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Real Real vs. Real Real. Reflaunt's Resale As A Service

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Just as The RealReal was starting to hit the bankruptcy-risk list, Reflaunt announced a new partnership with Balenciaga and Saks Off 5th to offer resell-as-a-service offerings. You may believe in coincidence, but I don’t.

Both The RealReal and Reflaunt compete in the $32 billion used luxury market, which Bain reports has grown five times faster than the main market from 2017 to 2021. However, these companies operate on completely different business models.

RealReal follows a more or less traditional consignment business model. Individual shippers can send goods to The REAL where they can be sold or purchased directly for cash or site credit. REAL also offers a selective concierge service that goes into the shipper’s closet and hand-picks items. He then authenticates, photographs, and lists the items on his website, or he delivers them to one of his 19 stores.

Reflaunt works quite differently under the Resale-as-a-Service model (RaaS). Essentially, it is a facilitator for brands and retailers to seamlessly integrate resale and circular fashion directly into their business models. It works directly with consumers through concierge services and offers limited direct trade-ins, but its primary target is brands.

We also offer resale services for Balenciaga and Saks Off 5th, as well as Net-A-Porter, Harvey Nichols and The Outnet.

Using Balenciaga as an example, Refrant works like this. Balenciaga customers can return their favorite items to the store for credit. Items are then shipped to her Reflaunt where they are authenticated, photographed and priced. We then list the items for resale on Reflaunt’s global network of resale sites, including Tradesy, Vestiare Collective and 28 other sites. Some Brand Partners may also offer resale items directly from their website.

magnified difference

The main difference between the two companies is the customer. For REAL, it’s the consumer. For Refran, it’s the brand. There is a world difference between the two.

REAL needs to go out and source customers and shippers. Reflaunt’s brand partners have already incorporated them.

REAL requires the customer to follow a different customer journey. Reflaunt expands the brand’s existing customer journey to include resale. This is a value proposition understood by brands whose customers are waking up to the circular economy and wanting to leverage existing value in their closets.

Reflaunt calls this “positive consumption,” and by offering RaaS, brands can take their used goods back to the store, earn credit or cash to start another customer journey, and spend more time with their customers. are helping to join the circular economy.

said Felix Winkler, CCO, who co-founded Reflaunt with CEO Stephanie Crespin in 2018.

“We believe resale will become an integral part of the fashion industry and one of the services retailers ultimately offer to their customers,” he continued.

Rather than allowing REAL to benefit from the value, goodwill and reputation of a badge that luxury brands have worked to develop over the years, Refloaunt will help brands increase brand loyalty, leading to ongoing customer engagement. to keep the brand “as part of the family”.

Reflaunt reports that some brands are offering cash back to customers who return items for resale, while others are offering credit with an additional 10% incentive. About 85% of sellers choose credit options to reinvest in new purchases, and the reseller’s lifetime value extends from 4x her to 7x that of the average customer. I’m here.

to control

“We are enabling brands to regain control of the second-hand market,” says Winkler. “Brands’ customer relationships are not only preserved, they are strengthened. It also enhances brand reputation by encouraging customers to make a positive difference in their environment and understand the lasting value of the products they purchase.” .”

Brands have a financial incentive to partner with Reflaunt as they do not make a profit by reselling items on The REAL. “When resale becomes part of the brand’s service offering, they have the opportunity to generate new sources of cash flow,” he said.

But perhaps more importantly, reselling offers brands a way to create new circular customer journeys by helping customers engage with the circular economy.

“Brands don’t have many opportunities to engage with customers other than sales. Resale is a good way to re-engage them and increase retention,” he continued.

Reflaunt’s business model also overcomes the authenticity problem that has plagued The REAL since its inception. Brands know what their customers are buying and can easily spot counterfeits.

REAL relies on a staff of certifiers who are not always correct. REAL recently settled his $11 million class action lawsuit filed by the company’s shareholders, who allege they were misunderstood about the level of certification offered in his 2019 IPO.

problem solved

In fact, The REAL has become a problem for luxury brands, and Reflaunt solves that problem. “Reselling can be a difficult new business model for brands whose core business is manufacturing and distributing new products. Reverse his logistics are very complicated,” he said. increase.

“And then there’s the technology part. and has a tested model that you can use to incorporate reselling into your service offering,” a Southeast Asian marketplace called Style Tribute.

“Stephanie has been in the second-hand business for decades,” he said.

which one would you choose?

Privately held Reflaunt doesn’t release numbers, but it grew 25% month-over-month in the last fiscal year and now has a portfolio of over 40 luxury brands, retailers and reseller partners with more than 100 million views. It is clear that resale has been achieved. shoppers around the world. It currently has a strong presence in Southeast Asia and Europe, and is growing rapidly in North America. We are also looking at China, South Korea and Japan as markets for expansion.

As a publicly traded company, REAL’s numbers are available for everyone to see. Earnings in the six months to June were up nearly 50%, from $204 million a year earlier to $301 million in the same period last year, but they’re still in the red, compared to the last six months adjusted. His EBITDA is his $64 million. He expects a loss of $30 million from $24 million in the third quarter. And in a potentially troubling sign, its average price fell from $520 last year to $486 in the second quarter.

To add insult to injury, REAL has no CEO after founder Julie Wainwright left the company this past June. President and COO Rati Sahi Levesque and his CFO Robert Julian currently serve as co-interim CEOs.

Wainwright is tight-lipped about why he picked up the stick from The REAL, but he may have seen the writing on the wall. RealReal was good during its existence, but its business model was not designed for the long term.

Time will tell about Refland, but as luxury brands double down on helping to make circular fashion part of their business model, Refland has all the ingredients to make it happen. It seems to be equipped with