TheRealReal’s Online Luxury Consignment Shop

TheRealReal’s Online Luxury Consignment Shop
How the reseller brings designer goods into the “circular economy.”


By Susan Orlean

October 14, 2019


The company’s “luxury managers” help clients decide what to sell.

Illustration by Luci Gutiérrez
Your Birkin bag, your Chanel flats, your Alaïa bandage dress, your Rick Owens leather leggings—all your expensive so-called investment clothing was, in the olden days, an investment in name only. If you went up a size or down a size or just experienced a fashion rethink, there was no recourse; your wardrobe was largely illiquid. Other terrible things could happen. You might be an influencer and your followers could get tired of seeing you drag around the same Gucci clutch, but it cost so damn much that you had to wring all the value out of it. Or you might realize that you weren’t giving every Cathy Waterman stud in your collection sufficient ear time and yet were hankering for an Anita Ko climber.

One recent Wednesday morning, a young woman named Chasity Saunders was addressing a situation like this. She had a pair of bedazzled multicolored Christian Louboutin booties that she loved but no longer love-loved, and she had mixed feelings about a pair of Fendi pumps and a Tom Ford foldover tote, and was concerned that a gold ring from an ex-boyfriend might be blocking her energy in such a way as to inhibit her from starting a new relationship. She was meeting with Sarah Ro, who works for the luxury consignment site TheRealReal, to consider her options. Saunders, who lives in a cheery apartment in the San Fernando Valley, had laid out the shoes and bags in question on her sofa and was perched beside them. She and Ro chatted about how they’d first met (at the jewelry counter at TheRealReal’s brick-and-mortar store in West Hollywood) and about how Saunders’s work as a model and actress was going (she’d just shot an ad campaign for the beauty retailer Ulta).

Saunders had previously consigned jeans and sweaters at a local used-clothing store, but this was her first time with TheRealReal. Ro explained how the consignment process worked: She would take Saunders’s items and send them to the main warehouse, in the San Francisco Bay Area, where they would be evaluated, priced, photographed, and posted on the site. When they sold, Saunders would receive a check for fifty-five per cent of the price. (The rate can vary between forty and eighty-five per cent.) “I’m not trying to get rid of anything for the money,” Saunders said to Ro. “For me—well, I just love to shop. And right now I have my eye on a Y.S.L. bag that I saw on TheRealReal.” She chuckled and held up one of the Louboutin booties. It was eye-popping, with a long shiv of a heel and a bulging toe.

“Look at that!” Ro exclaimed.

“I know! I mean, if I’m going to spend two thousand dollars on a shoe, I want to step out as a star,” Saunders said. The bootie glimmered in her hand. “I love them, but I’m not for surefor sureabout them anymore. I feel someone else will love them.”

Ro nodded encouragingly and said, “I’m here when you’re ready.”

Saunders paused for a moment, and then said, with a sigh, “O.K., I think I’m ready.” She opened a Louboutin shoebox, pulled out a satin bag, placed the booties inside, shut the box, and handed it to Ro. “Bye-bye, I loved you!” she said to the shoes. The two women were quiet for a moment. Then, suddenly, Saunders reached for the box. Ro looked stricken. “Can I have them back for a minute?” Saunders said. “I just want to do an Instagram story with them.” Ro relaxed and handed the box to her. Saunders positioned a shoe against her white sofa for a beauty shot, and zoomed in on it with her phone. “I’m consigning today with TheRealReal,” she narrated, “and these are a pair of my favorite shoes. So watch for them!”

In 2011, Julie Wainwright, an e-commerce entrepreneur, founded TheRealReal, a platform for selling previously owned luxury goods. Selling used clothing wasn’t a new idea; vintage and used-clothing stores have been around forever, and some have even gotten big. Buffalo Exchange, which is based in Tucson, began selling used jeans and flannel shirts in 1974, and now has fifty locations across the country; Crossroads Trading, which opened in 1991, has thirty-seven. A few renowned shops, such as Decades, in Los Angeles, have specialized in very expensive used designer goods in an atmosphere in which much is made of a gown’s provenance, especially if, as is often the case, the previous owner was a celebrity. But, generally speaking, resale businesses were little local shops that catered to aficionados, hipsters, and people on a budget. Wainwright decided to go global and high-end.

“My parents loved beauty, and they hated things going to waste,” she told me recently. Her father owned an art-and-design business in Indiana. In his spare time, he liked digging through the town dump to see what he could salvage and refashion into, for instance, a chandelier. “Both of my parents loved reusing things,” Wainwright said. She studied management at Purdue; her first job out of college was a position at Clorox. After a few years there, she took a chance on joining a tech startup in San Francisco. She ended up running Pets.com, a site for pet supplies. It folded in 2000, during the first e-commerce collapse, but by 2010 the economy had steadied and Wainwright felt that itwas time to get back into business. She decided to pivot from pets to luxury goods, a category that she thought was not well represented online.

On a shopping trip with a friend, she noticed a rack of used fancy clothes at the back of a boutique. After doing some homework, which included selling some of her jewelry at pawnshops, to see what the experience was like, she hired a few people and began hunting for inventory. “I called all my friends and said, ‘I need you to send me anything you’re not using.’ I met stylists and asked them to send us their clients.” She collected for two months before opening the business. The response was so enthusiastic that Wainwright was worried she would run out of things to sell. Unexpectedly, she got a call from a stylist saying that one of her clients, who had so many clothes that she stored them in a warehouse, had decided to get rid of some of them. Wainwright got a U-Haul truck and picked up nine hundred articles of clothing and shoes. “This woman was very tiny, so we got a lot of size-2 dresses,” she said. “But she wore a very standard size-7 shoe.”

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Shopping for used clothing had always been a hit-or-miss affair, since the supply relied on getting consignments from whoever lived near the shop. Putting used clothing online, though, meant that the Louboutin booties consigned by Chasity Saunders in the San Fernando Valley could be seen and bought by anyone in the world. Using the Internet to sell secondhand clothes really began in 1995, with the launch of eBay, but you had to search through millions of listings to find what you wanted. TheRealReal offered only luxury clothing and jewelry, and, unlike eBay, it took possession of consigned items and guaranteed that they would be examined by authenticators, to rate their condition and to eliminate counterfeits, by checking brand markings and serial numbers. Clothes were photographed in a studio on headless mannequins against a white background, so that the site looked clean and consistent, as opposed to the D.I.Y. pictures that appear on eBay—a genre that can include items spread out on a bed and half obscured by a cat that wandered into the frame. In its first year, TheRealReal sold ten million dollars’ worth of clothing and jewelry. It has since sold more than eight million items, and when it went public last June—the first clothing reseller to do so—it had a valuation of $1.5 billion.

Fashion has had its struggles in the past few years, ranging from Forever 21’s recent bankruptcy filing to the downturn at Prada to the thundering drumbeat of bad news from malls and department stores. But news about the clothing-resale business is positively merry. According to a report by the consignment company ThredUp, which used research from GlobalData, a retail-analytics firm, resale was a twenty-four-billion-dollar market in 2018, and will grow to sixty-four billion dollars by 2028, making it one and a half times the size of the behemoth fast-fashion business—the Zaras and H&Ms and Forever 21s of the world. Luxury companies make no money from the resale of their items. So far, they have ignored resellers like TheRealReal, or grudgingly appreciated that people who get in the habit of buying Louis Vuitton secondhand might eventually graduate to buying retail. In a few instances, though, the relationship has been prickly: Chanel is currently suing TheRealReal, claiming that the site has no authority to verify the authenticity of Chanel products, and therefore doesn’t have the right to claim that the Chanel items it offers are real. The site said, in a statement, that it “stands behind its authenticity guarantee.” The suit is currently in federal court.

Some people might think buying used clothing is icky, but nine million more people bought secondhand clothes in 2017 than in 2016, and, according to “Rise of the Fashion Resale Marketplace,” a report released earlier this year by the investment bank Raymond James, sixty-two per cent of women say that they have bought or are willing to buy secondhand. TheRealReal is just one of many thriving clothing resellers (although, like many new Internet-based businesses, it has yet to turn a profit). Poshmark, which was also founded in 2011, has sold two billion dollars’ worth of merchandise so far; Vestiaire Collective, based in France, focusses on the international market; Rebag offers only handbags; StockX is the leading sneaker reseller; ThredUp, which sells used casual clothing, adds fifteen thousand items to its site every day. The London-based Depop describes itself as “a global conduit” where “creative influencers” can buy and sell items and also “like” listings, just to show their enthusiasm and to feel part of the Depop community. Unlike TheRealReal consigners, Depop sellers write their own listings. “Super cute 100% linen Peter Pan collar cropped jacket in grey blue, perfect for frolicking in a field,” one recent listing began, followed by a sterner request: “only ‘like’ if you’re interested in purchasing i need to make rent this month.”

In the Raymond James report, shoppers said that they bought secondhand because it cost less than retail, they could find things that were unique, they could buy brands they normally couldn’t afford, and it turned shopping into something of a treasure hunt. Thirty per cent said that buying resale is an environmentally responsible choice. Fashion is oneof the world’s most polluting industries. According to the Ellen MacArthur Foundation, an organization promoting reuse and recycling, the equivalent of one garbage truck full of textiles is incinerated or added to a landfill every second. Fast fashion—clothes that are made cheaply and tend to go out of style after a season of wear—is a big culprit. Extending the life of an article of clothing or a pair of shoes, making it part of the “circular economy,” keeps it out of the trash.

TheRealReal now has the tagline “A Sustainable Luxury Company,” and last year it developed what it calls a “sustainability calculator,” which for each item of women’s apparel notes how much is saved in water (used in manufacturing) and in driving miles (the carbon offset, as estimated by the Environmental Protection Agency) by buying the item used rather than new. For instance, according to the calculator, a Monse wool-blend plaid skirt given a second life saves 50.81 litres of water and 15.18 driving miles, versus producing a new one. This doesn’t take into account the possibility that you could skip the Monse wool-blend plaid skirt altogether and save even more water and driving miles, but not shopping at all is a different calculation entirely.

When I asked Erin Santy, the head of communications for TheRealReal, what the company’s biggest challenge was, she thought for a moment and then said, “Passivity! That’s what Julie always says. Having things in your closet just sitting there, rather than clearing them out and consigning!” When she said that, it occurred to me that resale sites are in the interesting position of not making anything or owning anything: they are just the pass-through point for products, a sort of transportation hub for luxury goods. Consequently, the company needs to cultivate people willing to consign their belongings just as actively as it needs to cultivate customers; there’s a bit of selling on both ends of the process.

Wainwright believed that TheRealReal would succeed only if she could convince people that consigning was easy. Instead of having to schlep your bag of unwanted clothes to the local vintage shop, you could mail them in, or, even better, a “luxury manager” from the site, like Sarah Ro, would pick them up from your home. (Most other resale sites, including Poshmark, are “peer-to-peer”—that is, the company doesn’t take possession of your belongings, and you are responsible for sending them to buyers.) There are a hundred and eighty luxury managers working for TheRealReal, based in cities across the country. Many previously worked in fashion or in actual stores; they were in the business of persuading people to buy. Now they are in the business of persuading people to sell. A number of them have regular clients whom they collect from as often as once a month, and they become de-facto fashion consultants, helping clients decide what should stay and what should go.

One recent morning, I joined Santy as she drove from Los Angeles to Palm Desert with Karin Dillie, who is the head of TheRealReal’s trusts-and-estates department. Dillie was visiting a home in Palm Desert that had belonged to a woman named Jean Blake, who had recently died. Blake left no will, and one of her nieces was trying to make arrangements for her belongings. Santy, who is lanky and ebullient, was wearing a summery Rachel Comey dress that she had bought on TheRealReal. Dillie has long blond hair and a sunny air. She was wearing a floral Ganni shift, Givenchy sunglasses, Chanel flats, and a Gucci watch, all of which she had bought on TheRealReal. The two women swore that they had not planned their outfits; they both just happen to buy most of their clothes on the site. “It’s very dangerous to work here,” Santy said. “We don’t get an employee discount.”

Dillie has an M.B.A. from Yale and had worked at Sotheby’s before TheRealReal asked her to launch the department. The company had been expanding, first adding menswear, then children’s clothing, then home décor and art. Because more people were asking it to help sell the contents of entire households, a trusts-and-estates department was the natural next step. Dillie now travels at least two weeks a month for the job. She has cleared out an estate in California that contained dozens of Hermès Birkin bags, a house in Michigan with hundreds of pairs of collectible sneakers, and a Tennessee mansion packed with Chanel. “I did an estate in Connecticut a while ago whose owner must have been very polite to his personal shopper and never sent anything back,” Dillie said. “The closets were just filled with suits with the tags still on.”

Dillie knew that Blake had been an enthusiastic shopper who loved Judith Leiber handbags, but otherwise she wasn’t sure what to expect. A dream scenario would be if, among Blake’s possessions, there was a Gucci Dionysus suède mini bag (an envelope clutch that is one of the most sought-after handbags on TheRealReal and can sell for more than fifteen hundred dollars), or an Hermès Avalon blanket (twelve hundred dollars or more, and one of the most desired home items), or a Goyard dog collar (another favorite, and usually priced at more than five hundred dollars). Bucket hats have been enjoying a big increase in searches on the site this year (up three hundred and sixty-five per cent), but Dillie knew itwas unlikely that a woman in her eighties had had any Kangols in her closet.

Blake’s house was a low rectangle of sugary-pink stucco in a tidy gated community called Marrakesh Country Club, which doesn’t allow garage sales, so emptying an estate there presents challenges. Liquidators had offered a few thousand dollars to take the contents of the house, but Cindy Ellsworth, Blake’s niece and executor, thought that it had to be worth more. “She had beautiful things,” Ellsworth said, meeting us at the door and leading us into the living room. The place was quiet and dim, with a static, uninhabited air. The living room was well appointed and old-fashioned, chockablock with paintings and sculptures and lamps and tables and books and mirrors and bowls and baskets. Ellsworth, who lives in Germany, recounted the experience of meeting with the liquidators. As she was telling the story, her face crumpled and she choked up. “You know, my aunt was a nurse. She worked her whole life for these things. To have someone tell you they’re not worth anything . . . ”

Dillie said, “That’s not the case. It is absolutely worth something. Where do we want to start?” Ellsworth gestured toward several Lalique and Baccarat crystal figurines on an end table. Dillie murmured approvingly, took snapshots for the receipt, and slipped the figurines into padded bags. Then they headed into the master bedroom. The bed was strewn with handbags.

“It seems like Judith Leiber is selling,” Ellsworth said. “Isn’t it?”

https://www.newyorker.com/magazine/2019/10/21/therealreals-online-luxury-consignment-shop