Tradesy CEO: Younger generations are transforming fashion and we're here for it

Tradesy CEO and Founder Tracy DiNunzio joins Yahoo Finance Live to talk about the online marketplace's evaluation of secondhand goods and consumers' holiday shopping habits.

Video transcript

ALEXIS CHRISTOFOROUS: Are you looking for some extra cash? Well, the answer may actually be right in your closet. Tradesy is an online marketplace where people can sell their secondhand clothing and accessories. And now with these supply chain disruptions, a lot more people are actually turning to buying used clothing. Joining us now for more is the CEO of Tradesy, Tracy Dinunzio, and Yahoo Finance's Dani Romero. Good to have you here, Tracy. So I'm curious what the trends are that you're seeing right now, as more people look to the secondhand market for their clothing.

TRACY DINUNZIO: Yeah, we've seen an explosion in sales of small leather goods, accessories, scarves. Things that we consider giftable items are selling-- we're up 60% year over year on items like that. And we still haven't even gotten into the bulk of holiday shopping yet.

DANI ROMERO: Yeah, and I wanted to ask about among the Gen Zs, it seems like they are the ones most inclined to buying secondhand clothing. Why is that?

TRACY DINUNZIO: Well, younger generations are more on board with the idea that their habits, especially their consumer habits, are going to determine the future of our climate. And so, fashion and apparel causes 10% of all of our global greenhouse gas emissions. And it's younger generations who are really taking the initiative to change in this industry, shifting away from fast fashion and making big efforts to buy pre-owned and to sell the things that they're no longer wearing.

DANI ROMERO: Yeah, and following up to that is, how is Tradesy, like, different from Thredup, Poshmark, Mercari? Because there's-- and even Depop as well.

TRACY DINUNZIO: Yeah, so we're particularly focused on luxury. So Tradesy is one of the only sites where you can find all of the luxury brands on Earth, from Louis Vuitton to Chanel to Gucci to new indie brands that are just coming out. And the reason that we focus so specifically on luxury is that we want people to buy higher quality goods that can have multiple owners throughout their lifetimes and never, ever end up in a landfill.

The other thing that makes us different that we're peer to peer. So we don't take any inventory. We do everything with technology. We've replaced human middlemen with smart technology so that we're minimizing the amount of shipping and handling necessary to sell each item. And we charge the lowest fees in luxury. So Tradesy sellers earn more while Tradesy buyers pay less.

KARINA MITCHELL: And then I wanted to ask you-- you know, it's always been a conundrum to me. So many of these items that you see available, they're brand new. They've never been used. Why is it that people are buying these items presumably at full retail and then they're selling it, obviously, not at full price? Why does it happen? I mean, it's great if you can score something like that. I believe you say something like 60% of the items on Tradesy are actually brand new and unused, so they're great for gift giving or for yourself personally. And then also want to just ask you really quickly, how much are people spending on average? And do you see them spending more?

TRACY DINUNZIO: Sure, sure. So, yes, 60% of our items are new or like new. 40% are new with tags. So the remainder are just sort of, they've barely been worn or they're in brand new type condition. But either way, the way that that happens-- and I wonder if this has ever happened to you-- I know it's happened to me-- is that you go shopping, buy something you love, miss the return window, think you're going to wear it. It never happens. A year later, it's sitting in your closet. And it's really, like, cash sitting in your closet.

And so a lot of our sellers are selling things that they thought were a good idea when they bought them at retail and then just never happened to wear and left the tags on. Those are great deals. That's a great way to get a gift that still has tags on it if that's important to you. Our average order value is pretty high. It's over $600, and it is going up right now with the holidays approaching. But that includes more than one item, so about 1.2 items per basket. And there's a huge variety. So our average handbag sells for about $900. But our average piece of clothing sells for about $85. And so it represents a very large range.

ALEXIS CHRISTOFOROUS: Tracy, I'm just curious, in terms of your business model, how you're making money. I would imagine it's commission based. Is advertising part of the mix? And if I were to put something on Tradesy, what's my cut of the sale?

TRACY DINUNZIO: Yeah, so on average, our sellers pay 17% of the sale to us. Again, that's the lowest in the luxury category by quite a bit. As a new seller, on your first item, you would pay 19.8%. And that is primarily how we derive our revenues. We don't do any advertising, although we never say never to future business models. Right now, we're focused on serving our buyers and sellers. And we monetize just that commission. So when you make a sale as a seller, we win, too. And the whole system is really designed to create a win-win-win scenario for buyers, sellers, and our business.

ALEXIS CHRISTOFOROUS: All right, well, it's an interesting trend we're seeing here in the holiday shopping season, secondhand clothing back in style. Tracy Dinunzio of Tradesy, thanks so much for being--