TheRealReal Closes $40M Funding Round, Cynthia Ringo to Join BOD

Luxury Consignment Site The RealReal Adds $40 Million In New Funding

By Sarah Perez:

Online lux­u­ry con­sign­ment site The Real­Re­al announced this morn­ing its largest round of financ­ing to date with news that it has closed on $40 mil­lion in Series D fund­ing, as the com­pa­ny is poised to dou­ble its $100 mil­lion in annu­al rev­enue in 2015. The round was led by Indus­try Ven­tures and includ­ed par­tic­i­pa­tion from new investors Grey­croft Growth, e.ventures Growth, and DBL Partners.

Exist­ing investors Canaan Part­ners and Inter­West Part­ners also par­tic­i­pat­ed, bring­ing the service’s total raise to date to $83 mil­lion. The com­pa­ny also gained a new board mem­ber with DBL’s Cyn­thia Ringo who joined with this round.

The fund­ing comes at a time when a num­ber of online con­sign­ment shops have sprung up to tack­le an area of e‑commerce which his­tor­i­cal­ly has been dom­i­nat­ed by mar­ket­places like eBay. Today, how­ev­er, there’s a wide range of online con­sign­ment shops, with every­thing from sites where users sell fast fash­ion via peer-to-peer mar­ket­places up to white glove offer­ings where com­pa­nies vet and authen­ti­cate high-end items them­selves before pho­tograph­ing them and list­ing them for sale on behalf of sellers.

The Real­Re­al falls on this lat­ter end of the online con­sign­ment spec­trum as it offers a full-ser­vice mar­ket­place where gar­ments, bags, jew­el­ry, art and oth­er items are inspect­ed and authen­ti­cat­ed before being sold, so buy­ers can be sure that what they’re buy­ing is, well, real. Addi­tion­al­ly, the site offers its own white glove ser­vice in 18 U.S. cities where lux­u­ry man­agers will come to buy­ers’ homes, con­sult with them and then pick up their items.

The company’s authen­ti­ca­tion process has helped to dif­fer­en­ti­ate the site from sev­er­al com­peti­tors and could even poten­tial­ly eat away at eBay rev­enue in future. How­ev­er, with $100 mil­lion or even $200 mil­lion in rev­enue rolling in, The Real­Re­al is still a small frac­tion of the larg­er lux­u­ry goods mar­ket. Ebay, for exam­ple, report­ed­ly sees $2 bil­lion to $4 bil­lion in lux­u­ry good sales annually.

The RealReal’s busi­ness mod­el involves offer­ing its con­sign­ers 60%-70% of the sale price, and then keeps the remain­ing por­tion for itself. The com­pa­ny is not yet prof­itable, how­ev­er, but that’s what the fund­ing round is aimed at achiev­ing. To get there, the site will need to be able to scale more quick­ly – includ­ing adding new inven­to­ry at a fast and reg­u­lar pace as well as turn­ing it around and get­ting it sold quick­ly, too.

Cur­rent­ly,  The Real­Re­al touts 3.5 mil­lion mem­bers, 315 employ­ees and ships to 61 coun­tries. To date, the site has sold 1 mil­lion items, and is expect­ed to pay out its con­sign­ers over $100 mil­lion in 2015.

The com­pa­ny also notes that its fastest grow­ing cat­e­gories include men’s fash­ion as well as fine jew­el­ry and watch­es. Pre­vi­ous­ly, the site has been more female-focused so the expan­sions in these cat­e­gories could poten­tial­ly broad­en its reach to new demo­graph­ics, which could also encour­age growth. Menswear saw 225% growth from 2013 to 2014 and is expect­ed to see 125% growth in 2015, The Real­Re­al states. Mean­while, the fine jew­el­ry and watch­es cat­e­go­ry grew 251% from 2013 to last year and is expect­ed to remain rough­ly the same (250% growth) again this year.

 

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