The RealReal is an innovator when it comes to evaluating and utilizing wardrobe apparel. It stands as the premier $6B leader in the global luxury resale market. In the past, it was difficult to acquire clothing that was exclusive due to cost. The price and scarcity of many of these items made them rare investments for a select few. Today this is not the case at all for strategic shoppers. This company presents an entirely new paradigm by encouraging the purchase of pre-owned goods at budget-friendly discounted prices.
The RealReal is described as a high-end consignment resource, which is currently valued at $450M. It serves dual purposes by providing tools for both shoppers and sellers. Their clients have the opportunity to resell items, such as Louis Vuitton merchandise that they no longer use. These clients receive a cut of the price that their item sells at. Due to this advanced and trendy method, the RealReal has successfully sold 8+M products, including luxurious clothing, accessories, and home goods on its website.
These types of items also sell at the company’s pop-ups and physical store locations in New York City and Los Angeles. There are 9M members actively participating in the process through the RealReal system. The company’s San Francisco-based Chief Merchant, Rati Levesque studied economics and owned an upper scale boutique before successfully launching the company in 2011. She is quoted here in a condensed fashion, which has been edited by Jenni Avins:
It is easy to see our company as a sort of gateway drug. Members may decide to invest in a variety of items, such as something by Chanel. This is a quality brand that always looks and feels amazing because of its sensational fabric and designs. Once a member buys this item they may consider a Chanel bag as their next purchase. This is actually what I refer to as the lifecycle of luxury for many people. My philosophy, however, is making well, buy well, and resell.
In my opinion when fast fashion does not hold its retail value, luxury is the beneficiary. Currently, according to trends, luxury is doing extremely well. I believe this is because strategic shoppers see this as an investment. These are not frivolous when they can earn you between 60% and 80% back of your initial purchase. Mindsets are being transformed, according to our data. About 80% of our consignors utilize their commissions to turn around and shop in the primary market.
This becomes nothing but a positive for the primary market. As merchants at the RealReal, we are essentially educating people and providing them with smarter ways to shop and invest. This information shows them what’s trending and in what direction it’s trending. It also helps them to decide what to consign right now and what items should be held on to. We are able to acquire this data in real time and consistently because we are adjusting prices to meet supply and demand.
Our sales team gets this valuable information and they are able to share it with clients in their homes. If products like sling-back shoes are trending and selling really well, it benefits consigners to put theirs up for sale. By doing this it is possible to earn a high percentage of their investment back. Another strategy we apply is looking at the history of a product. If it hasn’t been selling, the problem could be that prices are too high. Pricing lower for this inventory also provides useful information to our members.
Our data is beneficial to in-store stylists, as well. They can utilize this data to assist clients with sales decisions. There are instances where this encouragement promotes sales for items that can be resold in the future at a profit. This certainly convincing with it is possible to get a 70% earning on this same product once you’re done with it and it’s resold. There are other details and factors that impact how and when things sell.
For example, Phoebe Philo for Celine may announce that she’s leaving. This could result in a change of pricing for Celine. Search results might increase by 30% due to this and in real-time it is easy to see an increase in sell-throughs. This makes way for an increase in pricing, as well as, being able to establish certain items as collectibles. These are generally considered to be items that are limited and cannot be acquired anymore.
Shoppers should see our stores as miniature warehouses or pick-pack-and-ship e-commerce centers. Everything that is available in-store can be purchased online. We utilize the RFID system so there is a chip in every tag. This provides flexibility for those in individual shopping locations. Shoppers in LA, desiring a Louis Vuitton item will receive a push notification. This alerts them that the Louis Vuitton they want is available in our LA store. We facilitate better shopping experiences by promoting investments