Lead: Sellpy, the fully-managed resale platform owned by Swedish fast fashion giant H&M, surpassed 2 billion SEK (about $206 million) in revenue in fiscal 2025, yet its operating loss widened to 168 million SEK (about $17.3 million), more than double the prior year. Revenue up 25%, losses up 113% — these figures push the industry question of "can reselling cheap clothes ever be profitable" back to the forefront.

1. An Advanced Model, a Ledger That Doesn't Add Up

Sellpy is no startup experiment. H&M brought it in-house in 2019, the platform has operated for over a decade, and in the prior fiscal year it processed roughly 20 million items across its European warehouse network. Yet scale has not improved profitability, and the problem lies in the per-item processing cost.

PwC UK research on circular fashion notes that fully-managed resale platforms face a minimum per-item processing cost of about £5 to £7 (roughly $6.5 to $9), covering intake, sorting, quality checks, photography, storage and shipping. For premium or luxury items selling above £50, that cost share is bearable; but for the many fast fashion pieces entering Sellpy's system, resale prices are often under $10. PwC specifically points out that labor accounts for more than half of total resale apparel costs. That means processing 20 million items is simultaneously processing millions of basic H&M T-shirts and kids' trousers, and these low-priced items keep dragging down overall economics — no amount of warehouse efficiency can fix that.

H&M Chief Sustainability Officer Leyla Ertur, in a public statement supporting an industry joint call for policy intervention, admitted: "Resale keeps products in use and meets consumer demand for more affordable, more sustainable choices. But today, this business model is still economically penalized."

2. The Full Financial Picture: Parent Keeps Transfusing Cash, Losses Widen Sharply

Sellpy's fiscal year ends in November, with the latest data covering through November 2025. According to annual accounts unearthed by Swedish financial outlet Breakit and reported by Placera.se on August 10, 2026, Sellpy's revenue rose from 1.6 billion SEK (about $165 million) the prior year to over 2 billion SEK. The operating loss widened from 79 million SEK (about $8.1 million) in fiscal 2024 to 168 million SEK (about $17.3 million).

H&M currently holds about 80% of Sellpy, and financial support has never stopped. At the end of fiscal 2024, H&M provided Sellpy a 50 million SEK (about $5.2 million) loan to expand warehousing capacity; during fiscal 2025, Sellpy carried out a rights issue totaling 134 million SEK (about $13.8 million). The parent isn't pulling back — it's doubling down.

Meanwhile, H&M's own performance is under pressure. Its fiscal 2026 third-quarter results released Wednesday showed operating profit of 5.91 billion SEK (about $609 million), below the analyst consensus of 6.3 billion SEK, with the stock falling more than 5% before partially recovering. CEO Daniel Ervér acknowledged the results fell short of the company's own expectations, attributing it to supply chain disruptions and weak consumer demand in Western Europe. Sellpy's ever-widening losses are part of this broader pressure.

3. Asymmetric Competition: Why Vinted Makes Money

In stark contrast to Sellpy is Lithuania's Vinted. Its 2025 annual report showed revenue of over €1.1 billion (about $1.26 billion), up 38% year-on-year, with net profit of €62 million (about $71 million). A secondary market equity transaction in April 2026 valued Vinted at about €8 billion.

The gap stems from model differences. Vinted uses a C2C model and never touches the goods — sellers photograph, describe and ship themselves, and the platform charges buyers a service fee, removing almost all reverse logistics costs from its own books. Sellpy, like America's ThredUp, is fully managed: the platform receives, photographs, prices, stores and ships. A shirt listed at €4 on Vinted has its labor absorbed by the seller; the same shirt on Sellpy means the platform first pays processing and storage costs, while the sale price may be lower than the processing cost. ThredUp has yet to turn a profit, and The RealReal, by focusing on high-end authenticated consignment with higher average order values, only barely narrowed losses after years in the red — neither has proven that the fully-managed model can be consistently profitable at scale, especially at fast fashion price points.

PwC suggests three paths to improvement: cutting labor costs through automation, raising average order values by curating higher-value inventory, and securing policy changes to reduce VAT and regulatory burdens on resale. H&M is pursuing the first two while clearly lobbying for the third.

4. Where Do the Unsold Clothes Go?

Beyond financial pressure lies reputational risk. A documentary produced by German public broadcaster SWR aired in early 2026, in which researchers over an 18-month investigation sewed hidden tracking devices into 12 garments submitted to Sellpy. These garments, when unsold, are supposedly routed to donation or recycling channels, but the tracking results showed some flowed to Polish resellers supplying African markets, and to second-hand markets in Karachi, Pakistan — where local reports say unsellable clothing is sometimes used as fuel in brick kilns.

These findings directly undercut Sellpy's brand promise that unsold goods will be "donated or recycled," thereby extending their useful life. H&M responded that it "firmly believes clothing should not end up in the natural environment"; Sellpy said it takes the findings seriously and has strengthened traceability with logistics partners — including Looper Textile Co., a joint venture H&M formed in 2023 with waste management company Remondis. Sweden's consumer regulator also launched a separate investigation in late 2025 following consumer complaints about lost items and insufficient tracking of rejected garments on Sellpy.

Industry Significance: The second-hand market continues to expand rapidly. According to ThredUp's 14th annual resale report (produced by GlobalData, released April 2026), the global second-hand market reached $393 billion in 2025 and is expected to grow at twice the rate of the overall apparel industry by 2030. But Sellpy's situation reveals a structural fork: C2C platforms can profit through asset-light matchmaking, while fully-managed platforms have yet to prove sustainable profitability at fast fashion price points. For the used clothing trade and resale industry, the question is no longer whether the market will grow, but whether the reverse logistics of cheap clothing can ever be turned into a profitable business at scale by a single company.

Source: Sellpy Lost $17 Million Last Year: H&M Cannot Fix Economics of Cheap Clothes · Originally published 2026-09-25