The RealReal luxury consignment Web site has raised $20 million in a Series C funding round. The funding will be applied toward “expansion of our operations and infrastructure,” said founder and chief executive officer Julie Wainwright. “Additionally, this investment will help us accelerate our supply and customer acquisition efforts.”
The site is expected to more than double its annual volume this year to $125 million from $55 million in 2013. It has 5,000 active consignors and 2.4 million members.
The RealReal’s investors include Canaan Partners, Interwest, Graycroft, Alan Patricof, E-ventures, Jack and Susie Welch and the Michael Kors Group venture fund.
“An IPO [initial public offering] is in the future,” Wainwright said, “but not this year or next.”
The RealReal already has outgrown its physical space, while adding categories such as men’s, fine jewelry, watches, fine art and home products. In June, the San Francisco-based company will move from an 8,000-square-foot office and warehouse on West 36th Street in Manhattan to a 125,000-square-foot facility in Secaucus, N.J.
“We have 2,000 to 5,000 pieces coming in and going out every day,” said Rati Levesque, chief merchant. “We get a few Birkin bags every day in the mail. We’ve even gotten Van Cleef & Arpels pieces in the mail. We have huge expansion goals for each category. We have 10,000 items on our waiting list.”
The RealReal focuses on consignors. “We can always sell anything we want to,” Levesque said. “We focus on inventory.” The site’s standard bearers include Chanel, Lanvin and Prada, and jewelry from Tiffany, Cartier and Van Cleef & Arpels. There’s blue chip art from Andy Warhol to Pablo Picasso. “If you have an appreciation for luxury, chances are you like great art,” Levesque said.
The RealReal accepts products “in excellent to pristine” condition. Every item is authenticated by gemologists (jewelry), appraisers (handbags) and curators (art). Unlike some Web sites, The RealReal takes possession of all items. “We accept returns on everything except handbags,” Levesque said.
Luxury merchandisers in 16 markets check out the goods first. “Once customers have bought from us, they understand the standards we have,” Levesque said.
Up to 70 percent of the purchase price goes to the consignor. Consumer prices are discounted by as much as 90 percent. The site’s customers aren’t averse to high prices, however. A pink diamond tennis bracelet recently sold for $265,000, and Birkin bags in exotic skins sell for $20,000 and up.
“Fifty dollars is our break-even price,” Levesque said. “Anything below that is hard to make money on.”
The RealReal has a joint venture in Japan that launched in September. Wainwright said, “There’s a lot of luxury product there. We’re looking all over the world. This is not a U.S.-limited model. We’ll do a mix of partners and going it alone.” She said the company wants to break into China.
Levesque three years ago was operating a store in San Francisco when she met Wainwright. “Julie approached me with an idea and I thought it was brilliant,” Levesque said.
At first, the women helped friends liquidate clothing and accessories. Levesque called Hollywood stylists and offered to pay them if they got a celebrity to consign. “Paula Abdul was a big consignor in the beginning,” said Levesque. “She had a lot of Hervé Léger and Zac Posen. Now we have celebrities coming to us.”