With the advent of e-Commerce, the market of online luxury resale has been a force to reckon with. It brings to the table a new paradigm for the industry. The RealReal, went public in June 2019 and its revenue increased 51% year over year, was somewhat the proof of concept that it as a win-win situation for brands and for customers on the two sides of the product life cycle – the buyer of the luxury good who can become the seller in the future. For younger consumers craving original luxury items and at ease with shopping online, a luxury resale platform sounds as a cool getaway to enter their first luxury brand experience. In the meantime, luxury brands like Stella McCartney and Burberry reaffirmed the importance of sustainability for them, by enticing customers to enter the circular economy in fashion. The RealReal, thought to be the number one reference of luxury consignment in the US, had inked strategic partnerships with Stella McCartney and Burberry. This reassured its expertise in authenticating the luxury goods they resell. However, some luxury brands felt threatened by the lack of control over their brand image and their products price once they arrived on the second-hand market. This led Chanel to sue The RealReal in 2019. This case discusses the complex relationships The RealReal was building with luxury brands, whose products are resold on the online platform. More specifically, the case discusses: (a) what was the successful business model behind an e-Commerce luxury resale platform?; (b) how could brands like Burberry and Stella McCartney improve their brand image by becoming a part of the circular economy movement in one of the most polluting industry?; (c) to what extent were luxury brands actually able to control their reputation and image once their products arrived on the second hand market?; (d) was this sustainability in fashion awareness here to stay and could it explain the hyper growth of The RealReal, even though its shares on the stock market have never met again its IPO price?; (e) who are The RealReal true competitors: other e-Commerce platforms, luxury brands at full price or luxury vintage retail stores?; and (f) in the post-COVID what will be the future of e-Commerce platforms such as The RealReal and what lessons can luxury brands learn from its experiences.
SOM, A. (2020). RealReal & The Circular Economy. ESSEC Business School.