ThredUp’s attributing some of its success to artificial intelligence.
That it boasts about its myriad tools is far from a surprise—James Reinhart, the company’s CEO and co-founder has taken an all-in mentality on the technology for about 18 months now. To date, most of ThredUp’s innovations have focused on its buyers, rather than its sellers.
According to Reinhart, that strategy seems to be paying off when it comes to customer acquisition and conversion. In its earnings call this week, the company indicated it had increased new buyer acquisition by 74 percent year on year, while also increasing conversion by 18 percent year on year.
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While Reinhart said on the earnings call that the company doesn’t have an exact breakdown of which tools drive the highest conversion rates, he told Sourcing Journal that he believes the company’s Shop Similar feature, which provides similar recommendations powered by AI, has been “a big driver” for the conversion increase. He called the company’s Image Search tool and other AI-powered features “incrementally positive.”
“[Shop Similar] nails the experience. You’re looking for a shirt, and you find a shirt that you like and you’re like, ‘Ah, I want it in a different color.’ You used to have to start over, but now it’s like, ‘Show me it in different colors,’” he said. “It’s really created this nice way for people to stay in the shopping journey, versus having to always start over.”
Reinhart said Style Chat, ThredUp’s conversational AI interface, which helps users put together occasion-based outfits and responds to longer, natural-language queries, and its social commerce tool, which ingests users’ Pinterest feeds to help provide recommendations, are both “advanced feature[s].” He noted that users who engage with the tools regularly convert at “much higher rates” but said that many users have yet to discover the power of those tools.
“It’s something that people, I think, are just starting to use in their lives, the way they might be using ChatGPT,” he said.
And though ThredUp has a conversational interface of its own, Reinhart said he’s keenly aware that the company’s inventory needs to be publicly accessible to third-party AI models, like OpenAI’s ChatGPT, which offers users a shopping function. He said the team is investing in resources to make the backend of ThredUp’s site fully crawlable for other companies to keep pace with consumers’ preferred ways of shopping.
“I think [LLMs are] as big, or bigger than, the impact of SEO. In the SEO world, if you appear at the top of the rankings, you got all the traffic…I think the same is true [here]. I think if you don’t appear in ChatGPT or Anthropic—whatever the agent is, if you’re not appearing in that list, I think you’re going to get left behind.”
Much of the company’s AI movement in recent months has been targeted at raking in new consumers; Reinhart said that, while that’s always a goal for the business, longer-term ThredUp buyers also seem to have less interest in integrating AI into their shopping experiences.
For instance, he said, this year, the company launched on-model photography by leveraging AI. In an A/B test, new customers flocked to items with listings showcasing on-model photos, but existing customers didn’t seem moved by the test.
“Our existing customers were like, ‘I don’t need that,’ because they’re all in on ThredUp. There’s not a lot we can do on the innovation side where they’re going to be blown away, because they’re already committed,” he said.
For Reinhart, that means it’s time to leverage technology to go back to the basics. He said he knows repeat customers simply want to find quality pieces at an affordable price; many have already mastered the art of sifting through the millions of listings ThredUp offers on any given day.
“The biggest way to delight our heaviest users is to have ever better assortment, because they already know how to shop it,” Reinhart said. “They just need more stuff to buy from us that meets their needs, and so that’s why I’m balancing seller innovation as well as new buyer innovation.”
To do that, he contends, it’s time to shift the organization’s focus a bit toward developing AI that can better serve sellers, rather than fixating on buyers.
“The seller experience on ThredUp had, for the prior few years, taken a backseat to focus on the buyer journey—literally, every single AI tool is focused on buyers. So, I think now, we’re thinking, ‘Okay, well, how can we use AI to improve the seller experience? What types of products can work better for sellers?’”
He said the company plans to “tighten up” how sellers view items, how they handle cleanout kits and more.
Reinhart said the process of redefining the seller experience has already begun with ThredUp Premium, which charges a higher fee for listing items but typically yields higher return and longer selling window times for the seller. On the earnings call, he said those ordering premium kits increased 44 percent quarter on quarter.
But seller innovation and buyer innovation could soon dovetail more seriously; Reinhart hinted at a tool that would allow human creators and influencers to leverage AI to promote specific products on the ThredUp site. While that could help buyers select items, it could also help sellers move products quicker.
“You’re going to continue to see us invest in [what] I would describe as using AI and human creators together to tell powerful merchandising stories. If I were to, for example, give you some of the internal tools at ThredUp to put together outfits or curations…you could build something that people would want to shop,” he told Sourcing Journal. “What would it look like to enable creators and influencers to tell stories, to curate their own list of great content? We’re going to work a bunch on that.”
ThredUp’s ambitious AI goals require some manpower to build, test, iterate on and push to market. In 2024, the company laid off about 25 percent of its staff, and Reinhart later disclosed that a penchant for investing in AI was part of the reason for those cuts. Now, he said, the company has added heads in a targeted way.
“We have been hiring, really with a focus on people who have skill sets that can utilize either the emerging tools in AI or they’re naturally curious about how it works,” he said, noting that the company has “a few more key roles to hire for” before pausing its hiring.
“Our pace of hiring will probably slow a little bit into [2026]. I think we have staffed up to a level where we’re launching new products and innovating at a pretty healthy rate, and I’d like to see us breathe a little with the resources that we have,” he added.
