The RealReal Dominates The Second-Hand Luxury Market
In the second-hand market, fake or poor-condition products are what gives the industry a bad name. The RealReal is now raising the bar when it comes to quality control and they have proven that second-hand goods have a place in the luxury market.
They care so much about quality that they give free workshops on how to spot fake items. For example, they will sample the quality of leather handbags to see if it has a suspicious smell that it came from a low-quality factory. If the key to the handbag does not operate smoothly, it is another red flag that it could be fake. The details about their workshops were featured in The New Yorker.
Since 2011, Julie Wainwright has taken the company further than her original vision and now it is one of the top fashion companies in America. She was behind the companies Reel.com and Pets.com, in which she transferred over her knowledge to the fashion industry. These brands continue to remain popular but do not match the same income level of her new clothing venture.
Not only has the company been able to take hold of an under-utilized market, they have brought in buyers that would have not otherwise purchased used luxury goods. With second-hand in the spotlight, even small companies have seen the impact of The RealReal.
The vision for Julie’s company came from a successful second-hand shopping spree in San Francisco. She is a typical buyer of retail luxury handbags and jewelry but she never expected to find good brands in consignment shops. It wasn’t long before she accumulated a collection of Louis Vuitton, Gucci, and other high-end brands for such a low price. This made her realize that there is a lot of potential for used goods.
After her experience, she decided to auction off her good in eBay and local stores and had little success. Being an entrepreneur herself, she realized that there was huge room for improvement in the underutilized industry. This is why she had invested herself in buying a warehouse for the purpose of buying and selling luxury products. It is now one of the most successful luxury boutique operations on the planet.
Over 8 million users have registered on her site and at least half of them have some sort of engagement. The website is set up to attract those that would normally buy from retail stores and many will not know that it is a consignment shop at first glance. The elegance of the photos and descriptions have such an allure that her company can sell used purses at premium prices. With higher quality controls, the company’s reputation grows as there is a very low volume of fake products flowing through the website like other top clothing dealers.
Taking a look at their Instagram profile, it is quite clear that they focus on quality and user engagement. Perfectly crafted shots are taken in key parts of New York to present the prestige of wearing luxury clothes in a luxury-loving city. Targeting social media is the key for large companies like RealReal to gain market share.
Venture capital funding is clearly a key part of RealReal’s success. Hundreds of millions of dollars have gone into the company in recent years and there are more deals along the way. According to a 2017 post by Tech Crunch, the company had scored a $50 million funding deal with Great Hill Partners.