The Startup That Thinks It Can Dethrone eBay

Twice

On a recent January morning in San Francisco, Noah Ready-Campbell showed me around the 3-year-old business he says is about to give eBay a run for its money.

It’s a 25,000-square-foot warehouse space, with music pumping overhead and sunshine streaming through the skylights. Once an auto body shop, it’s now the headquarters of Twice, an online clothing consignment store that Ready-Campbell and his former Google colleague Calvin Young founded back in 2012.

Noah Ready-Campbell. Twice

Flashbulbs pop as a row of photographers shoot half-dressed mannequins, while a group of steam cleaners prepare each item for its close-up. A team of buyers hurriedly sifts through piles of new items, making snap decisions on which pieces are and aren’t suitable to be resold on the Twice website. On the opposite end of the building, bins of plastic-wrapped clothes are piled sky high, waiting to be shipped out to customers. It’s a living, breathing machine, and a well-oiled one, at that, which is important, given the massive scope of the task in front of Twice’s team.

Unlike eBay, Twice doesn’t just provide the platform for sellers to list used clothing and for buyers to purchase it. Instead, Twice does all the heavy lifting, from buying the inventory from sellers, to sprucing it up and photographing it for its e-commerce site, to shipping it off to buyers. That means the Twice team, which includes 240 operations employees and 40 corporate ones, is processing 5,000 one-of-a-kind items a day.

It’s the kind of logistical knot that other marketplaces, including eBay, have tried to avoid. But Ready-Campbell says it’s by design. By making the process of selling old stuff easier for sellers, he believes Twice can not only entice more people to sell their things online, but can also make the shopping experience more appealing to buyers.

The fact is, eBay is kind of a user experience nightmare, a crowdsourced jumble of product shots taken in sketchy lighting with linoleum floors as the backdrop. But eBay has endured despite these shortcomings, largely because the concept of an online marketplace was so revolutionary, and eBay got to it first. Today, however, the company is slowly losing ground both to smaller players including Twice and its nearest competitor thredUP, as well as major tech giants like Amazon, which have seen the flaws in eBay’s marketplace and have tried giving it a facelift.

That is already taking a toll on eBay. Last week, the company announced it was cutting 2,700 jobs, many of them in the marketplace division. Now, with eBay’s dominance in the space weakening, companies like Twice are better poised than ever to fill in the gap.

The Vulcan

But pulling this off will be no easy task. After all, the genius of eBay has always been its hands-off approach. Because it didn’t hold inventory, eBay had no logistical obstacles to trip over. Twice has countless. Which is why the company has developed a proprietary software system called Vulcan that automates and tracks many of the processes that could gum up the works in a typical warehouse.

For instance, as soon as photographers take a photo of a given item, Vulcan automatically lightens, sharpens, and aligns the photo so the photographers don’t have to process them manually. It’s the same with pricing. Buyers type basic details about an item into Vulcan—things like brand, size, and fabric—and Vulcan comes up with a price, based on historical sales data.

Twice

Vulcan also tracks the efficiency and whereabouts of every employee in the warehouse, timing how quickly they process an item versus how quickly they need to process the item to meet that day’s goals. It’s Big Brother-esque, yes, but Ready-Campbell says it helps the company sidestep sticky managerial issues.

“By showing very clearly whether you’re meeting time standards or not, it’s the intersection of technology and management,” he says. “Rather than having to check stuff off on a clipboard every hour, if we have real-time visibility it makes it easier for everybody to stay on the same page.”

Risky Business

But while technology can help streamline the process, Twice is operating a risky business, nonetheless. As Forrester analyst Sucharita Mulpuru points out, plenty of businesses have tried and failed to do what Twice is doing because it’s such a difficult model to scale. “You get a lot of crap that you have to wade through, and then there are all the customer service issues associated with people thinking their merchandise is worth more than it actually is,” she says.

These businesses also tend to be afflicted by a fundamental chicken and egg problem, Mulpuru adds, “To make money they need to buy the items for cheap. But if they buy the items too cheap they won’t get customers to provide enough merchandise.”

In other words, as much as it’s a logistics challenge, Twice is also playing a complex numbers game. Today, Twice buys items for an average of $4 a piece. They accept about two thirds of what they receive and about 97 percent of sellers accept Twice’s offer. About half of those items sell in the first week, meaning, for now, the company isn’t tying too much money up in inventory, but that’s subject to change as more sellers come online.

Still, investors have put their faith in Twice. Last year, Andreessen Horowitz led an $18.5 million round of funding in Twice, bringing the company’s total funding to $23 million. Now, as its women’s clothing business continues to grow, Twice is also expanding into other verticals, including men’s clothing, which it launched this month. But Ready-Campbell says that’s just a start and that the company is testing “every product category under the sun.”

“That’ll be a big step for us,” he says, “where we execute on our vision of becoming eBay, but a lot less work for sellers and a nicer merchandising experience for buyers.”