The online luxury consignment space is getting more crowded.
ThredUp, which claims to be the world’s biggest thrift shop, today is expanding into luxury with the launch of a beta site called Luxe. In entering the sector, ThredUp is taking on The Real Real, as well as other existing players such as Tradesy and the Vestiaire Collective as well as new entrants such as StockX.
While brick-and-mortar stores are closing at an unprecedented rate, online e-commerce sites are growing 20 times faster than the broader retail market and five times faster than off-pricers as they disrupt the landscape. The apparel resale sector is expected to grow 13 percent to $33 billion in 2021, from $18 billion in 2016, according to a ThredUp/Fung Global Technology study.
To jump-start its luxury inventory, ThredUp cofounder and chief executive officer James Reinhart is offering 100 percent commission to consignors for items sold through Labor Day, when the rate is scheduled to drop to 80 percent. “I’m thinking about how do we extend that even longer,” Reinhart told WWD in an exclusive interview.
ThredUp resells more than 30,000 items a day from a list of more than 35,000 brands such as Tommy Hilfiger, Gap, J. Crew, Lululemon, Disney and Lands End at discounts of up to 90 percent off retail prices. Reinhart said the site is on track to sell 10 million items this year.
“All the research we’ve done indicates that luxury items make up only 15 percent of the typical woman’s closet,” Reinhart said. “People who sell on platforms like The Real Real, still have a closet full of stuff that they didn’t consign. They also have Vince, Theory and J. Crew. In the world today, you have to send some stuff to this place and some to that place. We’ll pay 80 percent for items from 650 brands in luxury, more than anybody else is paying.”
Consignors can request a Luxe Clean Out kit from ThredUp. “We have an awesome bulletproof nylon bag,” Reinhart said. “You fill it with both high and low items. We’ll do the sorting, and put Luxe brands through special processing.”
Reinhart made it clear that he’s gunning after The Real Real, which is considered to be the leader in the online luxury resale space. “ThredUp launch to take on The Real Real,” said a missive from the company last week. By Monday, its confidence had grown to encompass the entire sector with, “ThredUp launch to take on luxury resale.”
Compared to ThredUp’s 100 percent commission, The RealReal, which reported $400 million in gross merchandise value last year, double its 2015 GMV, has a tiered commission scale: 55 percent on sales of $1,500 or less; 60 percent on sales of $1,501 to $9,999; 70 percent, $10,000 or more, and 80 percent for fine watches with an original resale price of $2,500 or more, and all Hermès Birkin handbags.
“We’re not worried,” said Julie Wainwright, founder and ceo of The Real Real, which recently signed a lease for its first brick-and-mortar store in SoHo in Manhattan. “They have a different model and a different infrastructure than The Real Real,” Wainwright said. “There’s room for both. It’s very hard for a business focused at the low end of the market to position themselves at the high end with all the support to deliver on that proposition.”
Reselling luxury items online isn’t so easy, said The Real Real’s Wainwright, who opened luxury consignment and valuation offices staffed by experts in six cities, including New York, Los Angeles, San Francisco, Chicago, Dallas and Washington, D.C.
Wainwright bristles at the idea of using technology to authenticate products. “The technology works off pictures,” she said. “There are things you can authenticate with pictures, like color, so it’s fine for some products, but not others. We’ve looked at doing technology as a first pass. It’s image recognition and has limited usefulness.”
E-commerce sites in a rush to get into the luxury resale business can buy products from re-sellers, which is risky. “You can buy products from vendors and they could be fakes,” said Wainwright, noting that about 5 percent of The Real Real’s offer consists of products from vendors. “There’s a lot of vendor product out there, but you get fakes, and you get some good products and don’t have a lot of pricing flexibility.”
Still, plenty of companies are entering the sector. EBay is reportedly planning to begin supporting luxury resale and is said to be working with Entropy, which developed technology to authenticate products. Even Saks Off 5th has begun selling used Hermès handbags on its web site.
Meanwhile, The Vestiaire Collective, a France-based online reselling platform for luxury goods, in January secured $62 million in funding, which it plans to dedicate to international expansion, particularly in the U.S. and Asia. Vestiaire has six million customers in 48 countries and consignors in 17 nations. The company lists 600,000 items for sale, and 4,000 new products are added daily to the site. France is Vestiaire Collective’s main market, representing 35 percent of total sales. Sébastien Fabre, founder and ceo of Vestiaire Collective, said the company’s annual sales growth has averaged 70 percent.
StockX, “the world’s first stock market for things,” featuring a live bid/ask marketplace, recently stepped out of its limited-edition sneaker comfort zone and into the luxury resale space with Hermès Birkin and Kelly handbags and watches such as Rolex and Patek Philippe.
Joshua Luber, cofounder of StockX, said “bags depreciate some amount, about 20 percent to 50 percent for Chanel and Louis Vuitton. We sell Yeezy’s for a 500 percent premium, a pair that was originally $200, sold for $1,000. In the bag world, we are trying to solve a problem. The Real Real’s products are guaranteed authentic, but you can’t tell the world, ‘I’m looking for this bag,'” Luber said, adding that StockX gives buyers a forum for addressing sellers with their needs. “If I give a bag to The Real Real, they take 30 percent. With others, like eBay and Tradesy, I don’t really want to run a store.
“There are 20 to 30 other categories we might do next, including street wear. In six weeks, StockX already has 6,000 sku’s of designer handbags,” Luber said, noting that StockX has benefited from the deep pockets of cofounder Dan Gilbert, who is chairman and founder of Quicken Loans and the owner of the Cleveland Cavaliers, and celebrity investors such as Mark Wahlberg.
With the new players comes increased competition for talent with online luxury consignment experience. The watch team at StockX is being led by Reginald Brack, former senior Vice President and international head of retail watches at Christie’s, while Cynthia Houlton, former vice president of business development at The RealReal.
Asked about the available stock of pre-owned luxury products, Reinhart said, “We’re hoping people send Birkin, Louis Vuitton and Chanel handbags. For apparel, we know they may not be thinking about us in that way. But that’s [luxury] been the vision all along.”