Handbag resale startup Rebag on Thursday announced it's collected $25 million in a Series C funding round, led by private equity firm Novator and joined by existing investors General Catalyst and FJ Labs.
The investment brings the e-commerce site's total funding raised so far to $52 million, according to a company press release.
The money will fuel its ambitious plans, including adding to its five locations in New York and Los Angeles. Its medium-term plans are to expand to 30 physical stores, both standalone and in malls. Rebag will also use it to scale its technology and product teams, with plans to triple its 100-person workforce in the near term, and strengthen its leadership, the company said.
Resale taps into the treasure- and bargain-hunting penchant that also drives off-price retail, and like off-price, the market is proving to be both popular and enduring.
Rebag joins The RealReal in confining itself to the luxury side, though it also offers a more limited range of merchandise. In a statement on Thursday, Rebag founder and CEO Charles Gorra suggested that Rebag will ultimately provide the last word in what a high-end item is worth, predicated on intel furnished by its tech prowess. "Our goal is to become the standard for the luxury resale industry, just like Kelley Blue Book is the main resource for the auto industry," he said. "We will make very ambitious releases shortly to provide tools that simplify and standardize the resale process."
The company is investing in people that are supporting those ambitions. Recent hires include Chief Technology Officer Jay Winters (who arrived from Delivery.com and Goldman Sachs) and Chief Marketing Officer Elizabeth Layne (who was previously at Bonobos and Appear Here). Both are "veterans in scaling ecommerce and marketplace businesses," the company said.
The market is significant, on pace to reach $41 billion by 2022, according to a report last year by second-hand apparel website ThredUp, which found that shoppers appreciate the opportunity to acquire nicer things. Two-thirds said they buy better brands than they would if shopping at full price. But that doesn't mean that resale shoppers are all strapped for funds — 13% are millionaires, ThredUp found.
The focus on high-end handbags also looks smart. Luxury is helping boost sales of accessories, according to The NPD Group. Fashion accessories introduced between November 2016 and September 2017 drove the most incremental sales gains, yet represented just over a third of annual 2017 sales. Designer styles were the only brand segment to grow across the fashion accessories industry that year, accounting for 12% percent of industry dollar sales, following 10% growth in the previous 12 months, according to an NPD report emailed to Retail Dive last spring.
But there are challenges, notably the need to authenticate such items and the resistance by some of the original brands. Chanel last year, for example, took The RealReal to federal court with claims that the consignment retailer sells fakes, despite its in-house authentication process, allegations that the company denied to Retail Dive.