💿 Should you add The RealReal to your portfolio?
AND: Vinyls are what's on the coffee table
Oh, 2020 how you’ve come and gone. Thank you for teaching people how to wash their hands and for making masks great again. We owe you one!
This issue closes out the year by giving you insight into The RealReal’s S1 filing from 2019.
Marketplaces are blowing up, and I’ve always had an interest in learning about The RealReal’s business model. The question is… is the luxury consignment juggernaut worth your investment dollars?
The answer might surprise you…
Teaser: Next week's issue will be the first edition of our seasonal lookbooks. Stay tuned for winter inspiration!!
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brand of the week: Rhone
Rhone was born out of a need-created to fill the void in the modern men’s lifestyle offering. To provide an attire option with purpose-clothing that refuses to be designated as business or leisure or any pursuit between. For the man that values form and function alike.
is The RealReal investable?
The sustainably conscious consumer is creating a new beast in the consignment economy. That’s why you hear brands like Allbirds, Nike, and Adidas talk of carbon footprints and recycled products.
But you can’t just “recycle” a Gucci bag into another product haha. That’s why The RealReal has an interesting opportunity to fill a void in the aftermarket luxury space. Looks like a great business in theory.
Trends are in The RealReal’s favor. We’re accepting resale more, conscious of our consumption, and have a renewed focus on sustainability.
So I took a quick glance at their S1 from their IPO in 2019 to see whether it’s a risky investment to add to your portfolio, or not.
those risk factors tho
There’s a lot of them that’s for sure. I laid out the ones that reallllyyyy concerned me:
If we fail to generate a sufficient amount of new and recurring supply of pre-owned luxury goods by attracting and retaining consignors, our business would be harmed.
We may not be able to identify and lease merchandising and fulfillment facilities in geographic regions that enable us to effectively scale our operations and attract and retain specialized personnel to effectively manage the merchandising operations required to authenticate, process, and sell consigned luxury goods.
We have a history of losses and we may not achieve or maintain profitability in the future.
National retailers and brands set their own retail prices and promotional discounts on new luxury goods, which could adversely affect our value proposition to consumers.
Our success depends on the accuracy of our authentication process, and failure by us to identify counterfeit goods could adversely affect our reputation and expose us to liability.
there’s some good… kinda
They’re incredible at managing acquisition and marketing costs. In just 6 years, they slashed costs to acquire customers in half. While adjusting ad spend in real-time to optimize across all channels.
As I mentioned, they play into the sustainably conscious consumer, and I think they gain some headwinds from that.
I mean, their backs are against the wall. I’m not sure I can get behind a business that simply can’t control their own supply and have literally no control of costs. Plus, habits change. What if people want to hold onto their shit longer. What will they do then?
And we haven’t talked about counterfeits. Amazon and Alibaba can’t even deal with it, so you think The RealReal can?
But I love the possibility of an acquisition (LVMH maybe?). And it makes sense! They could control their topline products while building relationships with aftermarket buyers and sellers. But is profitability or acquisition on the horizon? Maybe. But I’ll look elsewhere to put my dollars.
what’s on the coffee table
If you thought Mating Ritual's 2019's album 'Hot Content' was a fun ride, then strap in for The Bungalow. Recent singles "King of The Doves" and "The Bungalow" are dripping with swagger, sex appeal, and the kind of good-times-only-please attitude we have come to expect from Mating Ritual. These guys are throwing the party of the year, and this is your personal invite.
MISHA MILL // Interior design and architectural visualization studio, founded in March 2014.
Some believe coronavirus will prompt fashion consumers to reassess their values and shift spending away from fast fashion and luxury megabrands. They are wrong, argues Eugene Rabkin.
How to Market a New Brand [CASE STUDY]
Effective marketing is a challenge for every type of consumer brand, but especially for emerging brands. In our latest in-depth case study, BoF decodes the strategies driving real results for eight young lines.
See you next Tuesday,
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