Online consignment shop thredUp is taking on The RealReal. The e-commerce site for secondhand items today announced the launch of a new luxury goods storefront, simply called Luxe, which is now available as a public beta. Via Luxe, consignment customers can request a “clean out kit” from thredUp, as per usual, and fill it with both their high-end and low-end items, which the company will then sort upon arrival. The luxury items will then be offered for resale on Luxe, which offers sellers up to 80 percent commissions.
ThredUp’s take of the commission will actually be waived during the launch period, in order to drive user adoption of the new service – meaning users will take home the full, 100 percent commission on sales through Labor Day here in the U.S.
The move comes shortly after The RealReal, a top player in the luxury consignment space, announced it had pulled in an additional $50 million in funding from Great Hill Partners, in order to further grow its business, which includes the expansion of its physical footprint in the form of valuation offices where people can meet with experts to consult on the price of their high-end items, like fine jewelry and watches.
The commission structure thredUp is proposing for Luxe is different from The RealReal’s, which uses a tiered structure where commissions vary based on the type of items being sold, and the dollar amount of net sales. For items $1,500 or less, The RealReal offers a 55% commission, for example, while it pays up to 80% on fine watches. ThredUp’s overall commission structure is also tiered, but in smaller increments with different prices for women’s and children’s clothing. But by the looks of things, most Luxe items should come in around the 80% commision rate.
Also unlike The RealReal, thredUp is focused mainly on apparel, shoes and handbags – Luxe doesn’t currently accept jewelry, sunglasses, formal gowns, or real fur items. The new service isn’t processing designer menswear, either.
According to thredUp, the launch of Luxe was driven by rising searches for luxury goods on its e-commerce site.
“Demand for luxury goods on thredUP is currently outpacing supply with more than 60,000 searches for luxury brands each week,” explains James Reinhart, thredUP co-founder and CEO. “We created thredUP LUXE to bring in the supply to meet that demand,” he says.
Today, luxury sales are not a large part of thredUp’s business. Reinhart says the company, which has 18 million registered users, is on track to sell over 10 million items this year. However, only 1% of its sales are luxury goods.
The company declines to share its revenue figures, but sources told TechCrunch previously that thredUp was on track for a $100 million revenue run rate in 2016. That would be up quite a bit from the $19 million reported just a few years ago. And with the addition of higher-priced, higher-margin items, those figures could grow still.
Sellers who want to try the luxury service can send in items using thredUp’s new, specially designed, reusable clean-out bags, which not only protect the high-end items, but also reduce waste compared with the plastic bags some sites like this – including thredUp, typically – today offer.
Like The RealReal and others, thredUp will also authenticate the items via expert evaluations, both to verify their authenticity as well as to suggest prices. The experts will inspect, itemize and photograph the goods, ahead of their posting to the new site. And they’ll determine what qualifies for resale, too – the company won’t accept items with damage or signs of wear, like pilling, stains, or holes, nor will it take items with missing labels.
However, sellers don’t have to go by the price suggestions offered. They can choose to set their own prices, and even reclaim anything that doesn’t sell within 90 days for free. They can also continue to adjust their item’s price during the consignment period – for example, lowering it in order to boost interest.
The goal with the expansion into luxury is to turn thredUp into a more comprehensive service for reselling items, whether that’s everyday clothing from Gap and Banana Republic, for example, or designer clothes, handbags and shoes.
“Luxury items only make up 15 percent of the typical woman’s closet, but to date, there hasn’t been an easy to way to sell a mix of high-end and everyday brands,” notes Reinhart. “ThredUP Luxe offers the only one-stop-shop for women to buy and sell everything in their closet,” he says.
Luxe is only available as a beta for the time being to interested buyers and sellers who request an invite here. It will later become available on the main thredUp site, at thredUP.com/designer.