The resale market is super popular right now, especially for those who want to buy and sell luxury, big-ticket items. One place where people resell their luxury items is through The RealReal. The RealReal is the world’s largest marketplace for authenticated luxury resale items. Their goal is to sell people’s items at the highest price the market will demand. The process is interesting but can be complicated for someone who has never consigned their items before. This article gives some information about the company itself and explains how their consignment process works.
Founder – Julie Wainwright
Before The RealReal
The RealReal was founded by Julie Wainwright in 2011. Before founding the company, Wainwright was the CEO of Pets.com, an online retailer that sold pet supplies. She became the CEO of Pets.com in 1999 and was the CEO when the company went public on the stock market. 268 days after its initial stock offering, Pets.com ceased operations and was liquidated in November 2000. According to Kirk Cheyfitz, author of Thinking Inside the Box: The 12 Timeless Rules for Managing a Successful Business, Pets.com is “one of the shortest-lived public companies on record.” Wainwright became a public failure and was told her career was over. Wainwright knew that no one would ever believe in her after what had happened, so her only option to still have a career was to start her own company, The RealReal.
Inspiration Behind The RealReal
The inspiration behind The RealReal came from Wainwright’s parents and her upbringing. Both of her parents were artists who believed in upcycling and rescuing clothes and household decor from the trash because they saw the beauty in items that weren’t exactly new. Wainwright says, “My mother would go to people’s homes and, if for example they had a nice rug, she’d say, ‘When you’re ready to sell it, I’ll buy it from you.’” Wainwright would also go with her father to the junkyard to scavenger for beautiful pieces that her father could refurbish and turn into something else. She also frequented boutiques around San Francisco. While at those boutiques, she noticed how customers would always go to the “consignment” section. She realized that there was a market for consigned items, and this gave her the idea to start The RealReal.
Like many new businesses, Wainwright worked out of her home in Marin County, California at first. She shipped the first The RealReal orders in June 2011. Two years later, she expanded operations into a warehouse. The company has continued to grow and expand, yet their headquarters has always remained in San Francisco, California.
Make well. Buy well. Resell. The RealReal’s mission is to extend the life of luxury goods and enable more people to own and appreciate them while giving their original owners the opportunity to maximize the value of their investments.
For the vast majority, they do not have the money to buy luxury items directly from the shelves of luxury stores or simply do not want to buy them at retail price. On the other hand, those with luxury items may find difficulty in selling their items on their own and want to be able to show that their item is authentic. A platform like The RealReal is the link between the two groups and makes the process easier for both sides.
The RealReal’s vision is to empower people to contribute to a more sustainable future and grow a vital community around the circular economy. They want to move toward a world where all consumption is conscious consumption.
Sustainability is a major concern today, especially in the fashion industry. Brands work towards being more sustainable, but The RealReal is sustainable through and through. They don’t want to realize their vision just through their processes but also through creating change in legislation. The RealReal is working with congressmen and multiple people in the government to help change laws to increase the awareness of the importance of recirculating used goods and conscious consumption.
What You Can Sell
The RealReal accepts a wide range of items. All of their categories have different restrictions, so it is recommended to check their website for what they will and won’t take.
Top Searched Items
The RealReal also lists their top searched items, which can give consigners an idea of what will easily sell.
Examples of Sales
How to Sell: From You to The RealReal
To enter The RealReal’s website, you need to make an account. Once you have an account, you can click on the “sell” button. This prompts you to give some of your information and go through a few steps. The first step is to choose how you want to hand over your items. You can set up a free concierge appointment where a Luxury Manager can pick up your item(s) from your home. Another option is to drop off your item(s) at one of The RealReal’s locations. You can either select whether you want an appointment or just want to do a walk-in. The last option is to ship your item(s) using a free shipping label provided by The RealReal. Once they receive your item(s), it will go through the authentication process.
Authentication and Pricing Process
The RealReal has the most rigorous authentication process in the marketplace and is the only resale company in the world that authenticates every single item they sell. The RealReal has an in-house staff of experts including horologists, gemologists, art curators, and luxury fashion authenticators. who inspect the items for authenticity and value. As many of the authenticators have specialties in certain areas, they will typically inspect the items of their specialty. Many of those specialty authenticators come from the brands themselves (Tiffany & Co., Hermès, and Rolex) and auction houses (Sotheby’s and Christie’s). On top of specialty authenticators, The RealReal also has a quality control team that will pull high-risk items for further review to prevent fakes from reaching the market. As the market is changing constantly, the team receives daily training updates to be informed on the latest developments of brands and counterfeiters. The authenticators inspect thousands of items each day.
In October 2019 alone, The RealReal received nearly 490,000 products for consignment. They rejected just over 4,000 products due to concerns uncovered during authentication. The quality control team rejected an additional 139 products during their review.
The RealReal uses real-time advanced pricing algorithms for intelligent pricing that is derived from internal data and external market trends. They determine their pricing based on four factors:
- Brand Resale Value: The original cost the brand listed the item(s) at
- Market Trends: The current trending patterns, colors, silhouettes, and styles
- Item Condition: The closer the item is to pristine condition, the higher its resale value
- Recency: Newer items have a higher resale value with an expectation for vintage and rare items
How Commission Works
As it is for any consignment process, you earn more for in-demand, high-value pieces. You can earn up to 85% of each item’s sale price by consigning with The RealReal. This is 3 times more than other resellers. The RealReal prices items at the highest price they can. Once your item is sold, you can get paid through direct deposit, site credit, or a check. Commission payments are issued on the 15th of the following month in which items were sold. For example, if your item sold in January, then you’ll receive your payment on February 15. For Site credit, you get it within 2 weeks. Most items sell within 30 days, but if an item is taking longer to sell, then The RealReal will apply discounts to the item to drive increased demand. Even if there are discounts on your item, you will still get a commission based on the initial price The RealReal listed the item at.
What You Can Buy
What people sell is what you can buy. Here are some of the top categories to help you get an idea of what The RealReal has.
Top Fine Jewelry and Watches Brands
The RealReal was exclusively an e-commerce platform until they opened their first permanent retail store in New York City in 2017. They also opened pop-ups in San Francisco and Las Vegas that same year. In the following years, The RealReal opened up more locations throughout the United States. They currently have 16 retail locations. Locations include:
At these locations, customers can bring in the items they would like to consign, buy from the stock that particular location has available, and pick up the items they purchased online.
As the blowup of Pets.com and Wainwright’s career was so publicized, those in business were curious how well Wainwright’s company would do. In 2015, Forbes wrote in an article that the estimated value of The RealReal was $300 million and that “the startup is in a much better place than Pets.com ever was.” In 2017, The RealReal received the award for Best-Performing Company in the small-cap category from Women’s Wear Daily, and by the end of that year, they had over 950 employees. In 2018, the company had raised $288 million in venture capital funding. At this point, The RealReal was still a private company. The RealReal went public on Nasdaq under the symbol REAL on June 28, 2019. The company raised $300 million during its initial public offering (IPO). In The RealReal’s end of 2021 press release, they stated that their gross merchandise value (GMV) was $1,482 million and their total revenue was $468 million for the entire year. They have over 25 million shoppers, sold over 23 million items, paid $2.5 billion in commission, 80+ brand partnerships, and hundreds of experts and authenticators on their team.
Overall, the concept of The RealReal is genius because it has the service aspect that caters to two separate groups and also promotes saving the environment. When looking at the big picture, it was almost a blessing that Pets.com didn’t work out for Wainwright because now she has her own successful company and proved to people that one can come back from a public failure and be better than ever. She says that The RealReal’s greatest accomplishment is “Bringing awareness to the amount of fashion in landfill and the incredible benefits of buying and consigning goods, previously owned goods.” We hope that through this article, The RealReal’s consignment process became a bit easier and that everyone can be more conscious of their fashion consumption.