The RealReal is determined to make luxury part of the circular economy. Taking in high-end fashion and accessories from their previous owners, the company carefully authenticates each piece it buys, makes any necessary repairs or cleaning, stores them with care, and then sells them online to the next round of luxury owners.
For consumers, the options provided by the RealReal make luxury purchases less risky. A consumer might be willing to purchase the latest design if she knows she can get some return on it later by selling it to the RealReal. Another buyer can access designer goods, in excellent shape and guaranteed to be authentic, at a much lower price because they represent an offering in a secondhand market.
Although most of its sales take place online, the RealReal also is opening storefronts, to give sellers a place to bring the items they no longer want and buyers a means to interact with the items in person. The stores also will leverage the company’s vast repair capabilities, so that people can bring in a ripped shirt or a skirt missing some sequins to get it repaired by expert tailors.
As another service, the RealReal keeps a running tally of which designers are hot with buyers at the moment—information that may help consumers but that can be detrimental to the brands being listed. Some luxury brands reject the RealReal model, issuing several complaints, such as their concern that organized resale markets undercut their luxury image. In addition, Chanel has sued the company, alleging that its vaunted authentication is actually flawed, such that the company sells frauds as true Chanel offerings.

Discussion Questions:

1. Define the RealReal’s business mission and perform a SWOT analysis for it.

Source: Alexandra Jacobs, The New York Times, January 23, 2019