The RealReal isn't profitable but it grew its revenue by 55% in 2018, and plans to take over the luxury consignment market.
, the RealReal is still losing money. The company lost $75.8 million on $207 million in revenue in 2018. This is compared to 2017, when the company lost $52 million on $134 million in revenue.Investors have seen triple-digit returns on some 2019 IPOs, but UBS think there are 2 key reasons it could cool by midsummerStill, the RealReal is a high-growth company. Its revenue was up 55% from 2017 to 2018, and its gross profits of $136.9 million were up 56% in the same period.
In its pitch to investors, the RealReal said its biggest competition isn't other online retailers but brick-and-mortar stores where people resell their stuff. But the company also positioned itself as a marketplace — an online platform that connects buyers to sellers.The company also told investors that the total addressable luxury goods market was expected to hit $294 billion in 2018, and that number is rising.
As a consignment shop, the RealReal relies on outside resellers to list their inventory on the website. Most of its revenue comes from its— the fee it charges to the sellers on its platform. In the first quarter of 2019, it charged 35.3% to resellers on every transaction. This business model creates some unique risk factors. The RealReal disclosed in its S-1 that it may fail to generate enough"pre-owned luxury goods," and that the luxury market may be hit particularly hard during a market downturn since consumers could spend less money.
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