Ever wondered why a handcrafted Hermès purse can command an astronomical $2.5 million price tag?
It’s because there are high fashion customers who are more than willing to be associated with the premium brand, the same shoppers who will buy the coveted purse without batting an eye while swiping their credit cards during checkout.
The Tribe Mentality
Trends come and go but legendary brands can take up significant space in the hearts and minds of their loyal customers for a very long time.
As much as shoppers value quality, being part of a tribe has been largely responsible for the profitability of many successful high-end brands such as Louis Vuitton, Gucci, Chanel, Hermès, Rolex, and other expensive fashion items endorsed by famous and wealthy celebrities.
Pricey high-end brands are status symbols and for those who care about their image, oftentimes sky is the limit.
The Smart Mentality
But what if high-end fashionistas can save an astronomical amount of money by being smart about their shopping habits?
The RealReal, a brick-and-mortar and online consignment store that sells second-hand high-end products, may have the answer.
Founded in 2011 by seasoned entrepreneur Julie Wainwright, the RealReal has grown to become a multi-million-dollar business selling consigned luxury items that went through the company’s thorough authentication process.
By providing consumers the option to pay less money for the luxury brands they crave for and advocate, the RealReal strengthens their buying power.
By buying authentic high-end products for a fraction of the retail price, the buyer is introduced to a new buying experience which is not only cost-efficient, smart, and practical, it also lessens the guilt and the stress involved in paying a huge sum of money especially among ordinary shoppers on a budget.
But that’s just one way to shop smart.
The other option is to consign your used or second-hand (some call them pre-loved) high-end products to the RealReal so you can earn back a portion of the money you had spent when you first bought them.
The money you earn from consignment gives you the power to purchase more of the brands and products you love knowing you can recover the money you spent for them eventually once you’ve decided to let them go in the loving arms of their new owners.
How Does It Work?
The RealReal accepts consignment items from anyone who wants to re-sell their high-end products like clothing, handbags, shoes, timepieces, artwork, home décor, jewelry, and others that consumers will find valuable. Top brands preferred are Chanel, Hermes, Louis Vuitton, Gucci, Prada, Celine, Cartier, Rolex, Patek Philippe, and Van Cleef & Arpels.
Those who want to consign can drop off their items at the RealReal consignment stores. The staff at the RealReal will assess the items for quality, authenticity, and pricing as well as charge fees for consignment, marketing, and shipping.
If you want to consign but do not have the ability to go to the store, the RealReal can pick up your goods for free. You may also ship your goods to the company free of charge.
The RealReal’s goal is to sell your products within 30 days to their loyal clientele at the highest possible price depending on your products’ brands and condition. Once any of your items have been sold, you can earn a commission as high as 85% of the selling price of the sold item.
On the RealReal’s website, products like a floral Yves Saint Laurent shoulder bag and a pair of Chanel over-the-knee boots had sold for more than a thousand dollars.
But the company does not only benefit those who consign. It takes care of its shoppers too.
If you’re on the other side of the trade, you’ll benefit big-time from buying second-hand luxury products from the RealReal because their luxury items are discounted by more than 80% of their retail prices.
From Zero to Millions
The concept and strategy behind the RealReal are not rocket science. Other ventures like eBay, Plato’s Closet, Thredup, and Poshmark are doing the same.
By embracing the circular economy, these ventures prolong the lives of the luxury goods by passing them from one owner to another, preventing wastes, and giving the consumers the power to recycle their investments.
But the success of the RealReal is special in its own way.
Julie Wainwright’s dream company she started when she was in her mid-50’s had grown from zero to $500 million in six years.
A startup that was able to raise enough capital from supportive investors, the RealReal capitalized on being a trusted source of high-end brands by hiring experts who were tasked to validate and assess the authenticity of every product being sold by the company.
It turned out to be a wise move.
Over time, the company’s customers had turned to RealReal for both shopping and consigning based on trust, a must for anyone paying thousands of dollars for a pair of shoes or a piece of clothing from their manufacturer of choice.
The Clever Circle
The goal of the RealReal to reach fashion-conscious, high-end-brand loving yet practical customers had been accomplished through the company’s strong belief in the power of trust and recycling.
By re-using pre-loved items, customers are contributing to the preservation of resources used in manufacturing such items which leads to the elimination of wastes resulting in a better, less polluted environment.
At the same time, customers both consigning and shopping profit from being smart, letting their investments move from purchase to commission and back in a cycle that keeps them winning versus their previous practice of just buying and then storing their luxury items to idle in their protective sacks and boxes for years.
Luxury buying in the fashion industry may remain strong for as long as consumers continue to patronize, advocate, and purchase brands that command over-the-top price tags.
But as long as there are companies like the RealReal, consumers are empowered to finally outsmart the system by being smart with their investments.