How tech turned thrifted clothes into fashion's hottest status symbol

California companies have propelled this movement, turning what was once an old-fashioned way to save money into a booming industry at the cutting edge of style.

The secondhand clothing market grew 20% to more than $240 billion over the last five years, according to McKinsey & Co.'s State of Fashion report, as San Francisco's RealReal, Redwood City's Poshmark, Oakland's ThredUp and others used Silicon Valley innovation to streamline listing, finding and delivering secondhand products.

"Resale itself reflects something very Californian: taking an existing behavior and using technology to fundamentally change its scale and possibilities," said Rati Sahi Levesque, founder of RealReal. "What we've done is build the trust, logistics, data and technology that allow that behavior to become a mainstream way millions of people shop."

The emergence of a new kind of online shopper, using these sites and willing to pay luxury prices for used pieces, has become so prominent that it is sometimes outshining the freshest runway trends.

California consumers' acceptance of and excitement about thrifted, recycled and repurposed clothes catapulted L.A.'s Reformation from a vintage boutique into a billion-dollar company after its initial public offering last month.

Online thrifters like that they save money, help reduce waste and can ignore trends dictated by the industry. Many also are addicted to the thrill of the hunt for rare, unique items at a better price.

University of Southern California student Julia Ho had been scouring the sites for months for a particular 1990s Gucci watch she was obsessed with. She tracked it down at a great price on eBay, and it arrived three weeks later in great condition.

"There's definitely a dopamine hit when you're looking for these deals" and you find what you are looking for, she said.

Trailblazers like Craigslist and eBay first showed the potential of online listings of anything. Fashion specialists added more ways to transact, giving sellers more checks and balances and adding delivery and payment methods to help buyers feel safe.

The fashion industry turbocharged the trend with limited-edition drops from brands like Nike and Supreme, meaning the only way to get your hands on an Air Max shoe or T-shirt collaboration was through resale at astronomical markups.

A whole social media ecosystem emerged with influencers sharing their finds and recommendations. On YouTube, L.A.-based influencer Emma Chamberlain's thrift store hauls went viral. Other creators gained a following by turning thrift-store finds into trendy items.

When the COVID-19 pandemic hit, secondhand shopping sites took off. People were looking to empty out their closets and make extra cash. Reselling became a side hustle for many and a full-time job for some.

When ThredUp Chief Executive James Reinhart founded the company in 2009, he hoped to change the secondhand fashion market by giving people a place to easily send in used clothing and browse millions of sorted, listed items.

At the time, resale brought to mind old, dusty clothes in the back of a closet and rummaging through thrift store racks just to put on someone else's shoes.

"It was something that required a level of coercion," Reinhart said. "It was, 'You should do this. It's good for you. It's good for your wallet. It's good for the planet.'"

In 2011, two other sites emerged: Poshmark, with a peer-to-peer marketplace, and the RealReal, focused on luxury items and authentication services. By 2021, the companies had gone public, though South Korean tech giant Naver Corp. bought out Poshmark two years later.

eBay has been investing more in fashion resale and authentication services. In July, it acquired Depop, a trendy secondhand fashion platform based in London.

According to the McKinsey report, secondhand shopping is growing at four times the speed of retail, at around 12% per year.

Traditional retail shopping is boring, Reinhart said. Many stores carry iterations of the same styles, and buying vintage is the easiest way to be sure what you're wearing is different.

"Now when generations are coming of age, there's no stigma, there's nothing odd about shopping at a thrift store or shopping secondhand," Reinhart said. "If anything, it's the other way, which is it's the cool thing that kids want to do."

The California companies benefiting most from the movement still need to find more ways to reduce costs if they want to keep growing and boost their profit margins, said Anita Balchandani, a senior partner at McKinsey.

"The economic model is tough. They're operationally complex, and the rate of return is quite low,” she said.

RealReal shares have fallen more than 35% this year. ThredUp shares are down more than 60% over the same period, plunging after investors were disappointed with its revenue outlook announced last month.

The companies are turning to artificial intelligence to cut costs.

At ThredUp, AI helps sort millions of pieces of clothing sent to warehouses, helping speed up operations and reduce costs.

The RealReal introduced an AI feature called MyCloset that lets users track the value of all their clothing.

In June, Poshmark announced a partnership with AI shopping assistant platform Silvr to upload more than 100 million of its listings so users can search for outfits.