Rebag has made a big business out of selling old handbags.
The luxury resale platform — now with seven stores across New York, Miami and Los Angeles — has taken a total of $68 million in funding over the last seven years and is now using those cash reserves to propel itself to the next level in time for the post-COVID-19 shopping era.
Rebag considers itself a premium resale platform because it pays for used goods upfront rather than working on a peer-to-peer or consignment model. The company was founded in 2014 by Charles Gorra, formerly of Rent The Runway and investment banks like Goldman Sachs.
Gorra says that key to driving new business today is not one-upping resale competitors like The RealReal, but rather harnessing the power of unused assets in clients’ wardrobes. “Our main belief is that we compete against idleness — that’s our main competition. We believe right now that only 10 percent of luxury goods owners actively sell on the secondary market. That means 90 percent of owners do not sell anything and we think it’s largely because of convenience, so we are here to focus on building a convenience that attracts sellers and customers,” he said.
Gorra noted that Rebag’s sales grew 50 percent over the last year, particularly as women looked to treat themselves with luxury goods that they perceived to have lasting investment value. He projects that over the next two years, the company will grow an estimated 2.5 times its current size. Currently, the Rebag’s average order value is about $2,000. While stores are important commerce centers, Rebag’s site represents the majority of company sales.
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Gorra feels that luxury consumers, particularly those with a considerable inventory of goods, want their hand held as much as possible throughout the resale process. To offer another layer of service, Rebag launches a proprietary AI Clair Trade program today that sellers can use from the comfort of their own homes.
By photographing a bag, Clair Trade will automatically estimate its retail price. If the seller is interested in buying another product on Rebag’s platform, it will automatically tally their final bill by subtracting the cost of their goods from their cart’s sticker price.
Inside the Clair Trade process. Courtesy/Rebag
“It enables more of a circular mindset to buy and sell in one transaction,” Gorra said of the program’s potential. Ultimately it could be a boon to Rebag’s bottom line, because as Gorra noted — “the reality is that the secondhand market is supply constrained.” Currently he estimates the company has an inventory of about 25,000 bags.
“It’s about — how do you convince someone to part with a beautiful item instead of keeping it. In order to do that we pay them a certain value upfront. It’s a seamless process that removes friction for sellers. Our core business idea is the value of time. In our stores, for instance, we will buy any product within 15 minutes — it creates supply when we make it that easy,” Gorra said.
When shoppers are provided a sales quote, they are always shown what percent it represents of Rebag’s retail price. “That’s important to help customers benchmark themselves versus the retail value,” he said.
In the time since Rebag’s founding, secondhand shopping has — as Gorra noted — “become mainstream.” He feels that, particularly with handbags, there are two main categories of secondhand shoppers now crucial to the market’s success.
“It’s still resilient — this idea of resale as a way to get into luxury in more affordable way. It’s that proxy, especially for accessories, that is attracting a lot of customers,” he said.
But there is increasingly a subset of affluent customers who want something no one else has — a super rare, limited-edition Louis Vuitton or Chanel bag from the early 2000’s, for instance. “It’s a small part of the market that I would say is more of an exception than the norm,” Gorra said. But it is this group of people who increasingly influence first-time secondhand shoppers from the aforementioned category to explore the world of pre-owned fashion goods.
What the two groups do have in common is an awareness for the environment. “I think a few years ago the notion of sustainability was nice to have, but if you fast-forward six years we are in a market now where sustainability is a priority for consumers and therefore it’s become a priority for brands,” Gorra said.
Also key to growing Rebag’s business over the next few years is a recent expansion into timepieces and fine jewelry, which Gorra estimates could become 20 percent of overall sales. But he does not foresee any future interest in shoes or the larger apparel category. “Our positioning is very specific. A lot of the other companies are trying to address a larger share of the closet than we are,” he said, noting that business-wise handbags and jewelry are particularly appealing as they are not size-restrictive and take up minimal storage space.
A Rebag boutique in Dadeland, FL. George Panagakos
Overall, he feels that the handbag market has begun cycling back to colorful trends and away from the more pared-back investment pieces that sold during the pandemic. “I think when we are talking a Chanel bag, Louis Vuitton, an Hermès Kelly, maybe you don’t have a way to showcase it immediately [during the pandemic] but if you take long-term stock of bags, it’s a good chance that they will still be sought-after in a couple years so in a way these long-term minded purchase were pretty resilient during the pandemic,” he said.
This drove up the cost of classic bags that, due to manufacturing constraints, were nearly impossible to come by on the retail market. Louis Vuitton’s classic Pochette bag, for instance, remains sold out across the company’s U.S. stores. Its resale value now exceeds the bag’s $790 price tag and is trading for about $960 on Rebag.
“The Pochette right now we are paying double what we paid sellers a year ago. Especially the limited-edition styles. The retail price doesn’t reflect that, they are so hard to find that growth in the resale market has outsized any price increase,” he said.
But while the classic Pochette remains hot, Gorra said other investment-minded trends from the pandemic “are already starting to reverse. Maybe it’s seasonal for summertime but we are seeing more color and limited-edition things create a lot of excitement.” Louis Vuitton’s By the Pool collection remains among the most popular bags of the season, he said.
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