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<span style="font-weight: 400">As consumers grow more concerned about the sustainability of fashion, “re-commerce” vendors that sell vintage clothing have proliferated. ThredUp, one of the biggest, works with retailers like Gap, Abercrombie &amp; Fitch, and Walmart to involve them in the secondhand market, as sellers or gatherers of used apparel. The result: Recycled clothes reach the market faster and gain wider acceptance. </span>

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The secondhand clothing market is booming worldwide. Yet it took over a decade for The RealReal to reach profitability, and ThredUp is still chasing that goal, due in part to the hugely complex intake process that goes into receiving, authenticating, pricing, listing and delivering millions of unique items.

Today, AI is revolutionizing that process. Fortune senior writer Phil Wahba goes behind the scenes at The RealReal’s authentication center in New Jersey to see how the new AI-powered intake tools are transforming the secondhand clothing industry.

Inside The RealReal’s AI-Powered Authentication Center

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In the US alone, there's $200 billion trapped in people's closets of luxury goods, and then every year $80 billion gets added. Resale is booming, but just a few years ago, used apparel resellers like the Real Reel and Thread Up were hanged by a thread. Despite the US secondhand clothing market reaching $43 billion in 2023, shares in both companies plunged towards record lows. Single skew items, 50 million items sold, 200 attributes per item. When you get in there and you really start to understand the business, you realize it's much more complex than you think it is. That same year, ultra fast fashion giant Sheehan. Expanded its third party marketplace to the US, further threatening resale on speed, price, and variety. So how did digital secondhand sellers survive? Enter AI. Really what we're doing here is capturing more and more data. The decisions are happening at the speed of machines as opposed to humans. Can AI help resellers compete against the world's biggest, fastest retailers? This facility is about 500,000 square feet network wide across the east and west coast. We have about 1.3 million square feet of warehousing space. The real real is one of the largest luxury goods resellers on the planet. Yet the company operated at a loss for more than a decade, and the complexity and costs of processing secondhand goods remained a major challenge. If you think about real real, you're not sourcing from like other brands, right? You're sourcing from individuals. All of these items will be very, very unique. You could have a particular color or a particular style or a fabric. You have a significant supply side uncertainty, which makes this whole problem much, much more challenging. Unlike broader resale sites like eBay, the Real Real and ThreadUp are responsible for intaking, authenticating, pricing, and shipping millions of items flowing through their inventory. This puts them at a major disadvantage against other online retailers, including ultra fast fashion giants like Xi'an which can drop up to 10,000 new designs daily and ship products within weeks at deep discounts. Today, The Real Real believes AI can change that. So this is our receiving department and we have one of our merchandise operations specialists and he is taking some scanned images of tags, the designer tag, the fabric tag, and this is the start of feeding data into Athena, and that is our AI powered intake platform that helps us to automate the authentication and lifting process of these items. And it's essentially going to assign it a counterfeiting score, and that's going to help route it to the next phase in the warehouse. The Real Real has been incorporating AI tools across its operations since 2018, significantly cutting processing time through AI enhanced intake, authentication, and pricing. The strategy is starting to pay off. In 2025, for the first time, the real real logged four consecutive quarters with positive adjusted EBITDA. GMV rose 22% in the second quarter of 2026, and operating expense leverage improved by roughly 4.7% points. We really focused how we think about AI on our value props and our moat. Authentication is a big one for us. It's our pricing algorithms. We let the market set the price. We don't set the price, so it's all of that data, but it's also taking dollars out of the unit economics that it would take to process the item so we can take that money and invest it in. or invested in other parts of our business. Authentication has long been a challenge for the Real Reel. In 2018, Chanel sued the company for selling counterfeit Chanel products, and a few years later, the Real Reel settled a class action lawsuit accusing the company of using undertrained staff to help meet high authentication quotas. Today, the Real Real's AI powered intake system, Athena helps workers price and authenticate SKUs in seconds. The company plans for Athena to process half of all new items by the end of 2026, up from about 20% a year earlier. On the supply side, the decisions are happening at the speed of machines as opposed to humans. So typically if you think of like a supply chain, right, it has many, many subsystems, so AI can form that layer or a decision support system which can integrate all of this together and actually do scenario analysis of the speed of machines. So now you can have fewer experts or they can be used in a better way. And secondly, your kind of speed of decision making has significantly improved. We've actually built proprietary. for our gemologists, our watchmakers, our handbag experts to count the melee on every stone, the weight of our diamonds. It utilizes a highly magnified camera to help us take a high resolution picture, and it's able to come up with the carat weight in a moment, just 1 or 2 seconds. And so now actually our humans don't need to so much look at that. They're going to be focusing more on grading the actual diamond, which is where their expertise lies. Does this speed up the process? Does it make it more accurate, or both? It's both. It adds consistency, of course, and speeds up the process where we can process items much faster for the consigner so it gets on the site faster, but also the technology behind the scenes, making sure that each individual item is authentic. But also that the consigner is valid too. The global resale market is still booming. It's expected to reach $393 billion by 2030. And now secondhand resellers are integrating AI across buying and selling, ranging from one tap pricing to personalized agentic shopping experiences. Yet as supply, demand, and AI integration increases, critics still point to lasting industry issues around authentication, shipment delays, and low payouts. What are some of the pitfalls of AI where maybe companies lay too much on the back of AI? One of the big challenges that everybody is facing with AI right now is that fundamentally these are nondeterministic systems, what is known as the verification problem. They do tend to hallucinate. It's important for decision makers to understand, especially in the supply chain side. This is sort of mission critical. Decisions that you're making and if you make a wrong decision, it can potentially result in millions of dollars of losses. So when you integrate these things, it's super critical to figure out who is doing the verification, where is the human sitting in the loop. Somebody needs to be accountable for all of these decisions. We've invested millions of dollars over the years and continue to do so as fakes have gotten better. Over the years as things have changed, it requires us to continuously learn, continuously evolve our technology, but it is the art and science. Like at the end of the day you do need that gemologist to come in and look at the item or you need that watchmaker to come in and open the watch to make sure there's no aftermarket parts, and that's where the art and science is really important, but also makes. Us defensible to AI. Why does Gen Z like resale so much? You know, I think it's a few things. I think it's authenticity that's number one, you're right? Like in a world where everything's starting to look the same and it's algorithms after algorithm, it's the anti-fast fashion at the end of the day, but you know you're going to go somewhere and you're going to look authentic to who you are and you're going to look unique, be your own stylists, right?

As conversations around the four-day workweek gain momentum, employees are becoming more open about feeling overworked, and companies are being challenged to ensure their teams don’t burn out. As conversations around the four-day workweek gain momentum, employees are becoming more open about feeling overworked, and companies are exploring how best to support their teams. Many of the factors that contribute to overwork sit within leadership’s influence. This discussion will explore how leaders can rethink priorities and workloads and challenge the old rules of work to make productivity and well-being thrive.

Malissa Clark, Professor, Department of Psychology, University of Georgia, Director, Healthy Work Lab
James Reinhart, Co-Founder and CEO, Thredup
Moderator: Indrani Sen, Senior Features Editor, Fortune; Co-Chair, Fortune Workplace Innovation Summit 

Burnout is Breaking Work: Can a Four-Day Week Fix It?

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I'm going to start by just setting the table a little bit. AI is upending assumptions about how work is valued, what humans uniquely bring to the table. And what kinds of work can be automated or done by LLMs or agents. The bigger question may be whether customers cus sorry, whether companies are willing to redesign work itself, cutting low value tasks, redefining productivity, and making it safer for employers to say employees to say when the system isn't working. James, I'd love to start with you, particularly after the conversation that we just had. Um, I'd love to talk to you about the 4-day work week that that you've implemented at Thread Up. Uh, you started out with an experimental 4-day work week during the pandemic and then made it permanent. What nuts and bolts changes to Thread Up make in terms of meetings, decision making, staffing, manager behavior? To make this happen and what are the biggest changes that you've noticed since you implemented it? Sure, uh, it's great to be here. Yeah, we, we started the 4 day work week during the pandemic, um, and people were at home, and one of the things that I noticed thematically when people were at home is they were working all the time and people were very productive once they had control of their own schedules. Uh, collaboration was up, you know, Google Meet, we were able to track all the data, and we just started to see this explosion of, of productivity, frankly. And so when, and of course none of us go to our offices and so we had all this extra commute time and our right so there was a lot of more time in our day so then when people came back to work. Um, I just found that like wow, there was this explosion of of opportunity here. Why not just maintain the 4 day work week and, and so for us it was a it was a top level decision. It was not a we didn't take a poll, it was we're gonna do the 4 day work week because I've been sort of obsessed my whole life around organizational design and how do you get the most out of employees and the fundamental idea was that um we waste an enormous amount of time at work. An enormous amount and so I thought why not making the organization be prioritized more? Why not cut all the fat in the meetings? uh why not reduce the sort of meeting before the meeting um and so I just said look we're gonna, we're gonna try this experiment and everybody thought that was a great idea and since then we've been tracking productivity and stuff but I have seen just tremendous uh improvements in employee happiness. Uh, in an employee creativity, I think we're working on the hardest problems, uh, and I think people, uh, in our retention metrics are through the roof, yeah, and so we'll probably talk about that. But, but to me, like, uh, unlike Ryan, like we're, we're not going back. I actually think these days with the sort of the explosion in AI, I think the world is moving more rapidly, and I think we need our best employees and their most creative minds working really concentrated hours on the most important things. And Melissa, as an expert on this, you know, better than most, not all four-day work weeks are created equal. How should we think about the difference between compressing work and genuine genuinely reducing work and how do those models work differently? Yeah, that's a great question because I think a lot of people think 4 day work week, all right, let's just take 40 hours and cram it into 4 days. That is not the philosophy behind the 4 day week movement, uh, and it's not what you're doing, so it's literally shaving 8 hours off of your work week, so a 32 hour week, and so a compressed work week is taking those 40 hours and. You know, just smushing them 4 to 4 day work week is 32 hours. Another kind of myth about this is it doesn't have to be 4 days. Your model is 4 days, I think Monday through Thursday, right? And some pushback I hear is, well, we need people there every day of the week. We need somebody there. That's fine. You don't have to have everyone on the same schedule with a 4 day work week. People can choose different configurations that work for them. Someone could work 6.5 hours a day for 5 days because that works for them. They'd have to pick up their kids from school and it works better with their family. That's great. Uh, the bottom line with the 4 day work week is shaving those 8 hours off. I'd love for you. This is a question for James, but you may have thoughts also, Melissa, to speak directly to the leaders in this room. We have a lot of uh people and HR leaders in this room who might be interested in experimenting with the four-day work week or other changes in work structure, especially as we rethink everything in this era. Um, they're gonna probably face resistance, uh, and maybe the stance that like this might work for Thread Up, it's not gonna work in our company, it's not gonna work in our industry. Um, or a cultural unwillingness to challenge all assumptions about what productivity is. Um, what advice, I'd love to ask you, James, and then you, Melissa, what advice would you give to, to, to our audience here if that's the position that they're in? Um, you know, I, I think the thing to think about is, is the companies that you work at and the teams that you serve, are you ultimately going to win by The number of hours in like is this a truly an input scheme or is it that your teams are coming up with the best ideas, right? um, the most innovative products, uh the best uh engagement and and retention metrics and so I really think about like this idea that that thread. And I think a lot of companies, especially in the world of AI, are going to win by delivering superior workplaces and superior products. So I'm like a, like, and we've all been part of it. Think about the time when you were writing a paper in college, right, and you're like you're grinding at your computer and it's like days and days and days and then you're like. And there's a spark and you have a moment and in 30 minutes you've like you've nailed it, right? Think about like the number of moments that you can have where you have real sparks of innovation and creativity. That is what I'm optimizing for and so I think if you think about the the opportunities in your organizations to how can my employees do the most exceptional work of their lives, what would it take to do that. My guess is you wouldn't say show up at 9, leave at 55 days a week in a, in a, you know, in a desk environment and so that's, that's kind of what I would push people is where can you spark creativity, um, and then one small thing is just I'm a huge believer that rested employees and genuinely happy employees are way more creative. And so for me the idea of the 4 day work week is that when employees come back on Monday morning they're like they've gone on hikes, they've spent time with their kids and families, they've done stuff like they're ready to be the best version of themselves they're not going to spend the first like 4 hours of Monday getting back in the groove and reminding themselves why they still want to work here, right? So it's a real mindset shift. What, what would you arm people with when they're, when they're having this conversation, Melissa? Yeah, well, first of all, I wish more CEOs had your philosophy behind rest and creativity and productivity because you know one of the conversations we have around AI is, OK, we're using it to shave off time from all these tasks that kind of build up throughout the day. OK, so you've shaved off 10 minutes. What are you going to do with that 10 minutes? And to your point, the research shows that the most effective thing to do with that 10 minutes is engage in a rest and recovery activity. This could be as simple as walking around the building or just turning off your cell phone and just sitting and relaxing and deep breathing, and that has been shown to link to greater productivity, greater creativity. I mean, I know myself when I write. The best ideas sometimes come to me when I'm on my walk or the shower. It's not when I'm, you know, working on this thing for 6 hours in a row. Um, so I'm just curious how many companies or people in their companies out here do have a 4 day work week formally? Raise your hand if you have a 4 day work week. Any companies that are, is there one handbag? Uh, she works for me. Oh, look, so this is so depressing, right? But the, the science is so clear. Like the science is so clear on the, on the sleep, on happiness, on walking for creativity. Like it's amazing that we're so willing to trust science on so many things, many things, and yet on this particular thing, like, nope, nope, nope, yeah, head in sand, yeah, so for my book Never Not Working, I interviewed one of the co-founders of the 4 day week global movement. I'm not affiliated with them at all, but I'm a huge fan. And so they've conducted very psychometrically sound research studies that show over these trials of implementing the 4 day work week all of the well-being metrics were going up, uh, burnout was going down, turnover was going down, but companies always care about the bottom line, and this is the most exciting part revenue went up in the majority of these companies and it's sustained over time. And one of the most interesting pieces of data from the recent study that I read about was that 90, so this isn't the most interesting, but 96% of employees said they wanted to continue, OK, but 15% said they would not go back to a 5 day work week for any amount of money. Wow, that I thought was shocking. So in that scenario that you set up actually that the, the CEO says, well, you know, with AI we're gonna be able to, to do, you know, 20% more or we're gonna be able to do the same amount with 20% fewer people. Um, what questions would you ask, uh, about, about how they're thinking about that? I mean Look, there's no question that AI is going to make us more productive. Like, I think the the, the science is clear on that too, right? I think it'll ultimately be how are we leveraging these tools in ways where generative AI is doing stuff when we sleep, right? So to me right now, and I bet for many of you. Like the AI leverage you're getting is how you're interacting in a prompt-based world with chat GPT or cloud, right? You're not actually like, have you, you've not actually come up the other side of the J curve where, where cloud is working for you at night, right? Right. And, um, and I'll give you an example of this is a really simple one which is if you've not used Google's Notebook LM, so who is, has anybody used Google's Notebook LM? OK, there's a feature in there which I'm sure those of you raise your interviews, which is the creation of the podcast. Where you feed it a bunch of data and then these really exciting hosts talk about your idea, right? Um, that is an example where like you, you set a prompt right you feed it a bunch of information and you come back and sometimes it takes 30 minutes, sometimes it takes 1 hour, yeah, that's like the smallest example of this right where you're you're. Going to do something else for an hour while it's producing this podcast for you. Extrapolate that out to large data sets, right, to redesigns of work systems to how your, um, your workforce deployment across 10,000 people might look, those are actually the problems where AI is going to actually have great leaps forward, and I think to get and to nail that you're going to need the most exceptional employees in the world. And those exceptional employees are gonna work wanna work at Thread Up 4 days a week. And so you're going to be competing right against companies like mine for these exceptional people and you're going to lose and so to me, like I, I mean I'm joking, I'm sure you will win, but others will lose, right? But like I think that so to me and I think that's the question, right, is how are you going to compete in a world where the very best people are going to find the leverage in AI, right, um, right, and I think a lot of companies are very shortsighted with thinking about, um. You know their workforce and going pedal to the metal all the time and sure there might be a burst of productivity but we're human and uh eventually we are going to fatigue and at the extreme burn out and guess what that's gonna be costly not just for the individual and their health and their family. But to the company, uh, there was a large scale meta-analysis, for example, that found that for every $1 put towards wellness programs, the company saved $3 in healthcare costs. So I think just thinking about and I hate bringing up these metrics that shouldn't be the end goal, the ultimate criterion in my opinion should be employee well-being. It shouldn't be profit, um, but I know companies like to talk about profit, so I'm giving them data. Um, and then the other thing I think to point out just big picture, uh, and that I would challenge people to think about is why are we still stuck on a 40 hour work week as some of you know this was implemented by Henry Ford, uh, you know, and we're still here and it's funny you can look at anecdotes from a century ago, people predicting that we would be working 15 hours a week now and taking 2 months of vacation. Uh, French, very French, and why are we still here? And with every technological revolution there are these predictions, and can we please for the love of God implement those predictions and at least shave off a day. Right, and people are making those predictions now, of course, about AI, including Elon Musk famously saying, you know, basically we'll, we'll just all have butlers, AI butlers and to work 120 hours a week, right? So if you're imagining this idealized workplace 10 years from now, AI is deeply embedded, uh, maybe we are all working 4 day work weeks. What would you hope is different about how leaders are thinking about people's time? And their capacity at work. I would say that I hope that leaders could start focusing on rewarding working smarter and not working longer. I think we continually talk about wellbeing and the idea of. Rest and recovery as hindering productivity, but as your examples point out and a lot of other data, it actually helps productivity. So it's a false dichotomy, and I think we really need to stop pitting the two against each other. They work together very well actually. Yeah, I mean, I, to me like I, I really do think it's going to, it comes down to the war for talent. Like I really do believe that. I mean that, that, you know, the, the 10x employee, like there are people in all of our companies that they're just exceptional, right? They're, they're so much better than other people at our companies. And so when I think about the, the folks at Thread up that are exceptional, um, the 4 day work week is a big part of like why they want to work there, but I'm asking myself what are the conditions that I can put in place to find more of those exceptional people. And I think about the 4 day work week is just one input in that, right? There's lots of things that go into it, but I do think that especially in a world of AI, like I think it's the war of talent that's gonna be, that's going to be more, um, more profound than anything. Can I just piggyback off of that? So we, you know, a star athlete, a star athlete is not working every day of the week at their craft. The star employees, the same kind of thing athletes build. Rest and recovery into their routine. It actually is part of why they're amazing. And so why don't we think of our top talent like that and you know it helps with retention. It also helps with recruitment. We talked in this conference about Gen Z and what they want out of work, so I think many benefits. I love that you've talked about both attracting that talent but also allowing that those talented people to do their best work. I feel really proud of the work that they're doing. What in one sentence, uh, and, and we really only have time for one sentence. Um, what's one rule of work that you think leaders need to retire if they want productivity and well-being to coexist as, as Melissa said. I would say Stop thinking you can just say you're going to implement something great like the 4 day work week or unlimited PTO or whatever the buzz thing is then just start acting in a way that your culture is supportive of having more of a balance, and culture is determined by the worst behavior that is tolerated. So if you are letting those behaviors slide, even if you have these policies that will become your culture. Yeah, and I just think that I would emphasize how much, how much time we waste at work and how much unproductive time we spend in our lives. And if we really focused on being more productive and more deliberate with how we spend our time, I think we'd all be like a lot happier both in our personal lives, but I think for for companies in their in their professional lives. So to me it's about how we manage our time. Thank you so much, both of you for this great conversation, everyone for, for your attention. Thank you.

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