Even as closet clean-outs trend, resale companies are having a difficult time attracting sellers due to the logistical obstacle of getting pre-owned clothes from sellers’ homes to the processing facilities. To compensate, they’re seeking products from brands, which — as unsold stock mounts — are more willing then ever to sell to resale companies.
According to data provided by resale platform The RealReal, in the first two weeks of April, The RealReal saw 10-times the number of brands applying to join its B2B program, compared to an average two-week period before the coronavirus outbreak. A spokesperson for The RealReal said that the majority of new brands interested in selling to the company are looking for alternative ways to sell product at a time when their stores are closed. For business sellers, The RealReal, sells products for around 80% of the full retail price, on average. The RealReal’s cut is 50-80% of the sale, depending on the value of the item.
Most of the brands approached The RealReal looking to sell, while a few were approached by The RealReal based on high demand on the site. Some brands, like Stella McCartney and Burberry, have made their business with The RealReal public, while most have privately sold to the brand. The RealReal declined to disclose any brands that sell privately.
There is a longstanding point of contention between resale platforms and luxury brands that are vehemently opposed to resale. For example, Chanel filed a lawsuit against The RealReal for trademark infringement in 2018.
For resellers, the benefit of working directly with brands is obtaining large amounts of product from a business, where it’s already bundled and packaged in a warehouse. Currently, that’s easier than getting products from consumers’ homes. The RealReal takes on the cost of expedited shipping for brand partners. Like all sellers, brands get access to a personal dashboard to track their product and are paid upon the sale of the product. Between Mar. 1 and Apr. 14, The RealReal saw a 30% increase year-over-year in supply of product from brands.
Paris-based resale platform Vestiaire Collective, hot off the heels of a $64 million funding round, has also seen an increase in sales of product obtained through professional sellers. Those sales increased 20% in the last month, compared to months prior. Most of the brands approached the platform, versus Vestiaire seeking out their product.
“We are primarily a global peer-to-peer platform, but we’ve seen our B2B business growing quickly over the past year and expect this trend to continue as we utilize our recent funding round to expand into new markets like Japan and South Korea,” said Clara Chappaz, chief growth officer at Vestiaire Collective. She noted that the coronavirus outbreak has hastened the category’s growth.
For Vestiaire Collective, more than 50% of orders are shipped directly from seller to buyer, but all product from brands is processed at the company’s warehouses. The same goes for The RealReal.
Both The RealReal and Vestiaire Collective declined to say exactly how much revenue comes from B2B sales, but both characterized sales in the category as less prominent than those from consumer sellers. The RealReal is expecting a net loss of nearly $40 million in May, plus the company has laid off 10% of its staff and furloughed another 15%. As of June last year, The RealReal was valued at $1.7 billion.
Being based in Europe, Vestiaire Collective hasn’t been hit quite as hard as American counterparts, with monthly B2B sales globally up 20% over pre-coronavirus numbers, according to Chappaz. Conversely, The RealReal’s physical stores are all in the U.S. and most of its consumers are in America. Vestiaire Collective did have to temporarily shut down its New York warehouse this month, but it was back up and running as of Apr. 27.