ThredUp AI Tools Drive 30% Buyer Surge

ThredUp credited artificial intelligence (AI) with boosting its results in the fourth quarter by reducing the friction involved in shopping for secondhand goods.

The online resale platform for apparel, shoes and accessories has deployed AI solutions across product search, discovery, ad buying, recommendations, photography, measurement and flaw detection, ThredUp CEO and Co-founder James Reinhart said Monday (March 2) during the company’s fourth quarter earnings call.

“I honestly cannot remember another time when the business took such a giant leap forward on behalf of the consumer,” Reinhart said.

AI-driven innovation is one of the key drivers of ThredUp’s “marketplace flywheel,” together with full-funnel buyer growth and high-quality supply, Reinhart said.

During the fourth quarter, ThredUp saw its revenue increase 18% year over year to $79.7 million, its active buyers increase 30% year over year to 1.65 million and its orders increased 27% year over year to 1.56 million, according to a Monday earnings release.

ThredUp’s AI search tools include AI-powered search that lets customers use natural language such as “floral dresses” to find what they’re looking for, image search that lets them upload a photo or share an Instagram post to find similar items, and chat search that lets users provide a prompt such as “outfit for a fall wedding” and get suggestions for a complete outfit from the company’s chatbot, according to a Monday presentation.

Some of the company’s latest AI-driven offerings include the Daily Edit, which provides each user with a selection 100 curated items once every 24 hours, and the Trend Report, which shares the fastest-growing shoppable trends once a week, Reinhart said during the earnings call.

ThredUp’s AI customer service agent, Dottie, now facilitates the resolution of customer issues, reduces the need to escalate issues to a human customer service representative, and provides instant resolution that has increased customer satisfaction scores, Reinhart said.

“By embedding AI into everything from discovery to service, we are building a marketplace that is not only more enjoyable for the consumer, but structurally more profitable to operate,” Reinhart said.

Later in the call, Reinhart said that the flywheel effect he described makes marketplaces hard to stop once they get going.

“By continuing to redefine the buyer experience with emerging AI tools, while expanding our addressable market through supply innovation, we are demonstrating that our model could scale more widely and effectively over time,” Reinhart said.