By Ryan Mac: Julie Wainwright is staring down the shaft of an arrow. She wiggles her toes and cocks her head to focus on a set of blue and yellow rings 50 feet away. Pulling the bowstring to the corner of her mouth, the former CEO of Pets.com lets her shot fly. It wobbles before missing the target, wide left.
“I wonder if it’s because of my heels,” she says, looking down at her Chloé wedges. Her next four arrows miss the mark as well.
Wainwright, a sprightly 58-year-old, hadn’t done archery in years. But on a gloomy August day in San Francisco she suggested we visit an indoor range to give her a brief distraction from running The RealReal, her addictive consignment site. On track to do $200 million in revenue this year and with $83 million in funding at a FORBES-estimated valuation of $300 million, the startup is in a much better place than Pets.com ever was.
“Say what you want about it, but we did something others weren’t able to do in creating a brand with that sock puppet,” she says, referring to Pets.com’s still iconic mascot.
While Pets.com crashed and burned, The RealReal has filled a void in the high-end luxury market. Many one-percenters can’t be bothered to list their designer dresses or jewelry on eBay EBAY +0.00% and then ship those goods to buyers. But as Wainwright found, they will consign their wares if someone else does the grunt work. That’s the genius of The RealReal, which receives about 130,000 items a month.
Thwack. The final arrow from Wainwright’s quiver hits the blue ring closest to the bull’s-eye, and she lets out a small yelp of satisfaction. The RealReal, says its CEO, will be profitable by next year.
While the idea of selling used items on the Web is hardly new, The RealReal is leading the way in a crowded pack of players on the quest to build better marketplaces. With eBay trying to be everything to everyone, startups are creating online bazaars for all kinds of goods, from used cars to apparel. Poshmark, Threadflip, ThredUP and Twice (acquired by and folded into eBay) have raised millions to let women sell worn Levi’s jeans or J.Crew sweaters.
The RealReal turns up its nose at those items, focusing instead on luxury brands like Gucci and Alexander McQueen. In 2014, according to a report from Bain & Co , there were $73.7 billion in sales of personal luxury goods in the U.S. market alone, creating a huge resale opportunity for Wainwright. The consignors, including Yahoo CEO Marissa Mayer and Khloé Kardashian, keep from 60% to 70% of the online sale price.
Because The RealReal focuses on goods with higher margins, the company can afford to send a white-glove concierge to a person’s home to evaluate the goods, which are then packed, stored and listed by the company. While most consignment startups use technology to reduce the human element, The RealReal has 400 employees and is hiring more, from photographers who snap six photos of every item to authenticators who sniff out fakes by checking a bag’s serial number or examining the threading on a skirt. “EBay still does about $2 billion in luxury goods on its platform,” Wainwright says, “and yet they have a tremendous amount of fakes on it.” (An eBay spokesperson says the company doesn’t break out sales for the fashion category and that less than .025% of all 2014 eBay listings were identified as “potentially counterfeit.”)
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