Startup Spotlight #21: Marketplace With a Twist

One man's trash is another man's treasure.

Dec 17, 2024

Faircado has developed a search engine that aggregates listings from websites selling secondhand items. Currently, it specializes in clothing, electronics, and books.

The standout feature is its seamless integration into users’ browsing habits. With Faircado’s browser extension, users can shop on familiar platforms like Amazon as usual. The extension recognizes what items users are viewing and automatically displays secondhand alternatives in a pop-up window.

If the extension struggles to identify an item, users can manually click the product image and select the option to search for it in Faircado.

This functionality is powered by Faircado’s proprietary AI, which can analyze pages from 1,600 e-commerce sites and search through a database of 50 million secondhand items. The search engine sources these items from partner websites, including major platforms like eBay.

Faircado earns revenue through affiliate links and commission fees from these partners, which now number over 50.

Currently in beta, Faircado has a few thousand users but recently secured €2.3 million in funding, adding to the €750,000 it previously raised to develop its platform.

What’s the Gist?

Faircado isn’t the first player to venture into the secondhand search engine space. Other startups not only exist in this space, but they’re also attracting some serious funding.

Investor interest in the secondhand market is driven by its explosive growth. By 2028, the market is projected to reach $350 billion, with secondhand clothing sales growing three times faster than the overall apparel market.

This growth reflects changing consumer priorities, driven by affordability, sustainability, and cultural shifts. Younger generations, in particular, are embracing secondhand goods not only for economic reasons but also as a way to express their individuality and align with eco-conscious values. Buying used helps reduce waste and the environmental footprint of fast fashion, a significant factor as awareness of climate issues grows.

The secondhand market also provides critical benefits for people in countries with lower purchasing power. In many regions, secondhand platforms create access to high-quality goods at prices far below retail. This democratization of access allows families to stretch their budgets while still purchasing durable, brand-name items. Beyond clothing, secondhand electronics and books give students and professionals opportunities to obtain resources that would otherwise be financially out of reach.

For sellers, the market opens new revenue streams, turning unused possessions into cash. In countries with economic constraints, this can be a vital way to supplement income or build small businesses centered around reselling. Platforms like Faircado, which simplify the buying and selling process, help create a vibrant ecosystem where these exchanges thrive, boosting both access and income opportunities.

In 2023, 52% of shoppers had already purchased secondhand clothing, with Gen Z leading the charge at 65%. Interestingly, motivations differ across age groups:

• Gen Z: buys secondhand to stand out, avoiding mass-market styles without overspending on premium brands.

• Millennials: focus on affordable family shopping.

• Gen X): seek high-end brands at lower prices, prioritizing quality over trends.

• Boomers: enjoy the hunt for unique bargains, caring less about brands.

Faircado’s key strength lies in its browser extension, which integrates with established shopping habits on platforms like Amazon. This is crucial since altering user behavior is notoriously difficult.

Faircado’s approach echoes other innovative startups in the secondhand space:

• Haz: this app notifies users when their friends buy new clothes, which can later be resold directly through the app. Haz raised €1.2 million in its first round.

• Croissant: offers shoppers a buy-back option for clothing purchased online, valid for up to 12 months. Croissant resells these items on secondhand marketplaces and secured $24 million in its first funding round.

Key Takeaways

The secondhand goods market offers exciting opportunities, not through opening a small thrift shop but by creating platforms that make buying and selling used items easier for everyone.

At its core, this market operates like one giant marketplace: for someone to buy a secondhand item, someone else has to be willing to sell it. Without a strong supply of quality listings, demand can’t grow. The challenge for platforms in this space is ensuring a consistent flow of desirable items.

One solution is to build a search engine that aggregates listings from multiple websites and adds helpful, user-friendly features — an approach taken by Faircado and Gently.

Another strategy is to attract and keep users who occasionally sell their items. Haz tackles this by offering a wardrobe digitization app, while Croissant engages sellers directly through online stores.

So, how would you carve out your place in this market? Let us know in the comments!

Company info

Faircado

Website: https://faircado.com/
Last funding round: €2.3 million, 28.05.2024
Total funds raised: €3.05 million over 2 round