Luxury consignment veteran 2nd Time Around has entered the e-commerce world with its own web site.
Unlike e-tail competitors such as The Real Real, ThredUp and Tradesy, 2nd Time Around is known more for its in-store experience. The retail chain is over 40 years old, and now has 40+ boutiques across 12 states. Each boutique carries a curated collection of brands. Shoppers can buy brands such as DVF, Chanel, Hermès, Chloé, Céline, Rag & Bone, Theory and Tory Burch at a savings of up to 80 percent off retail.
According to the company, 12 percent of the chain’s sales were from social commerce or Instagram sales in 2015. And it was seeing growth in social commerce that contributed to the company’s decision to expand the shopping experience online so it can be a player in m-commerce.
Kristin Kohler Burrows, chief executive officer, said, “We saw pent-up demand for the product. This allows her to shop us in a different way. In e-commerce, she can search for items by brand and classification. In the stores, she can shop by classification. For us, the store experience and [online] is similar to a treasure hunt.”
According to Burrows, the stores will curate items that come in from consigners and post a minimum of five items each day. The company has set guidelines on the photo to be posted, as well as information about the item. The new site allows shoppers to scroll through a feed to find products that they like. The ceo said the sites will be optimized for mobile access. “Fifty percent of our customers are looking at mobile first,” Burrows noted.
Burrows said the stylists are “instructed to price one-third off retail. Everything is within two years old. It is very current. The handbags are half-off because they carry their value longer.”
Consumers who want to drop off items for consignment can do so at any time, and there’s also the option to set up an appointment to go through each item with a staff member. In larger cities, there is also a home appointment option. The company also just made available its style and closet edit feature, in which a stylist heads to the consigner’s home to help her shop her closet and provide advice on what looks good on her.
The business model 2nd Time Around uses provides for the chain to take 60 percent of sales, with the consigner receiving the 40 percent balance. With handbags, the split differs on the bag’s brand, since they have different values. Anything sold over $1,000 has the consigner getting 70 percent of the commission.
Burrows said the company is in the middle of an equity raise.
The company is owned by Generation Equity Capital. Gary Furst, Generation Equity’s founder and managing partner, said, “We invested in the company about seven or eight years ago….The investment has been unbeatable. At the time of our investment, the economy wasn’t doing so well.”
Furst said the company has been “growing very fast,” with just four or five stores at the time of its initial investment. He explained that the model has “virtually no risk,” as the company doesn’t pay for inventory, provides consumers with products that are brand new or nearly mint condition at 80 to 90 percent off retail prices, and almost always makes a full margin on what it sells. Furst said the consumer who shops at the boutiques “become addicted to coming in. No two stores are the same as the selection is different from store to store. The shoppers love the opportunity to browse and treasure hunt…. Customers love to try stuff on. They like to see the merchandise, and check to see if there’s a little mark or a blemish. They sell the stuff very fast.”
He said that once the curated items on the site are sold, they are taken off the sales floor, and if sold in the store first, they are then taken off the site. Furst also sees further growth opportunities for the company: “Our stores work best in the best neighborhoods. There’s plenty of white space around the country. It is in only 12 states, and even in those states there’s a lot more geographies that we can sell in.”
As for its exit strategy down the road, Furst said there are big public companies that want to be in the resale space, as well as some larger private equity firms that “are interested in what we’re doing and are keeping a watchful eye and having conversations with us. We’re not interested now. We’re making too much money.”
That said, Furst is thinking that maybe three years down the road might be the time for an exit, although if “someone comes in with a pre-emptive offer, we’ll always take that conversation.” In the meanwhile, he believes that the bricks-and-mortar component of the business gives 2nd Time Around a competitive advantage when compared with their e-tail counterparts.
Roy Liu, managing director at Hercules Capital, which provided the company with a term loan in December 2015, said, “There are still certain advantages to having a bricks-and-mortar relationship with your local customers. When it comes to clothing and accessories, there’s a certain aspect [of shopping] that is tactile.”
Liu said that with the retail industry going through a lot of changes — both from the general economic backdrop and from a secular basis within the industry as shopping behaviors change — 2nd Time Around’s model of pre-owned merchandise “should work in their favor.” He added that the company has been “profitable for some time. It has a good historical track record.”