We dubbed 2018 the year that resale went mainstream, and clearly that's only continuing into 2019. Rebag and its investors are certainly betting on it. The Kyle Richards-beloved luxury resale destination known for handbags and for paying sellers upfront just announced a Series-C $25 million funding round that brings its total funding to $52 million; it was led by private equity firm Novator and also includes existing investors General Catalyst and FJ Labs.
That, of course, means expansion — and lots of it. Like the other rapidly-growing, digital-native resale sites with lots of investor money — Thredup, Poshmark, The RealReal, etc. — Rebag has gradually been building out its brick-and-mortar footprint with five now standing across New York and Los Angeles. But soon, those stores are going to be all over the country, from city blocks to luxury malls, with plans open 30 doors in the "medium term." That's significantly more than any of its resale competitors currently operate, most of whom have raised significantly more cash than Rebag. (Though that's not to say some of them aren't heading in a similar direction.)
"Since opening our first store in 2017, we've found brick and mortar incredibly successful for us," CEO Charles Gorra tells Fashionista. "Customers want to be able to touch and feel before they make the purchase." The company will set up shop in locations where there is an existing luxury market and where Rebag has already seen online engagement. Of course, Rebag will need the inventory to stalk all of those stores, but Gorra feels that won't be a problem, while acknowledging that a lot of people still aren't selling their old goods. "Only 10 percent of luxury handbag owners in the U.S. market are engaged in the resale industry," he notes.
"That's quite an untapped market," Gorra adds. "We're consequently working on activating those potential sellers, and we're having a lot of success, mainly because we are opening these stores to begin with – we're reaching large populations of luxury handbag owners who have not accustomed themselves to reselling until they've discovered Rebag." Gorra says Rebag works directly with stylists and personal shoppers to source inventory as well.
But physical retail isn't the only thing Rebag is investing that $25 million into: The other is technological tools to refine the ways in which it tackles pricing and evaluates handbags. Gorra says the company will use the "massive amounts of data" it has collected since launching in 2014 to develop these tools. Without getting too specific, he says the results could involve making pricing information more transparent for customers, and easier to determine.
"We have developed a set of algorithms to determine the secondary market value of handbags," he explains. And it's similar, apparently to determining the secondary market value of used cars. "Our internal model is very comparable to Kelley Blue Book, to optimize fair and competitive prices for both our buyers and sellers so our customers don’t have to put in the work themselves." Rebag's goal, he says, is "to become the standard for the luxury resale industry, just like Kelley Blue Book is the main resource for the auto industry."
The money will also go toward hiring: Rebag plans to triple its 100-person team in the near term. It's also possible that we could see Rebag pursuing the types of designer partnerships that The RealReal and Thredup have done recently, where brands actually encourage their customers to resell their purchases. (It's something not all brands are on board with, but those who are already sustainability-minded, like Stella McCartney and Reformation, have come around.)
"There is a lot to be said about the potential for more collaboration between luxury brands or retailers and trustworthy resellers," says Gorra. "Resellers can offer a lot of insight to these luxury brands and retailers on consumer spending habits, the lifecycle of a bag, influx in the market, just to name a few factors. To top it all off, there's a very strong give and take element – resellers introduce new consumers to the brands with their accessible price points, and those consumers will build brand loyalty and continue shopping luxury. Likewise, existing fans of the brands sell their once-loved bags to resellers, so they can earn funds for purchasing the brand's newest styles."
Could there be a Hermès x Rebag collab in our future? It's tough to imagine, but these days you never know.