in thread up‘s 600,000 square foot warehouse in Suwanee, Georgia processes approximately 40,000 pieces of used clothing each day. The company’s logistics network (four facilities across the United States) currently rivals that of some fast fashion giants.
“This is the world’s largest hanger system,” said Justin Pina, ThredUp’s senior director of operations. “We can store more than 3.5 million items here.”
Shopping for second-hand goods is booming. According to GlobalData, the global used apparel market is expected to reach $367 billion by 2029, growing nearly three times faster than the overall apparel market.
President Donald Trump’s tariffs were billed as a way to bring manufacturing back home. But the measure dealt a blow to fashion, one of America’s most import-dependent industries.
About 97% of clothing sold in the United States is imported, mostly from China, Vietnam, Bangladesh and India, according to the American Apparel and Footwear Association.
For years, Gen Z shoppers have been driving the rise of second-hand fashion, and now more Americans are jumping on board.
“When tariffs drive up costs, resale platforms suddenly look like a smart buy. This isn’t just a fad,” said Jasmine Enberg, co-CEO of Scalable. “Tariffs are accelerating trends that were already reshaping the way Americans shop.”
For ThredUp CEO James Reinhart, the company is already seeing it play out.
“The business has positive free cash flow and is growing double digits,” Reinhart said. “We feel very good about the economics, near 80% gross margin, and an operation built entirely in the United States.”
ThredUp reported a 34% year-over-year increase in third-quarter revenue. The company also said it added more new customers in the quarter than at any other time in the company’s history, with new purchase growth increasing 54% year-over-year.
“If tariffs add 20 to 30 percent to retail prices, that’s a huge benefit for resellers,” said Dylan Carden, a research analyst at William Blair & Company. “Used goods are not subject to these tariffs, so demand will naturally change.”
CNBC took a behind-the-scenes look inside the ThredUp warehouse. Automation will roar along with human workers. The AI system photographs, categorizes, and prices thousands of garments per hour. For Reinhart, this technology is key to expanding resale like retail.
“AI adoption has really accelerated,” Reinhart said. “It helps us improve buyer discovery, styling, and personalization.”
The technology wave extends beyond ThredUp. Fia, a fashion tech startup co-founded by Phoebe Gates and Sofia Chianni, uses AI to scan thousands of listings across retail and resale in seconds.
“The fact that we’ve driven millions in transaction volume shows how great this need is,” Gates said. “People are looking for smarter, cheaper ways to shop.”
ThredUp is betting that domestic infrastructure, automation and AI will allow it to stay ahead of the curve, and that tariffs aimed at reviving American manufacturing could ultimately fuel a new kind of American fashion economy.
“The future of fashion will be more sustainable than the present,” Reinhardt said. And second-hand items will be the main focus.
Watch the video to learn more.
