A third of shoppers at online-only children’s supplies retailer Kidsy “identify themselves as purely secondhand, recommerce, off-price shoppers,” said co-founder and CEO Shraysi Tandon. Kidsy, meanwhile, exclusively sells children’s overstock, open-box and customer-returned products.

“No matter what any brand or retailer does, they are unable to capture this audience because that’s their intrinsic consumer behavior. Those are the customers that we cater to,” Tandon told Digital Commerce 360.

Kidsy officially launched in September 2023 after having been in beta since April 2022, she said. Since launching, Kidsy has quintupled revenue and now has tens of thousands of customers throughout the United States.

“If the customers don’t shop on Kidsy, they’re doing so on eBay or Mercari or Poshmark, or name any of the P2P sites that have popped up in the last decade,” Tandon said. “Now, we’re starting to see this really wonderful cooperation with brands who are leaning into that and seeing us as parallel partners rather than competition.”

Why Kidsy was founded

Tandon and co-founder Sinan Sari started the Chicago-based ecommerce company after Tandon first became a mom.

“I quickly got introduced to this world of inventory that children need, and on most items, started having sticker shock looking at some of these price tags,” Tandon said. “And then, what added fuel to the fire was how short the lifespan of the inventory actually is.”

She said whereas some electronics or accessories adults buy can last for years, turnover seemed to be “almost on a monthly basis” for her kids’ items. Tandon, who has a journalism background, said she “had already known about the inventory glut the U.S. faced, that retailers faced.”

She also knew about supply chain issues, overstock, and about items ending up in landfills.

“But I never thought I was going to do anything with all that information,” Tandon said. “Of course, that changed subsequently when I became a parent, sought out liquidated stuff, really struggled to find it, and then decided, why don’t I go ahead and just build it?”

Kidsy embraces overstock and liquidation business model

The way Kidsy gets inventory is two-fold, Tandon said.

At the end of every month:

1. Whatever overstock and surplus items Kidsy’s partners produce go to Kidsy.
2. Every customer return the brand has received — whether it’s online or their brick-and-mortar store — goes to Kidsy as well.

The brands don’t have an avenue to resell these overstock and customer-returned items in a financially viable way, Tandon said. When customers return items, she said, most retailers don’t restock them because it costs about 60% of the retail price to restock a customer return.

“It’s too labor-intensive, and it’s too capital-intensive as well,” Tandon said. “Most people, when they drop off an Amazon return at UPS or Kohl’s or whatever dropbox Amazon is offering these days, you just put it back in the box, you stick the label and you send it back, and you never really think about what happens to that product. But essentially, when that product’s making its way back to Amazon’s warehouse, it’s touching six touchpoints, and at every touchpoint, there’s a dollar amount associated with it.”

Those individual stops add up, creating an opportunity Kidsy.

“By the time it ends up at the warehouse, it’s become too expensive for Amazon to restock it,” she explained. “Not to mention the amount of returns that are happening on a daily basis nationwide. Those are the products that we buy. Those returns as well as all your surplus inventory.”

How Kidsy handles fulfillment and delivery

Unlike other secondhand businesses, Kidsy doesn’t get its inventory from any individual consumer or customer. Kidsy also has a warehouse on the border of Iowa and Nebraska that Tandon said is “very strategically positioned” and “has been very advantageous.” There, Kidsy has a team that “rigorously inspects” all overstock and returned items at its warehouse to make sure they’re in appropriate condition to sell.

Tandon said Kidsy gets “highly competitive shipping rates nationwide” through a private company founded by Turkish engineers. That allows the retailer to offer free shipping to its customers. The company works with FedEx, UPS and USPS to ship orders.

“It is a customer-acquisition strategy in the long run, and in the short run, I just feel that as many features and benefits — and friction you can remove for your customer at every step of your retail ecom journey — is super important for creating customer love,” Tandon said.

Understanding customer demographics

New parents — specifically, millennials and Gen Z consumers — who shop with Kidsy often start with “a relatively modest purchase” on the retailer’s site, Tandon assessed. They might buy a $50 item first to test their experience with the brand.

“We then see that very same person come back and shop from us three or four times afterwards, subsequently with larger cart numbers and higher AOVs [average order values],” Tandon said.

Those initially skeptical customers eventually start to feel comfortable enough with Kidsy to buy a $1,000 stroller or bassinet, she said.

“It’s interesting also to notice that grandparents tend to be a little bit more trusting and bold with their shopping, so a lot of the baby boomer generation, they go straight for the juggernaut and add $500, $600 items to their cart in one fell swoop,” Tandon said.

She attributes the company’s customer growth to free shipping. Additionally, 60% of Kidsy customers go to the site through ads, and 40% are organic visitors.

“If you want your company to really stand out through an organic post, the best way to do it is have your customers and your friends and your followers talk about you rather than you talk about yourself,” Tandon said. “If you’re talking about yourself, you may as well pay for the ad because at least that seems more authentic — because everybody knows it’s marketing.”

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