As the resale market continues to grow more competitive, some platforms are beginning to move toward the consignment model to compete for luxury sellers.
Both eBay and Rebag have launched consignment models on their respective platforms in the last month. Consignment differs from the original selling models of both platforms. EBay is primarily a peer-to-peer marketplace, where sellers sell directly to buyers and use eBay to host the listing. Rebag, on the other hand, has historically offered a buyout model, where Rebag itself purchases the products at a fixed rate and resells them itself at a later date.
But consignment means that the platform takes the product off the hands of the seller, does the work of selling it and then pays the seller as soon as it’s sold. Essentially, it combines the financial structure of the peer-to-peer model with the logistical structure of the buyout model. It’s the model that The RealReal used to become a dominant player in this space, and it’s used by other players in luxury resale including Fashionphile.
Tirath Kamdar, gm of global luxury for eBay, characterized consignment, which launched at eBay in September, as one of the biggest projects in the company’s plan to become a major luxury resale player.
“We have lots of data around consumer behavior,” Kamdar said. “And one thing we see is that, for high-end products like handbags, there are consumers who have a lot of them just sitting in their closets because they don’t want the hassle of listing them all themselves. They want a white glove service that will do it for them.”
EBay’s consignment service is powered by Linda’s Stuff, a consignment platform founded by Linda Lightman who has been consigning luxury goods for over 20 years.
Charles Gorra, CEO of Rebag, made a similar statement, saying that the biggest challenger to a luxury resale platform isn’t other platforms; it’s idleness.
“Luxury resale’s [biggest headache] has always been on the supply side,” Gorra said. “Someone could have a beautiful, well-maintained Chanel bag, and it just sits in their closet for years. What we are trying to do is make the selling process so seamless to execute that it becomes a no-brainer for someone to consign with us.”
The Rebag consignment process involves sending the bag off to the platform, getting a price range for what it’s likely to sell for and then just waiting for the sale. The range is tight, varying no more than 20%. In the off-chance that the product doesn’t sell for a price within that range, a new quote will be sent to the seller to approve before Rebag attempts to sell the bag again.
“For us, it’s to maximize the selling benefits we provide,” Gorra said. “There’s a part of the market we weren’t covering by only offering buyouts. Now, you have a choice. If you want a guaranteed price and money now, you go with buyout. But if you’ve got something really valuable and you want the highest value possible, and you don’t mind maybe waiting a bit longer, you go with consignment.”
Sellers usually end up with more money when consigning since the platform does not have to take the financial risk of buying the product outright. Platforms like Rebag offer more competitive rates for consignment — around 35% — than for a buyout.
EBay has seen its revenue increase this year, even as it laid off 500 employees in February. Rebag has over $100 million in VC funding to afford both its product catalog and new features like consignment.
Luxury resale is expected to be a more than $50 billion industry by 2026. And as brands start to launch their own in-house resale platforms, third-party platforms like eBay and Rebag need to keep innovating and providing reasons for sellers to bring their products to them rather than directly to the brands.