The retailer, which has yet to make a profit, runs a secondhand market for authentic luxury goods
Source: Luxury second-hand site The RealReal sees stock jump 45% after IPO
Look at the quote above and you will find all that you need to know about why the current retail environment is extremely flawed. A company has yet to turn a profit but IPOs and generates over 300 Million in this launch.
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The retailer lost $76 million last year, and $42 million the year before.
StockX just attained a billion dollar valuation. The co-founder steps down and an eBay exec steps in. This is a sign that StockX may be preparing for an IPO as well.
The question is why and how are the bevy of online sites generating these fantastic valuations doing so without turning a profit? While StockX is a private company and information on the income is not readily available, the amount of advertising, the number of employees, and the fact that, like Amazon, their shipping and receiving is operating at a loss, gives a clear picture that StockX’s valuation is rooted in its software and users. StockX has one of the most accessible UX/CX experiences on the market and the site could easily shift into other areas.
In the source article on The RealReal it states,
Poshmark, an online retailer of secondhand clothing, expanded earlier this month into home decor with items including bedding and bath. Online rival ThredUP is opening physical stores.
Meanwhile, Neiman Marcus in April bought a minority stake in resale site Fashionphile. As part of this deal, at select Neiman Marcus stores, customers are able to not only receive an immediate quote for their items from Fashionphile but also payments they can spend immediately on new luxury items at the store.
In my book, Nike’s Consumer Direct Offense, Amazon & StockX: The Disruption of Sneaker Retail, I discuss that StockX only has two options, acquisition by eBay or add categories to eventually IPO. I make this prediction because of my own experiences with Amazon and e-commerce, but I also make a statement that I want to reiterate now:
The RealReal and StockX shouldn’t exist but they do exist because established retail is failing at innovating and story telling.
eBay and Amazon are the original reseller locations, but these new third party platforms were able to creep into the market because where eBay and Amazon saw flaws in retail, StockX and The RealReal saw flaws in eBay and Amazon. The world is about disruption in business. Things that are new and shiny catch the eye and invite users. Why and How are The RealReal and StockX here? They are here because retail has failed to adapt at the physical and digital levels. Here are ten reasons for you to discuss just how two companies that own no inventory have been able to do what they’ve done:
- Retail is stagnant.
- Leasing and square footage isn’t being maximized.
- Brands are making bigger steps towards DTC.
- Retail has failed to realize that personalization and customer service aren’t minimum wage options.
- Discounts don’t drive loyalty.
- Quality inspires loyalty.
- Storytelling is important.
- Fast fashion is a lie.
- Relying on the brand is lazy.
- The “urban” consumer is going digital.
Retail is in a precarious position and the dialogue around the industry is owned by people with data who haven’t worked in the stores and are lacking first hand experience with the shift. StockX and The RealReal shouldn’t have a place in the patheon of “billion” dollar businesses, but they do. The strange thing is ThredUp, Grailed, GOAT, and Poshmark are more popular than established stores and chains with 50-100 locations, which speaks volumes about why brands are looking at digital as the new wholesale.
