Beyond Craigslist: Classifieds Sites Cash In On Used Items

By Carolyn Said
San Francisco Chronicle.

Used stuff is hot on the Internet, with a bevy of new “re-commerce” websites to help people sell their castoffs.

EBay is making a foray into online classifieds with mobile app Close5. Meanwhile, specialized consignment sites are trying to simplify selling everything from secondhand designer apparel to used electronics and even used makeup — for a cut of the action.

“Americans have $1 trillion worth of value held hostage in our closets and garages,” said Lisa Gansky, an entrepreneur who has invested in Yerdle, an app that lets users exchange items for free. “If you think about redistributing that value, classifieds are one of the most efficient ways. Craigslist is a perfect example of one that has won the hearts and minds of people around the world.”

San Francisco’s Craigslist, which turns 20 this year, still rules the roost. In July, for instance, it drew 67.1 million unique U.S. visitors, or 60.1 percent of all U.S. traffic to the top 10 online classifieds sites, according to comScore. (It has ads for jobs, houses and personals in addition to those for stuff.) But it has stayed fairly traditional, leaving the door open for others to swoop in with different approaches.

A host of new marketplaces focus on specific niches, offering concierge-type service for folks wanting to unload used items without the hassle of doing it themselves.

“So much stuff out there deserves a happy second life,” said Bill Bobbitt, who co-founded “gently used” furniture consignment site Move Loot in 2013 after his own “painful and wasteful” move from Dallas to San Francisco. “It’s more sustainable to keep quality used furniture in the ecosystem.”

Specialty sites
Services like Move Loot and Viyet are specifically for selling furniture and decor; Shift, Beepi, Carlypso and Carvana are for cars; ThredUp and Twice (recently bought by eBay) are for clothes, and the RealReal is for designer apparel.

Have old electronics to sell? Check out Gazelle. Paddle8 is for art, TrueFacet is for jewelry and eBay Valet sells a range of items. All offer a simple proposition: Send us your old stuff, we will sell it and take a cut.

But behind that simplicity, many have built elaborate logistics systems.

“We have our own internal inventory management, photography, truck routes and automated scheduling to streamline moving items through the flow,” said Move Loot co-founder Jenny Morrill. “Every five or 10 minutes, a new item gets listed live from our warehouses across multiple locations.”

Backed by $11.8 million in funding, Move Loot now operates in six metro areas, from San Francisco to New York. Items range from $50 to $3,000, averaging $180. The company takes half of the sales price and offers free pickups and deliveries.

While apps like Poshmark, Tradesy and Threadflip let people sell their used clothes directly to other folks, San Francisco’s ThredUp provides middleman services to streamline sales. Users send ThredUp their discards in a prepaid postal bag, which holds a laundry basket’s worth of clothes.

“That’s part of the elegance of the experience; you just leave it with your mail and it goes away — and then you get paid up front, before we even sell the items,” said co-founder and CEO James Reinhart, who got the idea after realizing that his closet was packed with clothes he never wore.

Started in mid-2012 and now backed by $53 million in venture capital, ThredUp is on track to handle 1 million items a month by the end of this year. It will open warehouses near Chicago and Atlanta to complement existing ones in San Leandro and Pennsylvania.

Several companies are trying to use technology to sell used cars, a big-ticket item that’s notoriously frustrating to buy and sell.

“We provide white-glove car-concierge service,” said Minnie Intersoll, co-founder of Shift. It sends “car enthusiasts” to sellers’ homes or offices to pick up the car, then it does an inspection, detailing and photography at a South San Francisco warehouse and markets the car online. It delivers cars to potential buyers for test drives, and then handles financing, paperwork and deliveries for the sales.

‘Economic rewards’
“You’re taking a really important asset for people and helping them to monetize it,” said Emily Melton, a partner at DFJ, a VC firm that invested $8 million in Shift (it has $23.8 million in total backing). “The concierge service helps the consumer reap a lot of the economic rewards and overcome a ton of inefficiencies.”

EBay towers over the world of re-commerce, but its attempts at online classifieds haven’t gone well. It bought 28.4 percent of Craigslist in 2004, then spent years in legal battles after Craigslist accused it of stealing trade secrets. EBay sold its stake back to the smaller site in June.

Kijiji, eBay’s classified site, also called eBay Classifieds, failed to find many users in the United States, although it’s popular in some overseas markets like Canada and Australia.

Now eBay is pouring resources into Close5, a mobile app for users to sell items to others located nearby. In operation for about a year, Close5 has drawn 1.5 million app downloads to date, with about 200,000 of them in San Francisco, it said.

“The power of a mobile phone is you can list an item in 20 seconds: You take a picture, input a price and you’re done,” said Luke Winter, the Close5 general manager.

EBay hasn’t said how it will make money from the free app, and it is spending heavily on TV ads and other marketing to promote it.

“Our focus for now is to build a vibrant community; we don’t know the answer to (how to generate revenue) yet,” Winter said.
Sucharita Mulpuru-Kodali, principal analyst at Forrester Research, says she is mystified why eBay has never managed to achieve much success in online classifieds. “EBay is in a rut to this day, due to its legacy brand positioning as an online flea market,” she said.

Despite their long history, classifieds still have a lot of evolving to do, Gansky said.

For them to become integral to users’ lives, “they need to be as seamless as ordering a pizza or doing a one-click on Amazon,” she said.

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