers. Other retailers, like Macy’s and Kohl’s, have raised prices to keep up with the uptick in costs.

But resale companies The RealReal and ThredUp are playing up their secondhand supply chains, inventory levels, and pricing.

“While many retailers have been forced to raise prices due to inflation or supply chain pressure, we do not have the same level of exposure,” James Reinhart, CEO of ThredUp, said on the company’s recent third quarter earnings call.

ThredUp’s business is entirely sourced domestically from its users, according to Reinhart, and has no reliance on direct manufacturing for inventory.

“We have chosen to strategically lower prices in order to engage as many customers as possible during a time when consumers are feeling price pressure in many other parts of their life,” he added.

ThredUp’s prices averaged 15% lower in the third quarter compared to the same period last year. Reinhart said the company will continue to keep prices down through ThredUp’s domestic supply system.

The company reported record quarterly revenue of $63.3 million in its third quarter, up 35% year-over-year. It also had record numbers of active buyers at 1.4 million and a record number of orders at 1.3 million, growing 14% and 28%, respectively, year-over-year.

Julie Wainwright, founder and CEO of the RealReal, said after its third quarter earnings that the company’s inventory has exceeded pre-Covid levels, adding “we believe we are well-positioned from a supply perspective as we enter the holiday season.”

She also noted that the RealReal is shielded from the inflationary impacts other businesses are seeing.

The RealReal reported total revenue of $119 million in its third quarter, an increase of 53% compared to last year. There were 757,000 orders in the third quarter, up 38% year-over-year.

“Adjacent to the issue of reselling and all of the empty storefronts, I feel very strongly that retail is just changing,” said Tim Ceci, founder and president of Tim Ceci Retail Consulting.

Still, investors aren’t entirely sold on the outlook for these companies, even amid the supply chain issues around the globe for retailers. ThredUp’s stock has been volatile since its initial IPO pop this year, and after its recent earnings resulted in a one-day bounce, shares continued on a declining trajectory. RealReal received a boost from its recent earnings, but remains down near-25% this year.

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