The RealReal, the world's largest online marketplace for authenticated luxury resale goods, has demonstrated remarkable resilience and growth despite the challenges posed by the COVID-19 pandemic. With over 31 million members, the platform offers a safe and reliable space for consumers to buy and sell luxury items, thanks to its rigorous authentication process overseen by in-house experts.
The RealReal reported a 56% increase in revenue compared to 2020. However, the company also experienced a 34% growth in losses, amounting to $236 million. Despite these setbacks, the company has managed to recover substantially during the pandemic. In June 2020, The RealReal announced that it had seen significant recovery in its business since mid-March when the San Francisco Bay Area was hit hard by the pandemic.
By the third quarter of 2020, the company declared that the effects of COVID-19 on its supply chain were effectively behind them, and they were well-positioned for a strong holiday season. This optimism was reflected in their financial results for the fourth quarter and full year ended December 31, 2022. The RealReal reported a 13% increase in gross merchandise value (GMV) for the fourth quarter and a 23% increase for the full year compared to the same periods in 2021.
The company's success can be attributed to its unique business model, which is largely insulated from supply chain shortages and certain inflationary impacts that many retailers are experiencing. The RealReal follows a traditional consignment model, where individual consigners send items to be sold on the platform or bought directly for cash or site credit. The company also offers a selective concierge service, where it goes into consigners' closets and hand-picks items.
As a sustainable company, The RealReal gives new life to pieces from thousands of brands across various categories, including women's and men's fashion, fine jewelry and watches, art, and home décor. This supports the circular economy and makes selling effortless for consignors through free virtual appointments, in-home pickup, drop-off, and direct shipping.
The RealReal's robust digital platform has allowed it to take market share from traditional brick-and-mortar consignment shops. With a focus on key initiatives such as updating their consignor commission structure, improving efficiency, cutting costs, optimizing product pricing, and pursuing potential new revenue streams, the company is well-positioned to drive towards profitability under the leadership of its newly appointed Chief Executive Officer, John Koryl.
