SCOTT KIRSNER | INNOVATION ECONOMY

That hip used-clothing store is hard to recreate online

Alexandra Shadrow remembers dragging “this massive bag” of lightly worn clothing across Allston to Buffalo Exchange, a consignment store. As a junior at Boston University, she wanted some cash to buy a few new outfits. But, she recalls, “after waiting in line, they took almost nothing from the bag, and they were like, ‘Here’s $6 for the piece we do want.’ And that was a piece that they’d probably sell for $35 or $40.”

Not long after that, in 2014, Shadrow started a Facebook group so BU students could buy and sell clothes they no longer wanted. That rudimentary message board has evolved into an online marketplace focused on college women, UNItiques, where a retro-style puffy vest goes for $13 and a Wonder Woman costume (“only worn once”) for $30. This week, she pitches UNItiques on a reality show, Lifetime’s “Project Runway: Fashion Startup,” in hopes of raising money to continue growing the business.

Shadrow isn’t delusional about just how tough it is to get an apparel marketplace off the ground — and how competitive it is. “I’m shocked that so many people are in it because of how challenging it is,” she says. “You need massive market share to make it lucrative.”

But like models setting their sights on the runways of Paris, some entrepreneurs just won’t be dissuaded. At a pitch night in late September, I was on a panel of judges as yet another student entrepreneur was explaining that many people own fancy duds that hang forlornly in the closet 363 days a year. The business plan: Why not rent them out to people who don’t want to buy a nice black cocktail dress?

Two of the apparel sector’s best-funded startups, thredUp and Rent the Runway, were founded here and received early money from Boston venture capital firms — though they’re now based in San Francisco and New York, respectively. The companies have together raised about $245 million.

Aside from the glamour, what’s the appeal? James Reinhart, who conceived of the clothing resale site thredUp while earning dual master’s degrees (MBA, public policy) at Harvard, says “entrepreneurs tend to flock to categories with large discretionary spending — and food and clothing are two examples.” According to the Bureau of Labor Statistics, the average American spent about $1,780 on apparel and related services (like tailoring or dry cleaning) in 2014, the most recent year for which data are available, up 11 percent from the year prior.

But thredUp morphed several times in the early days. When I tried it in 2011, it was about person-to-person swapping of used garb. You packed a box full of children’s clothes, listed it for “swap” on the site, and paid $15.95 — most of which covered postage — to receive a box of someone else’s clothes that looked interesting to you. Today, thredUp is more of an online consignment store, where you ship apparel to them, and they give you cash either right away or when the item sells. They manage their own network of four distribution centers to process and mail clothing, and Reinhart says they’ve handled almost 20 million items.

A Boston startup called Date My Wardrobe has also altered its course since being founded in 2014. Initially, founder Amrita Aviyente envisioned letting people rent out infrequently worn items from their closets. “Customers were totally open for renting from other people, but they didn’t want to share their own wardrobe, so we didn’t have as much inventory as we needed,” she says.

Instead, she decided to work with a handful of Boston designers to introduce consumers to the clothing they created, like a $1,500 cocktail dress by Denise Hajjar that rents for $270 for four days. Aviyente says she hasn’t yet raised outside funding, but she hopes to start working with New York designers in 2017.

But even the investors who’ve written checks to Rent the Runway and thredUp say they’re wary of making many more investments in the sector. “These are really hard businesses to execute well on, and they’re operationally intensive,” Dan Nova of Cambridge’s Highland Capital Partners says. Rent the Runway, for instance, had to build the country’s largest dry cleaning facility to take care of the clothing it owns and rents out, like a $1,290 Badgley Mischka lace gown that goes for $200 for four days.

It’s also an industry where startups that have raised $100 million-plus might not have the option to get acquired by a large retailer like Macy’s, Kohl’s, or Target, says Scott Friend, a partner at Boston’s Bain Capital Ventures who sits on the board of Rent the Runway. Why? The retail biggies probably don’t have deep enough pockets. “You’re basically signing up to build a company where the economics really work, and where you’ve got leadership that can be a public company leadership team,” he says.

Despite the challenges, Nova says, “These industries that have been sleepy for so many years — like clothing, housing, and transportation — are all being redefined right now by companies like Rent the Runway, Airbnb, and Uber.”

As for Shadrow, she’s hoping to raise $250,000 for UNItiques — and she isn’t allowed to say whether the panel of entrepreneurs and fashion industry gurus on the show decided to pony up. She’s currently living in Los Angeles, and her technical cofounder is in Toronto.

But much of the way UNItiques attracts buyers and sellers is by contacting members of private collegiate groups on Facebook. That requires gaining access to the group, even though Shadrow isn’t a student. “I get inside — that’s the magic that I don’t want to share,” she says. “I’m not a hacker — just a strategizer, hustler, networker. I’ve traded tickets to a sports event for [access to] a group.” But she also says “we get kicked out of groups every day,” and so the company will need to figure out a better way to attract users.

I asked Shadrow about two of the giants in the used apparel business, Craigslist and eBay, both founded in 1995. Millions of items of used clothing can be found on those sites — including a Wonder Woman costume on the Boston Craigslist site for $35.

“I just turned 24 years old,” Shadrow replied. “Craigslist and eBay are just not relevant to college girls. We’re more into forums and communities. We’re looking for things online that not everybody else is using.”

As always, where others see established companies lined up shoulder to shoulder, entrepreneurs see the openings.

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.

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