Purpose The purpose of this paper is to analyze the business model of second-hand fashion stores and explore their challenges/opportunities and suggest potential strategies for second-hand fashion retail stores. Design/methodology/approach A qualitative research method using in-depth interviews of convenience sample of owners/store managers from within the USA was employed. Findings Contrasting the traditional retail stores, customers are the primary partners and suppliers of second-hand fashion stores. These stores retain minimal profits given a business model that typically involves sharing profits with customers. Cheaper price, thrill of finding great deals, value for brands and variety are the primary reasons mentioned by respondents for shopping at second-hand stores. Research limitations/implications Limitations include the use of a convenience sample of store owners/managers as well as the research is limited to women and children’s stores. Respondents of the study were from the same geographical region and the characteristics of the redistribution markets may vary in a different region. Practical implications As a means to foster textile waste reduction through second-hand clothing business, these stores could adopt innovative revenue streams, additional partnerships, and improved fashion and store appeal that may be effective in increasing profits and the number of customers. Originality/value This study is one of the early attempts to examine the business model of second-hand fashion stores, a form of collaborative consumption in the fashion context. The study contributes in promoting second-hand fashion stores as a sustainable business model in the fashion industry.