THE REAL REAL IS OFFICIALLY CONSIGNMENT QUEEN
$173 Million later, the new funding comes just in time for the retailer to open its first store.
While it’s fair to say e-commerce has totally changed shopping — putting mall brands out of business and spawning a new category of fast fashion retailers on steroids — the luxury market has had a harder time breaking out online. High-end brands are notoriously uneasy about e-commerce for fear of eroding exclusivity, and sites like Amazon, Alibaba, and eBay, riddled with counterfeit goods, have not proven to be great business partners.You can get your Louis Vuitton and Hermès another way though: The secondhand market has found a way to make luxury and online shopping work, and San Francisco-based site The Real Real is leading the sector. This morning, it confirmed it’s just closed on $50 million in funding from private equity firm Great Hill Partners. The startup’s largest amount of funding to date brings the total amount it’s raised to $173 million. The upcoming wad of cash will go toward expanding the business, which consists of more than 800 employees and three giant fulfillment centers, and a company spokesperson confirms The Real Real will eventually file for IPO, though there are no current plans in the works.
The Real Real remains the fastest-growing of the bunch; even the Kardashians and Saudi princesses use it.
The RealReal is one of many secondhand luxury shopping companies that have leveraged the ease of the internet and enticed shoppers to buy and sell luxury online (although not all have survived). But while sites like Tradesy, ThredUp, and Vestiaire Collective have cashed in on this previously untouched sweet spot, The Real Real remains the fastest-growing of the bunch; even the Kardashians and Saudi princesses use it. The site boasts five million users, has sold four million items to date, and is expected to surpass $500 million in revenue this year.To Julie Wainwright, the company’s founder and CEO, the site’s success really boils down to trust — a major factor in both online and luxury shopping. Wainwright started The Real Real in 2011 during a time when the options for selling luxury were feeble.“There was nothing out there that provided the level of service and trust that needed to be added to the equation,” Wainwright told Racked in an interview a few months ago. “eBay can say 90 percent of its products are legitimate, but then what about the other 10 percent? There were consignment stores, but the space was always limited, and most of them weren’t big enough to be sophisticated. I wanted to construct a business that gives you the best of the internet, and then fills in where the internet leaves holes on trust, authentication and service. We take off of the top of eBay and the bottom off Sotheby’s.”Part of the appeal of the startup is that it employs luxury buyers, art curators, gemologists, and watchmakers to authenticate product — not quite as high-end as shopping at Christie’s, but not quite a pawn shop either. The Real Real has employees who visit homes to evaluate product in every major city in the US, and perhaps most importantly, the site takes ownership of listed items, so shoppers can feel secure when splurging — and oh, are they splurging.Listings have hit as high as six figures (while Wainwright wouldn’t confirm the average listing price, she has said that “Net-a-Porter[‘s] average basket is $430, and ours is bigger.”). These days, The Real Real is selling everything from clothing to art to furniture to diamonds, Wainwright told Racked that 25 percent of its customer base is men, which probably is a nod to the site’s robust list of watches and sneakers.The icing on the cake here is that The Real Real sees itself as a player that’s bolstering the luxury sector, not preying off of it. In 2017, it is expected to pay almost $300 million to those who are selling on the site, and the company says this money will then be spent “back in the primary market, continuing the luxury lifecycle.” The company is also collecting data on luxury brands, and is currently in conversations about potential partnerships with brands like Louis Vuitton, according to TechCrunch. Wainwright told Racked a third of its customers are millennials, and The Real Real studies which brands are popular by age demographic.
The company is also collecting data on luxury brands, and is currently in conversations about potential partnerships with brands like Louis Vuitton.“I’ve met with all the top brands and I tell them that I’m the gateway drug for their brands, and some are in trouble,” she told TechCrunch last month. “Dolce is in trouble. We pick it up from people over 40 [years of age] and sell it to people over 50. There’s a whole disconnect with its advertising and they know it. They aren’t reaching millennials at all. We can also predict trends… if you have Valentino Rockstuds, hand ’em over, because the party is over.”As part of its ongoing growth strategy, The Real Real is getting into brick and mortar. Wainwright tells Racked she can envision opening a giant store of sorts in five years that’s dedicated to secondhand merch — “a superstore in a major metropolitan area that has one floor dedicated to women’s fashion, one to men’s, one to home, and one for art.”For now, The Real Real is executing its plans for store expansion on a more practical level: This winter, it will open a shop in New York City’s Soho neighborhood that will double as a valuation space and a store. Wainwright has said that the new store will have 100 Birkins on the wall and well, nothing can really top that.