An often overlooked niche for online marketplace sellers is the luxury goods market, and despite economic challenges hitting many consumers over the past year, this sector has grown steadily.
We have not covered The RealReal in depth on our site yet. But we think it’s time to keep a closer focus on what the marketplace is doing and where it’s heading.
But first, let’s take a brief look at the luxury business.
The luxury fine jewelry market is forecast to grow 6.5% (CAGR) globally through 2033 and 4.3% (CAGR) in the U.S. for the same time frame. Luxury handbags are booming as well, with an expected growth rate of 5.9% (CAGR) by 2031.
These data points prove that high-net-worth individuals are spending money, even during an economy that is sluggish.
While eBay, and some other “average” consumer online marketplaces, are trying to attract high-value buyers with new authenticated merchandise programs, one marketplace has specialized in authenticated, resale luxury goods for years.
With more than 30 million members, The RealReal is the world’s largest online marketplace for authenticated, resale luxury goods.
The marketplace has a rigorous authentication process overseen by experts providing a safe and reliable platform for people to buy and sell luxury items.
Hundreds of in-house gemologists, horologists and brand authenticators inspect thousands of items each day sold on TheRealReal.
What is so remarkable about The RealReal is that it has been in business since 2011, and raised over $356M in funding before going public in 2019.
Yet, over the past few years, it seems that only since high-value Trading Cards and Sneakers gained attention among consumers, eBay, StockX, GOAT, and others have taken the public spotlight trying to wedge themselves into the re-commerce business of high-value and luxury goods.
In its last quarter, The RealReal reported $440.7 million of Gross Merchandise Value (GMV) with the highest growth rates in ready-to-wear, handbags, and branded fine jewelry.
84% of its buyers are repeat buyers and its total number of active buyers reached 950,000, a 23% increase year-over-year (YoY).
By comparison to eBay, the marketplace is small. However, being small doesn’t mean it can’t be profitable for sellers, because it has a growing and loyal buyer base looking for luxury items and only luxury items.
What’s In Store for The RealReal in 2023?
The RealReal will focus on an initiative started in 2022 which is expanding its new consignor concierge service, an enhanced loyalty program, and offering better pricing transparency.
Consignor Concierge Service: Each consignor will have a dedicated Consignment Concierge who will assist them with authenticating, pricing and promoting every item, via text message, email, or phone call.
The Consignment Concierge consists of four luxury managers who will support consignors regardless of item value or brand and will remain the consignors’ point-of-contact for as long as they consign with The RealReal.
New Loyalty Program: The RealReal has completely overhauled its loyalty program to provide consignors with a clearer understanding of what they’ll earn and when, as well as enhance incentives across each tier.
Pricing Transparency: An improved pricing algorithm analyzes data from 28M+ items sold to date, current market and economic trends, and sales velocity to determine the best price to list an item.
The RealReal has already been piloting this new pricing algorithm with consignors to gauge the success of the update.
“Since our founding, we’ve been committed to, and have invested heavily in, making the luxury consignment experience seamless and frictionless,” said Rati Sahi Levesque, Co-CEO and President of The RealReal.
“We became the first and only full-service luxury resale marketplace that does all the heavy lifting for our sellers and shoppers, we have always helped our consignors earn more than any other secondhand marketplace.”
“These new areas of investment will help us deliver an elevated, luxury resale experience.”
The RealReal luxury goods marketplace is not new to the high-end game and continues to update the platform to offer more features to its members.
For sellers trying to sell luxury goods on marketplaces like eBay, The RealReal may be a better solution as listings won’t be drowned out by cheap imitations and fakes.
And with the luxury goods market projected to grow at a nice pace over the next 10 years, The RealReal may become a much bigger household name, at least in the right circles, and that means opportunity.
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