Online furniture resale marketplace Kaiyo is trying to make it easier for people to sell used furniture with a new instant offer feature.
Alpay Koralturk, CEO & Founder of Kaiyo, said that the two barriers to furniture resale for both buyers and sellers are a lack of convenience and trust. The new instant offer feature — which allows sellers to cash out with a flat fee for their used furniture as soon as Kaiyo picks up and accepts their furniture rather than wait for a percentage of the resale price — is just one of a few features Kaiyo has added to its platform to address these problems
Interest in furniture resale is rising — the market is expected to reach $16.6 billion by 2025, according to resale platform Chairish. But analysts say the space has more complications than resale in less bulky products categories like apparel. Through features like free furniture pickup for sellers and professional cleaning for buyers, Kaiyo is aiming to remove the hassle or mistrust that can come from buying and selling on other popular platforms like Facebook Marketplace.
Making resale easier
Kaiyo was founded in 2014 in New York City, and today operates across the United States. However, it only accepts products from sellers on the East Coast — and certain features like the platform’s free pickup, for example, are only offered in certain cities including the greater NYC area, the greater Philadelphia area, and Washington D.C. as well as select cities in Connecticut, Maryland and Virginia. Currently, the platform lists almost 6,000 items from a variety of sellers. Kaiyo’s revenue has grown over 150% year-over-year for the past two years.
Kaiyo has long used an algorithm that adjusts items’ prices almost daily, as demand for certain brands or product types ebbs and flows. In the past, resellers would receive 10% to 60% of an item’s value once purchased, depending on item value (items over $3000 get 60% of the sale while items under $100 get 10% of the sale, for example). In this old model, sellers would upload their item online, have Kaiyo pick it up and then wait for it to be sold before receiving any payment.
“Folks in our regular revenue share agreement don’t know how much they’re going to make [reselling their items] nor when they’re going to make it,” said Koralturk.
Instant offers will now allow sellers to cash out before their product is resold. How much a seller receives depends on how expensive an item is, as well as how much Kaiyo predicts it will be able to resell the product for.
Making resale more convenient for sellers, said Koralturk, is one of a few ways Kaiyo differentiates itself from other furniture resale platforms. Sellers on the East Coast, for example can submit an online form with pictures and details of their items. In turn, Kaiyo will review submissions within a day and send out a team to pickup items for free, photograph the items and list them on Kaiyo’s site.
“Nobody with good quality furniture should have to resort to — in this day and age — begging people on social media to come and get their thing,” said Koralturk.
For buyers, the platform offers low-cost delivery — currently a $149 flat fee for any size furniture — or free warehouse pickup in its two warehouses in New Jersey or D.C.. Products are industrially cleaned in-house and the original price of an item before resale is listed to highlight discounts to buyers. Moreover, Kaiyo tags items’ quality in a five-tier system.
Kaiyo is able to offer subsidized shipping and free pickup because of its pricing technology, said Koraltuck.
“We take a data- and technology- first perspective on [pricing] and this helps us very quickly tell sellers, ‘yes, we’ll come on this day and we’ll give you this fast, free pickup,'” said Koralturk. “We trust our technology to tell us that this is a worthwhile pickup, that we can make money and we can share money back with that seller as well.”
The bulk problem
Resale has boomed across a variety of product categories during the pandemic. According to resale marketplace ThredUp, 33 million consumers bought used apparel for the first time in 2020. Refurbished electronics startups like Back Market, meanwhile, reported 1,000% growth in sales from 2019 to 2020.
“There’s an emerging shopping pattern and customer base that is giving more and more importance to the idea of sustainability,” said Tim Ceci, founder of Tim Ceci Retail Consulting.
However, furniture is a bulky product and the logistics of moving it from one place to another are significantly more complicated and expensive than in categories like apparel or electronics. “It’s very hard to move these things,” said Koralturk. “You can’t put them in a small package and just mail it with USPS.”
Sucharita Kodali, a vp and retail analyst at Forrester, said over email that social media platforms like Craigslist and Facebook Marketplace have done well — despite the hassle for sellers and buyers — because furniture resale often “needs to be a local solution in order to be economically viable.”
While consumers can purchase Kaiyo’s products across the U.S., its seller services with free pick up or low-cost delivery are only available on the East Coast. Kaiyo does plan to continue to expand to additional states and cities, Koralturk said.
Kodali added that, because of these cost challenges, delivery services often only make sense at a higher price-point. She pointed to higher end furniture resellers like 1stDibs that offer low-cost shipping for high-priced products.
However, Koralturk said that Kaiyo does not want to be an “elitist” resale platform. Currently, the majority of Kaiyo’s products are over $100 and some are even over $20,000. However, Koralturk hopes to add more lower-cost items over time.
“As we scale up and we gain economies of scale, our tolerance and our acceptance of products will… go lower down market,” said Koralturk. “Products that today might be on borderline [acceptance], in a year’s time, we’ll be able to say yes to.”
Despite challenges, Ceci thinks the online furniture resale market will continue to provide growth opportunities for both resale- and digitally- native players, as well as larger furniture brands like Ikea.
“I think resale for furniture is alive and well and will continue to grow,” said Ceci.