This is going to be a tight squeeze coming into 2018 as smaller, even more established resale companies start to feel the pinch of the larger players.
With its recent upgrades, What Goes Around Comes Around is waging a war against the big players in luxury consignment.
Born in NYC’s Soho neighborhood, the 25-year-old company — known for its cherry-picked selection of Chanel and Hermès bags, vintage Levis and rock tees — relaunched its website earlier this year in a play to keep up with emerging competitors. And just this month, it opened its buying program — formerly restricted to private dealers and collectors — to the public, putting it head-to-head with other resellers gunning for luxury shoppers’ used goods.
The company, which now runs five stores (in Beverly Hills, Miami and East Hampton, plus a little-known outlet in Roslyn, New York) and a successful wholesale business (partnering with Shopbop, Lane Crawford, Dillard’s and a slew of private boutiques), has experience on its side; Vestiaire Collective was founded in 2009, The RealReal in 2011. However, it has much work to do to catch up to the big venture-backed consignment retailers. The RealReal, for one, is expected to see $500 million in revenue in 2017. What Goes Around Comes Around is targeting $50 million.
From “the vault,” a room housing a mini archive of rare vintage styles located in the basement of the Soho location, co-founder and CEO Seth Weisser discussed the increasingly crowded resale space and what it means for WGACA’s future.
How has WGACA evolved, in terms of the business model?
Originally, we were a true period vintage business: We sold pieces from the ’60s, the ’70s, the ’20s — but, then the ’90s came around, and there was no definable style. Everything became about brand, rather than a certain look, and so we shifted our focus to 13 of the luxury brands: Chanel, Louis Vuitton, …. And in about 2009, we transitioned from selling truly vintage pieces exclusively. We now have one-year-old items — we don’t call them vintage; we call them pre-owned — along with 30-year-old items.
Do you consider yourself a luxury retailer?
Ultimately, the concept of luxury was always exclusivity — though, what’s the definition of exclusivity anymore? We definitely feel that what we offer is very exclusive. If you go deep and dive all over the world, maybe you’ll find these pieces, but a lot of them are extraordinarily rare.
And we do cater to luxury shoppers. Luxury clients are collectors now, and they’ve been taught by the brands themselves to have that mentality. Some discontinue product after one season. Also, some brands never go on sale. Our store answers all of those things. We do have sales.
Where are you getting your product?
We’ve just opened our buying program to the public; people can come in, and we’ll buy their pieces. We don’t consign. So many people have been frustrated with consigning to companies, either because they get a very low price or they don’t get their money when they want it. It’s creating a bad small in the air.
Also, we have buyers in several countries — internationally, the resale industry is more mature than it is in America. There’s also an ongoing auction network — places like Christie’s and Heritage — where we’re active buyers. Obviously, online, there’s a lot out there, but I’d say about 20 percent of the product we purchase online gets returned, as we find out it’s counterfeit.
How big of an issue are fakes in the space?
Luxury shoppers always have the apprehension about pre-owned, because: Why should I buy that, versus buying new? And, yes: Is it real? The more that people feel comfortable, the better for us.
We’ve gone to countries where stores in major international cities, on Main Street, have fakes. It’s definitely a scary proposition, because consumers don’t have the expertise to be able to differentiate, and ultimately, the ability for this business and market to succeed is for people not to get burned.
What do you ensure authenticity?
We built an internal, proprietary system that houses all of the data we’ve collected in our 25 years of doing this. You can see the characteristics a product is supposed to have, to be able to price and compare pricing. An item with go through two to four inspections before it gets our authenticity card. If we suspect something doesn’t match up, even if we know it probably is an authentic bag, it gets rejected.
Are other retailers as strict?
Consignment companies just want to get as much [product] as they can. They’re pricing through an app and an algorithm; we have real-time evaluation of the piece.
The RealReal has grown so quick, so fast. It’s only a few years old, so even the people training their people are new. Inevitably, there are going to be pieces they’ve never seen before, and their guessing game could be to your detriment. It takes time to get to our level of expertise; our people have been training for 5-10 years.
Speaking of … the luxury resale market is getting crowded. Does that pose a threat?
Rebag and The RealReal are the most obvious competitors, since they just opened stores within three blocks of [our Soho store]. But they can’t meet demands and the volume that they’re buying with one store. Retail expansion is part of our strategy; we own five stores, and we plan to open more stores soon.
We laid the foundation for the evolution of the resale industry. When we opened in the early days, vintage was kind of a thrift world. Now, so many people see how much demand there is for luxury. They see us leading the charge and feel it’s easy to get into the business. A lot of them are being backed by VC money, and they don’t care if they’re doing it right; it’s just a data play. In the end, a shakedown will have to happen, because there is a finite amount of product out there with people who want to let it go.
Any specific plans to combat that moving forward?
We’re opening a new headquarters next year, in Jersey City, to expand our space and our operational capabilities. The stores are still important, because of the experience the provide our customer, but the website is kind of our main mission right now. We’ve got 2,000 pieces on the site, and we want to get all of our inventory up there. The quality of our pieces is our top trump card. We’re finding the right way to present it online, so that the quality comes across.
The business has grown so incredibly, exponentially, in the last three years that we need to scale for future growth. We need to stay ahead of everyone trying to come into the space. If you don’t constantly think about evolution, you’re eventually passed by.
This article was originally posted on Glossy.com