Julie Wainwright doesn’t do easy.
The founder and chief executive officer of The RealReal seems to gravitate toward challenges, especially when she was developing her company. “I wanted to do something really hard so that Amazon wouldn’t be able to replicate it,” she said. “I wanted luxury, where [Amazon] couldn’t go out and get the products from a supplier. I thought, ‘I’ll take the top off of eBay and the bottom off of Sotheby’s and Christie’s.'”
Putting those firewalls in place included “mastering a business model with a hard skill set,” said Wainwright, who tries to read one new book each week. If she weren’t blond and perky, she might come across as the smartest girl in the class, without the glasses and condescending edge. “I knew the company had to be tech-driven and potentially disruptive.”
Not only has The RealReal been disruptive, it’s been transformative. The e-commerce site sells luxury fashion, fine jewelry and watches from brands such as Chanel, Gucci and Valentino; Cartier and Bulgari, and Rolex and Patek Philippe, among others, and recently launched men’s wear. There’s also blue chip art, furniture and home decor.
The fact that the products had previous owners is incidental. Wainwright romances the merchandise, using the term “pre-owned” rather than “used,” which brings to mind the offerings at dusty vintage shops and consignment stores; an editorial approach with themed sales such as “Not Your Dad’s Plaid” and “We’re Loving Pleats,” as well as uniform product images.
The RealReal has removed much of the stigma surrounding previously worn goods, changed consumers’ purchasing behavior and created a viable outlet for a heap of apparel that otherwise would have ended up in a landfill.
With $500 million in gross merchandise volume projected for 2017, The RealReal is projected to grow by 30 to 40 percent for the foreseeable future, Wainwright said, adding, “Our goal is to reach $1 billion in the next couple of years.” The site is expected to expand overseas. An initial public offering is still a few years away, she said. The site’s rapid growth is the reason it is receiving the 2017 WWD Honor for Best Performing Company, Small Cap.
The RealReal offers white glove concierge service, where staffers visit potential consignors’ homes to look over and pack up any products that meet the site’s criteria. Luxury valuation offices have opened in six cities, where consignors can have fine jewelry and watches authenticated by gemologists and horologists.
Men’s wear recently launched on the web site. The RealReal on Nov. 9 will move into physical retail with its first store bowing in Manhattan’s SoHo neighborhood, one of a dozen units planned for the next few years. “We’re going to create an environment around learning,” said Wainwright of the store. “We’re staffing the store with experts. It will also be about aesthetics. There’s a deep appreciation in this company for the products we sell — and I mean deep.
“We’re getting beauty and home brands that want to sell new product in our store,” Wainwright added. “The lines are starting to blur a little. We’ll have space for special sales and we’re talking to certain people.”
Wainwright’s “a-ha” moment came while she was shopping with a friend in San Francisco. “The store had new styles in the front and a little area in the back called The Vault,” she said. “My friend bought Chanel, Louis Vuitton and Prada.” Wainwright was aghast. “‘You bought on consignment?'” she recalled saying. To which her friend replied, “‘I don’t care if it’s previously owned.’ I thought this could be a big business.”
Her instincts were right. The RealReal has raised $173 million since its inception, but Wainwright said she didn’t know how hard getting funding would be. “I didn’t try venture capital the first year,” she said. “I got seed investments from friends and family and I had an angel list. When I started going out to raise money, I was told there would be no affinity for my business on that [e-commerce] platform. I started trying to raise venture capital, but I didn’t get any resonance until I began talking to women. The men in Silicon Valley have no affinity for fashion.
“The luxury resale market is a $1.5 trillion industry,” Wainwright said. “More than 50 percent of merchandise is never consigned. The market is big.”
Big enough to admit other players, such as Thredup, Tradesy and Vestiaire Collective? “It’s pretty hard to go high-end,” Wainwright said. “They don’t have large luxury customer bases. I was pretty worried about Thredup five years ago, but now, we have at least 25 gemologist and brand authenticators. We have an infrastructure to evaluate authenticity. Their average order size is really low. The product mix is similar to the Good Will and Salvation Army. Luxury is an adjunct business. Everyone wants to move up.”
Wainwright wanted to move up, too. Her early career revolved around unfashionable products such as Clorox bleach, videos and pet supplies. While she quickly rose to the c-suite, getting her first ceo title by the time she was 30, Wainwright was less-than-inspired by the companies she was leading, and acutely aware that her window for finding a new job was closing.
It didn’t help that one of the companies Wainwright helmed was sold out from under her and another shuttered. She took over Reel.com in 1997 from founder Stuart Skorman, only to have the company sold two years later. Wainwright in 1999 became ceo of Pets.com, which launched an IPO then stopped operating less than a year later. “[Amazon founder] Jeff Bezos was the biggest investor. Pets wasn’t a big success,” Wainwright said. “He’s a zero-sum guy.”
At that point, she said, “I felt like my personal opportunity had dried up. I was a woman over 50. I was a ceo people brought in to run a company. The offers coming my way weren’t great. The opportunities were not what I wanted to do. I thought, ‘I better do my own gig.’ I knew I had to create my own business.”
A technology geek with an artistic bent, Wainwright never doubted her ability to start an e-commerce company. “I come from an entrepreneurial family,” she said. “My father had an art and design company. My dad was a really good entrepreneur. He did package design for Chevy and Kohler.
“My mother and father met in art school,” Wainwright added. “My mother wanted to work in the fashion industry and be a fashion illustrator. I grew up in an art-ish house. The top designers are all artists. Their vision is astounding. I had a mother who embraced fashion. It’s always been a joy to see people envision fashion and fabrics. I remember the Alexander McQueen show [at the Metropolitan Museum of Art]. Once you see something like that…Issey Miyake did a show with color and pleating. It took my breath away.”
Having The RealReal acknowledged as a valid player in the fashion eco-system is important to Wainwright, who pointed out that the company is the first luxury member of the Ellen MacArthur Foundation’s CE100 USA, a group of leading companies in the circular economy.
“We talk to designers on a regular basis,” she said. “People are becoming conscious that we’re a key component in the circular economy. When we pay our consignors, they go out and spend the money. It’s a smart way to think about fashion, jewelry and watches. It should have a resale value. Consumers tell us, ‘You changed the way I buy. I now consider the resale value when I purchase something new.'”
The fashion industry is starting to take notice. The RealReal will launch a partnership with Stella McCartney next year, one of the first luxury designers to recognize consignment. McCartney and The RealReal will educate and empower consumers to consign and the designer will have a pop-up shop inside the SoHo store.
The RealReal is “still talking again to Neiman Marcus,” Wainwright said. The e-commerce site in 2015 created a gift-card program with the retailer that offered The RealReal’s consignors commission payment in Neiman Marcus gift cards with 10 percent added to the value of the payout. The program encouraged consignors to put their money back into the luxury retail market and consign again with The RealReal once they’re done with those items, completing the full luxury life cycle.
Wainwright, a glass half-full type of person, can find reasons for being optimistic in dismal metrics, such as a consumer research study by Bain of The RealReal’s awareness. “It found that we have minimal recognition. Ninety-five percent of the people in our target audience don’t know us,” she said. “Now we’re running TV commercials on Bravo and E, and we’re shooting new fall ads. We’re just getting started.”