“Four years ago, the conversations were quite different, brands were wary,” said Allison Sommer, The RealReal’s director of strategic initiatives. “Today, we’ve never had so many brand inquiries and we’re having a lot of good conversations.”
While those conversations are likely not with Chanel, which is suing The RealReal in an effort to fully control its post-retail market, Sommer pointed to full partnerships with the likes of Stella McCartney and Burberry as showing how brands working with resale instead of against it can be beneficial.
“There’s starting to be an understanding of how resale fuels the market,” Sommer said. “By listing on The RealReal, we’re introducing new people to your brand, people who were probably shopping fast fashion and are now having their first introduction with a luxury brand. And eventually, they’ll graduate to the primary market.”
She added that even those already shopping new at retail are looking to the resale market to inform their shopping choices. “Customers are smart. They’re looking at what the resale value is [of a product], which can also reduce the cost to entry.”
But there are still concerns around knock-off merchandise making its way to The RealReal and for brands like Chanel, concerns at having employees it has no hand in training working to authenticate its product. Since the company went public in June at a valuation of about $1.7 billion, it’s stock has trended down, due at least in part to renewed scrutiny around the quality of all of its products and its authentication process. The company’s market capitalization is currently at roughly $1.5 billion, down from a peak right after it’s June IPO of $2.4 billion. On Nov. 12, the same day Sommer spoke at WWD’s forum, The RealReal founder and ceo Julie Wainwright sent out a note to shoppers and investors about the company’s authentication process. She noted that in October alone, the company rejected over 4,000 items over authentication concerns, out of a total 490,000 submitted for consignment.
“The RealReal has the most rigorous authentication process in the marketplace,” Wainwright wrote. “We are the only resale company in the world that authenticates every single item we sell.”
And people are still shopping The RealReal, regardless. It’s total revenue grew 55 percent to $80 million for the third quarter, and it’s now sold a total of 11.5 million items and paid out $1 billion cumulative to consigners. The company isn’t letting any authentication struggles hamper it’s international ambitions. Although it ships internationally, The RealReal only accepts goods to sell from the U.S.
“International is on the horizon,” Sommer said. “It’s definitely something that isn’t slowing down…and something we’re looking at in the next couple of years.”