Swap.com, an online used apparel marketplace and U.S. subsidiary of Finnish company Netcycler, recently announced it has raised $20 million in a new funding round led by Swedish private equity company eEquity. The most recent round brings the company’s total equity funding up to over $50 million.
The online consignment shop launched in 2013 and currently employs 500 people. Swap.com reportedly plans to use the new funding to increase marketing and advertising, hire an additional 200 employees to staff its two Chicago offices and optimize its 360,000-square-foot Bolingbrook, Ill. fulfillment center.
How does the site work? Users send their pre-owned items to Swap, which assesses incoming products for quality. If passable, Swap cleans the item and then displays it on the website. On average, clothing items listed on Swap cost buyers $7. When an item is selected for purchase, Swap takes a 30 percent cut of the sale price plus an additional $1.50 for each transaction. Sellers receive their cut via PayPal, generally within two weeks of sending in items. Repeat buyers reportedly account for more than half of Swap’s total revenue.
CEO of Swap.com, Juha Kopenen, was quoted as saying that the online consignment shop is on track to have raked in “tens of millions” in sales by the end of 2016, up from $7 million in sales in 2015.
Swap has also shown growth in terms of its items in stock. As of now, Swap reportedly has about 1.5 million items available for purchase on the website, more than double the 543,000 items it had 11 months ago.
The luxury online consignment market has had a considerable growth spurt and financial backing in recent years from the likes of Greycroft, Andreessen Horowitz, Kleiner Perkins and some fairly famous investors like Richard Branson. And as millennials have tended toward more frugal, less frequent purchases, some secondhand and discount-oriented marketplaces have also seen greater success.