When Charles Gorra launched luxury handbag marketplace Rebag in 2014, his goal was to change the way customers think about ownership of their bags. Now, almost four years later, the shift toward access over ownership, particularly among younger consumers, has gone into full swing, and Rebag is unveiling a new business model designed to capitalize on that movement.
Rebag Infinity, the brand’s new model for exchanging bags, promises customers at least 70 percent of the money they spent on a bag back in store credit, if they trade it in within six months of the initial purpose. Provided the bags are in reasonably the same condition as when they were purchased, those customers could get even more than 70 percent back, encouraging them to cycle through Rebag’s inventory and continue coming back to the store.
“The shift here, psychologically, should have a huge impact,” Gorra said. “We recognize that these are luxury items that have a high price. There’s a budget hurdle and a psychological hurdle to purchasing them. But the idea is people will think, ‘It’s not really $1000, its actually more like $300.’ You can vary the products you buy, and we can bring in a new type of customer who might not have shopped with us otherwise; it should create a certain allure for people — but the main goal is for recurring customers and getting them into the repeat pattern.”
The brand has grown in the last year. A few months after launching its first store in Soho, it opened a second location on Madison Avenue.
While Rebag Infinity is not really a subscription or membership service — it requires no sign-up and has no qualifications other than the six-month time limit — it does correlate with the growing number of rental and subscription services throughout the fashion industry. From runway fashion to streetwear to mid-market apparel, customers increasingly have the option to forego traditional notions of ownership and shopping in favor of a rotating cycle of options and recurring payments.
“Rebag Infinity really mirrors the bigger shift across all kinds of consumption patterns — the definition of ownership is changing,” Gorra said. “A lot of millennials and the younger generation are lighter on the asset side of things.”
According to Forrester Research, 25 percent of millennials say they don’t like using other people’s belongings, compared to 36 percent of baby boomers. And 47 percent prefer to spend money on experiences than products, compared to 29 percent of baby boomers.
“Millennials might love certain brands but really what they want is to be in tune with trends. They want something for a party or an event, but then they want to switch it out when they are finished with it. Millennials today are all about being efficient with your asset allocation,” Gorra said.
Handbags, in particular, are an area where these sorts of rotating options are highly popular. From popular services like Rent the Runway, which has a bag section, to older ones like Bag Borrow or Steal to new upstarts like the new member’s club for accessories Vivrelle, handbags have become fertile ground for alternatives to traditional transactions.
From a business perspective, guaranteeing a return of 70 percent of a product’s worth seems ambitious, possibly to a fault. For Gorra, it is worth it in order to keep customers coming back again and again.
“It’s certainly very ambitious,” Gorra said. “What we really wanted to do was offer an incentive to experience the new way of consumption. It’s definitely a big leap of faith. We are taking a lot of risks here with depreciation, fluctuating market values, etc. As customers increase their repeat use, I think it will pay off in the long run.”
The continuously rotating nature of Rebag Infinity, in which customers’ investment in their bags carries over to future purchases, is also meant to empower customers to be more adventurous in their choices. When 70 percent of the previous purchase is applied to the next one, and that next purchase will also be temporary, customers have more incentive to try different bags that they may not have chosen if they were paying full price. This also has the somewhat surprising side effect of encouraging more customers to come into Rebag’s brick-and-mortar stores in order to properly explore the different options they have.
“We are very lucky to have a loyal repeat customer base,” Gorra said. “In particular, based on what we’ve seen, we think this will work great in store. You go to the store, you pick what you want, you come back, you flip it.”