Online Fashion Consignment Firm The RealReal Nabs $40 Million In Funding – Forbes
During the dot-com boom, Julie Wainwright found herself at the helm of two different e-commerce firms. The first, Reel.com, sold movies online and preceded the likes of Netflix and other services before being sold to a Hollywood entertainment company. The second, Pets.com, went public before crashing and burning as the defining symbol of the Internet bubble.
Now, 15 years later, the former Reel.com and Pets.com CEO is at it again, this time with a startup whose high-end fashion consignment model did more than $100 million in sales last year. After first shipping product in June 2011, The RealReal, the first entrepreneurial endeavor that Wainwright has founded, announced a $40 million round of funding on Thursday led by Industry Ventures.
The investment–which was joined by the likes of e.ventures Growth, Greycroft Growth, DBL Partners, Canaan Partners and InterWest Partners–takes the company’s total funding to $83 million. Based in San Francisco, The RealReal is on track to double sales from last year, said Wainwright, who’s created a viable competitor to the likes of eBay eBay for users looking to hawk second-hand Chanel Chanel bags or Rolex Rolex watches.
“When I started in e-commerce, there was not a lot of clutter because there were not a lot of companies,” said Wainwright, 57. “Nowadays, you have to have a pretty serious moat around your business to compete with Amazon, Wal-Mart and even Alibaba online. You really need a unique selling proposition and people need to care about that unique selling proposition.”
The RealReal’s unique proposition is that it will take goods from users before they’re even sold, storing them in its warehouses until they are purchased online. All items, whether it’s a Burberry coat or pair of Tom Ford shoes are one-of-a-kind on the site and usually do not come in different sizes or colors. Sellers keep 60% to 70% of the online sale price.
The high-end fashion has been one of the last retail spaces to move online, though signs are pointing to a gradual shift in the luxury market. Last month, two of the leading online retailers in the space, Net-A-Porter and Yoox, announced an agreement to merge. Wainwright estimated that the luxury market does about $70 billion in sales a year in the U.S., of which less than 10% happens online.
The RealReal’s CEO sees the move toward online as being a large advantage to her company. Fashion has “a forced obsolescence” a few times a year as styles change with the seasons, forcing many to try and sell older clothes and accessories, possibly via the web.
The funding will allow the company to keep expanding operations and inventory, and Wainwright said that company will hit profitability for the first time this year. And while its expanded into selling art, the company still derives the majority of its revenue from fashion, which its CEO doesn’t expect to change.
“It’s really hard to create a fashion brand online,” she said, “and there’s certainly a lot of opportunity right now for anyone selling fashion online.”
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