You Could Make $50,000 Selling Your Luxury Bag Online

Two years ago, Marie Green, a San Diego fashion stylist, was running out of closet space. She was spending $12,000 to $20,000 a year on high-end clothing, handbags, and shoes -- but couldn’t wear it all.

Then she discovered the RealReal, an online reseller of luxury clothing and accessories.

“It literally changed my life,” said Green, who’s sold more than $50,000 of merchandise on the site and does much of her shopping there. Green, a former employee, continues to earn a stipend for referring consignment customers to the site. Last year she bought a limited-edition Louis Vuitton handbag for $1,495, about half the retail price. Green says she now spends from $6,000 to $10,000 a year on high-end clothing. “It’s a constant edit for my closet,” she said.

Sales of pre-owned luxury goods are soaring as online marketplaces including the RealReal and Paris-based Vestiaire Collective allow brand-obsessed consumers to recycle their fancy clothes and purchase more for less. The market for secondhand luxury apparel, accessories, watches, and jewelry is worth about $19 billion, according to Claudia D’Arpizio, a partner at Bain & Co. Leather goods and clothing, $4 billion of that market, are growing faster than the total luxury industry.

“We’ve moved from an era of owning goods for life to one where we enjoy stuff, use it, and let it go,” said Fanny Moizant, a co-founder of Vestiaire. She estimates that 80 percent of British women have clothes in their closets they no longer wear and says those clothes are worth about 10 billion pounds ($16 billion).

Impatient Shoppers

The RealReal, founded in 2011 in San Francisco, had revenue of $55 million in 2013 and has forecast it will reach $100 million this year. It has an application called RealBook that lists resale values for more than 500 brands, fed by data from brands’ websites and goods sold to date. Prices for some products, such as Hermes International SCA’s alligator-skin Kelly bag, can exceed the retail price when impatient shoppers want them immediately.

The sites list prices and details and earn a commission on every sale: Vestiaire takes 25 percent; the RealReal takes 40 percent at the start, then 30 percent once a consignor reaches $7,500 in sales. What sets these sites apart from EBay Inc. are the steps they take to authenticate goods. The RealReal has a team of luxury experts who examine the items and guarantee their authenticity before they’re put up for sale.

The secondary market is also good for luxury-goods producers, D’Arpizio said, as it makes the wealthy feel less guilty about spending thousands of dollars on something that sits in a closet, and it helps promote high-end brands, even if it affects sales in outlets and other discounters.

“Buying and selling secondhand luxury goods was taboo a decade ago,” says Yann Le Floc’h, a former Exane BNP Paribas banker who co-founded online reseller InstantLuxe in Paris in 2009. “Now it’s considered smart.”

(Corrects story that ran Oct. 9 to update Green’s background information in the third paragraph.)
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