Case Study Description of thredUP: Think Secondhand First
In the fall of 2016, the management team at thredUP, the largest U.S. online retailer of secondhand clothing, is deciding whether to expand into international markets. Over the past 12 months the 7-year old startup, which had raised over $130 million in venture capital, had seen revenue grow 100% and gross margin double. Would moving abroad expand thredUP's total addressable market and help position the company for an IPO? Or would it prove a distraction, derailing momentum in the core U.S. business?
Authors :: Thomas R. Eisenmann, Allison M. Ciechanover, Jeff Huizinga
Swot Analysis of "thredUP: Think Secondhand First" written by Thomas R. Eisenmann, Allison M. Ciechanover, Jeff Huizinga includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Secondhand Thredup facing as an external strategic factors. Some of the topics covered in thredUP: Think Secondhand First case study are - Strategic Management Strategies, Growth strategy, Technology and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the thredUP: Think Secondhand First casestudy better are - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions,
technology disruption, increasing commodity prices, etc
Introduction to SWOT Analysis of thredUP: Think Secondhand First
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in thredUP: Think Secondhand First case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Secondhand Thredup, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Secondhand Thredup operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of thredUP: Think Secondhand First can be done for the following purposes –
1. Strategic planning using facts provided in thredUP: Think Secondhand First case study
2. Improving business portfolio management of Secondhand Thredup
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Secondhand Thredup
Strengths thredUP: Think Secondhand First | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Secondhand Thredup in thredUP: Think Secondhand First Harvard Business Review case study are -
High brand equity
– Secondhand Thredup has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Secondhand Thredup to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Secondhand Thredup is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Thomas R. Eisenmann, Allison M. Ciechanover, Jeff Huizinga can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Secondhand Thredup is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Secondhand Thredup is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in thredUP: Think Secondhand First Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Secondhand Thredup in the sector have low bargaining power. thredUP: Think Secondhand First has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Secondhand Thredup to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Secondhand Thredup is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Secondhand Thredup are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Secondhand Thredup is one of the most innovative firm in sector. Manager in thredUP: Think Secondhand First Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Secondhand Thredup in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Secondhand Thredup has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in thredUP: Think Secondhand First Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to lead change in Innovation & Entrepreneurship field
– Secondhand Thredup is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Secondhand Thredup in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Secondhand Thredup
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Secondhand Thredup does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Secondhand Thredup digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Secondhand Thredup has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses thredUP: Think Secondhand First | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of thredUP: Think Secondhand First are -
Increasing silos among functional specialists
– The organizational structure of Secondhand Thredup is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Secondhand Thredup needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Secondhand Thredup to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study thredUP: Think Secondhand First, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Secondhand Thredup has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - thredUP: Think Secondhand First should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Secondhand Thredup has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study thredUP: Think Secondhand First that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case thredUP: Think Secondhand First can leverage the sales team experience to cultivate customer relationships as Secondhand Thredup is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Thomas R. Eisenmann, Allison M. Ciechanover, Jeff Huizinga suggests that, Secondhand Thredup is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Need for greater diversity
– Secondhand Thredup has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Secondhand Thredup has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study thredUP: Think Secondhand First, in the dynamic environment Secondhand Thredup has struggled to respond to the nimble upstart competition. Secondhand Thredup has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As thredUP: Think Secondhand First HBR case study mentions - Secondhand Thredup takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Lack of clear differentiation of Secondhand Thredup products
– To increase the profitability and margins on the products, Secondhand Thredup needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities thredUP: Think Secondhand First | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study thredUP: Think Secondhand First are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Secondhand Thredup to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Secondhand Thredup to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Secondhand Thredup can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, thredUP: Think Secondhand First, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Secondhand Thredup can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Secondhand Thredup can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Secondhand Thredup can use these opportunities to build new business models that can help the communities that Secondhand Thredup operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Developing new processes and practices
– Secondhand Thredup can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Secondhand Thredup has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study thredUP: Think Secondhand First - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Secondhand Thredup to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Secondhand Thredup to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Buying journey improvements
– Secondhand Thredup can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. thredUP: Think Secondhand First suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Secondhand Thredup has opened avenues for new revenue streams for the organization in the industry. This can help Secondhand Thredup to build a more holistic ecosystem as suggested in the thredUP: Think Secondhand First case study. Secondhand Thredup can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Secondhand Thredup to increase its market reach. Secondhand Thredup will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Secondhand Thredup to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Secondhand Thredup can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats thredUP: Think Secondhand First External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study thredUP: Think Secondhand First are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Secondhand Thredup in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Secondhand Thredup with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Secondhand Thredup needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Secondhand Thredup can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Secondhand Thredup demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Secondhand Thredup can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study thredUP: Think Secondhand First .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Secondhand Thredup in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Increasing wage structure of Secondhand Thredup
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Secondhand Thredup.
Regulatory challenges
– Secondhand Thredup needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Secondhand Thredup high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Secondhand Thredup is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Secondhand Thredup business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of thredUP: Think Secondhand First Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study thredUP: Think Secondhand First needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study thredUP: Think Secondhand First is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study thredUP: Think Secondhand First is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of thredUP: Think Secondhand First is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Secondhand Thredup needs to make to build a sustainable competitive advantage.
