Charles Gorra, founder and chief executive officer of Rebag, the digitally native luxury resale business with five stores, believes several massive trends are powering the resale market.
The first driver is that Millennials are seeking sustainable products; the second is value shopping, particularly after the recession, and the third is that the sharing economy is rising and people want to be asset-less. Witness the success of Lyft and Rent the Runway, he said.
“Consumers want to be smart with what they own,” said Gorra, noting that the resale market is becoming mainstream and heading to $40 billion by 2022. The current size of the resale market is roughly $20 billion.
Gorra believes that the trajectory of resale shopping is similar to what happened with online shopping 20 years ago. He recalled that in 2000 when Net-a-porter launched, people were skeptical about whether customers would buy luxury online. Fast-forward 15 years, and you see Net-a-porter, Yoox and Chanel investing in Farfetch .
“We think resale is going through some of these motions,” he said. “The same skepticism that was around online about two decades ago has somehow replicated itself in that theme. In reality, there’s been a huge shift toward the resale mind-set post-recession.”
Specifically, he pointed to Richemont and its acquisition of watchfinder.co.uk, which he called, “basically Rebag for watches in the U.K.”
“Those younger generations are defaulting to resale. They decide to make secondhand their first choice, and that’s what we think is happening now and empowering the space,” he said.
He said Rebag has created the luxury experience, especially in their stores, as well as online. “You will feel like you are in a luxury boutique. It will eliminate the bias you have about secondhand. We try not to even use the word, ‘secondhand.’ We are very curated and we provide authenticity, and we try to re-create the experience,” he said.
Gorra said the hardest work they have to do is on the sale side “and convincing people to sell.” Rebag is focused on the top 50 brands in the world, including Chanel, Hermès, Louis Vuitton and Gucci. He said the value proposition is extremely strong.
“The hardest thing is how do you get someone who owns and loves their purchase to part with it?” Gorra said. Only 10 percent of the supply is being addressed, and 90 percent of the market is dormant, he noted. Gorra said the company’s philosophy is to go after the sellers, so all that dormant product can surface.
“That’s why we purchase the goods. If you go to our store, we do that instantly, or within an hour. This idea of immediate liquidity will help surface all that dormant product,” he said.
One feature they’ve developed to make luxury mainstream is “Rebag Infinity,” where for every product one buys from them, Rebag guarantees they will buy it back from the customer for 70 percent of what they paid, within six months. “It gets them moving into that six-month cycle. The first bag you buy is really your gateway to the Rebag journey,” he said. Gorra said the average ticket at Rebag is four figures.
Asked by an audience member about the importance of stores, Gorra responded, “Stores are reasonably new for us…It’s been game-changing.” Gorra said they plan to expand their fleet of five stores (in New York and L.A.) and open 30 more stores in the next three or four years.
“The value of the stores works because of the high average ticket. You may have been to the stores. We have a Birkin wall. We have 40 Birkins. We have $1 million on the shelf. When that products moves, we can pay the outrageous rent.”