Meet the growing crop of marketplaces helping brands monetize excess apparel

This week, the company announced a $1.25 million pre-seed round from Baukunst, bringing its total funds raised to $1.5 million. Gannon hopes to be working with 150 brands by year’s end. Baukunst has also been the pre-seed lead for formula company Bobbie, home gym trainer Tonal and eyewear brand Pair.

“We’re capturing a shopper that’s between the secondhand customer and the full-price customer, and that space is getting bigger,” Gannon said. “People want newness, but they don’t want to feel guilty about how they’re shopping. That’s where we sit.”

Beyond its own growth, Offe Market is part of a new wave of companies that sell excess inventory or returns, usually at a discount compared to retail prices. The off-price industry is poised to grow as consumers become more price-conscious and brands hike costs to deal with changing tariff policies. And this also tracks for secondhand companies, with ThredUp projecting in its 2024 Resale Report that the industry will hit $367 billion by 2029. In January, a startup called Faro announced a $6 million fundraise to restore and resell U.S. product returns in South Africa. Revive, which sells deadstock as well as returned items, raised $3.5 million last summer.

While the models may differ, the overarching goal of many of these companies is to find a way to resell garments that may otherwise become textile waste, a problem cited by 66% of retail executives, per ThredUp’s survey.

For Gannon, both shoppers and brands are increasingly interested in off-price because of concerns about the environment. In the U.S. alone, only about 15% of textiles get recycled or reused each year, per the Environmental Protection Agency. But working with a resale partner is something brands can get excited about as part of their own sustainability goals, Gannon said.

“Because we align with their sustainability initiatives and the customers they want to reach, a lot of the brands have been willing to co-market with us,” she said. “They’ll promote us to their customer base — while you would never see brands being like, ‘Come shop us at TJ Maxx.'”

Kate McAndrew, co-founder and general partner at Baukunst, said Offe Market is re-inventing the off-price model in a more contemporary way. The site adds new inventory with brand-specific drops at least one to three times a week. Items can be sorted by brand or category, or featured under certain price points. In addition to apparel, shoes and accessories, Offe.Market has a “living” category with items like candles and pet supplies.

“Legacy players like TJ Maxx have dominated off-price retail for decades, but they haven’t adapted to the new consumer reality,” McAndrew said. “Offe Market is delivering real off-price value with full transparency and not cutting corners on quality. And their breakout growth across TikTok and Instagram proves how hungry shoppers are for something different.”

New models

Like other off-price retailers before it, Offe Market is building its own brand. But its version is very social; it has more than 84,000 followers across social media plus an email list of around 60,000. One recent TikTok from Gannon filmed in her store recently racked up 1.9 million views for a video explaining how Offe Market works.

Gannon said Offe Market is also different than other liquidation or resale options because it can work with brands that may have just five or 10 of an excess item. TJ Maxx, for instance, may only work with larger-scale brands that have to price their product lower than they would for their own brand, meaning companies may not be able to make money off the transaction.

Offe Market allows brands to list items on its marketplace and drop-ship them to customers themselves to keep about 60% of the revenue. But Offe Market also has a warehouse in Tennessee for more consignment-style listings. This has about a 50% revenue share, but spares brands the cost of storing excess inventory. 

Gannon said Offe Market also provides back-end support to help sell products faster and helps determine pricing based on factors like the retail price, demand and seasonality. Off-price isn’t one-size-fits-all, she said, and some indie brands she works with aren’t used to going on sale and aren’t sure what pricing looks like, in a way that will move product fast without diluting brand value. She said she often explains how higher discounts, like 50% off or 60% off, will move more product and offset the higher discount.

“We’re always having these conversations with the brands and encouraging  the discounts, but holding their hand through it,” she said. “We work closely with the brands to make sure we’re able to make money and then work backward from that, selling it at a price that will move it.”

Michelle Callahan, founder of knitwear company Callahan, has done several drops on Offe Market— current listings include half-off chunky oversized cardigans. She said the model makes sense for Callahan financially because it can reduce storage costs. But it’s also increased brand awareness.

Callahan said the curation of brands on Offe Market helps draw in a cooler, younger Gen-Z customer than the brand was able to tap in existing off-price channels. “Sales have outperformed expectations, and we did it without discounting on our own site or compromising on brand perception,” she said.

New demand

While Offe Market is exclusively working with excess inventory at this time, other growing players focus on helping brands sell goods that are returned and may otherwise be landfilled. Allison Lee, founder of resale company Revive, said demand for its services is increasing as brands look for new ways to monetize dead stock. The company sells returns from brands using third-party marketplaces like Poshmark and eBay, and it also provides ways for brands to sell returned or restocked merchandise via their own websites. It raised $3.5 million in a pre-seed round led by Equal Ventures last summer. 

“CFOs can no longer afford to write things off and accept just 2% of MSRP from sample sales,” Lee said. “This is a ‘hair on fire’ moment, they need to reevaluate supply chains.”

When it first launched in January 2024, Revive processed 1,000 units. This January, it processed 60,000. It currently works with 10 brands, including five that were signed this year, with the goal of having 15 to 20 brands live by the end of the year, Lee said.

Annie Hu, founder of resale service Bazar, which currently works with about 70 brands, said she doesn’t plan on doing any more fundraising for the two-year-old startup, instead aiming to run the business off its own balance sheet. She said Bazar is currently seeing more demand from brands that don’t fit with the legacy off-price model.

“I don’t think traditional methods of handling overstock work in the current market,” she said, noting liquidators’ minimum quantity restraints that many DTC startup brands may not be able to meet due to tight, small-batch production styles.

When considering resale, Hu said some brands may be hesitant to sign up because they’re concerned about eating into full-priced sales. But that concern doesn’t usually bear out, especially if targeting the right customers. Hu said that could mean offering resale to people who’ve expressed interest in the brand before but haven’t purchased, or giving loyal shoppers exclusive access to products. “We advise them to target new customers, or use resale as a perk for loyal buyers,” she said. Hu also said that buying off-price or recommerce from a brand can be a gateway to buying it at full price.

From a consumer standpoint, Gannon at Offe Market said her customer is looking for stylish brands and trending pieces but may have reservations about adding more new clothing to their closets.

“We’re finding this consumer who’s super values-driven, who wants to shop more sustainably and wants deals,” she said. “There’s a very real customer who wants the Ganni dress but can’t afford $400. And this is a way for them to participate in the brand.”