The RealReal hunts for more funding amid IPO buzz
The RealReal CEO Julie Wainwright is making the rounds with investors in hopes of collecting another $100 million in funding, ReCode reports, citing multiple unnamed sources.
The company last year snagged $50 million in growth equity financing from private equity firm Great Hill Partners, bringing the company's total funding so far to $173 million. The RealReal didn't immediately return Retail Dive's request for comment on ReCode's report.
- Last month the luxury resale site hired former Walmart executive Jun-Sheng Li as chief operating officer and former Amazon executive Len Eschweiler to the newly created position of chief revenue officer. The company also expanded its brick-and-mortar footprint with a 6,000-square-foot pop-up shop in Las Vegas that was open from February until this past weekend.
Re-commerce upstarts like The RealReal, which has snagged the luxury end of the market, are growing 20 times faster than the broader retail market and five times faster than off-price retailers, which offer a similar treasure hunt, according to a report last year from Coresight Research (formerly Fung Global Retail & Technology). Clothing, shoes and accessories currently make up 49% of total U.S. resale sales, CoreSight said.
The total U.S. apparel resale market (brick-and-mortar and online) will grow at a compound annual growth rate of 13% from $18 billion in 2016 to $33 billion in 2021, according to CoreSight. Second-hand apparel site ThredUp calculates that the resale retail market is on pace to reach $41 billion by 2022, with 49% in apparel, according to its own report released earlier this month.
While many U.S. full-price retailers (particularly department stores) are experiencing soft consumer demand, the "re-commerce sector" is thriving, attracting both customers and investors. Along with the $173 million that has flowed to The Real Real, ThredUp, which is a managed marketplace offering all brand tiers, has garnered $130 million in funding. Peer-to-peer marketplace Poshmark, also offering all brand levels, has had $153 million in funding. Other resale players include Rebagg, Depop, Tradesy and Grailed.
In the past, Wainwright has more than once said that its most recent investment round would be its last before an initial public offering, but the company has since collected more private funding instead, ReCode noted.
Shoppers in the space see an opportunity to acquire nicer things, ThredUp found. Two thirds said they buy better brands than they would if shopping at full price.
That leaves The RealReal particularly well positioned in the space. Founded in 2011, the company says it provides the largest selection of pre-owned authenticated luxury items including women's and men's fashion, fine jewelry, watches, fine art and home. Consignors earn up to 70% of the sale price. Rather than looking askance at shoppers' ability to find second-hand items there, Kering — the parent company of upcale brands Gucci, Yves Saint Laurent and others — told analysts that they're actively working with The RealReal on merchandising, according to ReCode's report.
As the company has shifted into the physical world, connecting stores with its website has been a process that needed fine-tuning, Allison Sommer, director of Marketing at The RealReal, told Retail Dive during a fireside chat at Future Stores Miami in February. Because the company is single SKU, it needed to develop a system that would ensure an online user couldn't snatch up an item that a customer in line at a store was waiting to buy.
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