THE REALREAL AND LUXURY SHOPPING.
The RealReal is a fashion site that sells second-hand luxurious goods from brands like Louis Vuitton and Gucci. The company operates by obtaining products from sellers, sells them and share the proceeds. Though secondhand, the rights go through a rigorous authentication process before being taken into the company and even after purchasing the goods from the sellers the company still holds contests to find fake items and the authenticators are awarded. The company was started in 2011 by Julie Wainwright and has raised $170 million in the seven years. The company’s source of funding for years now has been through private financing. Although Julie Wainwright, the CEO, had said the next financing would be through an IPO, she is currently pitching to investors on raising funding of $100million. The reason for this fundraising could be two, although Wainwright hasn’t consented to any yet. One idea would be as the company stands it hasn’t reached a scale by which investors and acquirers in the public market would be appealed therefore it needs more capital and funds to show that it is capable of operating as a long-term stand-alone business. The other reason might be it has come to the realization of the company and its investors that unlike their initial thought, this business has a bigger opportunity therefore they should invest in its growth to obtain a bigger market share.
The RealReal is one of the few still standing online businesses focused on fashion resale. Other companies include ThredUp that sells luxury labels with other affordable brands, Poshmark that no longer focuses only on selling secondhand clothing and Tradesy which works based on a peer to peer model whereby buyers get goods directly from the sellers. Previously various luxury brands thought of companies like RealReal as enemies, but they no longer do since they realized it is those companies that lead to their growth. A buyer is more likely to invest if they know they can resell the luxurious good and they will always go back to buy from the same brand they sold.