RealReal Overhauls Consignment Structure in Quest for Profitability

In its ongoing quest for profitability, luxury resale platform The RealReal said Tuesday (Nov. 8) that it has overhauled its commission structure and will charge more for low-priced transactions that have typically resulted in losses.

The announcement came as part of the company’s third-quarter earnings report, in which it outlined a four-fold strategy aimed at becoming profitable at a time when reCcommerce firms are struggling and its own stock has fallen 90% this year.

In a letter to investors, the company said the update to its take-rates will “incentivize the consignment of higher-value items and limit the consignment of lower-value items, which are unprofitable.”

The RealReal said in the letter it has also added a “dynamic and personalized tool” to its website to let consignors calculate their earnings, “which we believe will increase transparency and may further motivate consignors to sell their luxury goods on The RealReal platform.”

The company’s other profitability strategies include refining its pricing algorithms, taking a “more aggressive stance on cost management internally” — following what it called a “modest” reduction in staff — and looking at other revenue sources. These include a warranty program, advertising technology and data monetization.

This year has seen the company deal with the departure of founder, chairperson and CEO Julie Wainwright, as well as a “people problem” it reported in August.

That meant a lack of sales labor that left the company without supply to sell, along with a shift in demand that saw shoppers move from purchasing higher-cost jewelry and watches to lower-priced products, such as shoes and clothing.

Meanwhile, the company said its supply and demand problems happened faster than anyone expected, resembling a return to pre-COVID patterns and numbers.

Other companies in this sector have struggled of late as well. As PYMNTS reported last month, The RealReal rival Rent the Runway had seen its stock plunge 90% since its $1.7 billion initial public offering (IPO). In September, the company announced a restructuring plan that included a 24% reduction in staff following a subscriber drop from 135,000 to 124,000.

There were some recent bright spots for this niche retail segment: October saw New York City’s original luxury reseller, What Goes Around Comes Around, announce a new digital storefront on Amazon, transforming its bicoastal presence into a global one.

Around the same time, eCommerce fashion platform GOAT Group announced it had purchased apparel reseller Grailed, as the companies combined their forces in anticipation of a boom in second-hand luxury sales.

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