The RealReal heads to Japan, its first step outside of North America

August 27, 2013 02:44 PM

The RealReal Inc., the 2-year-old U.S.-based online consignment shop that sells used luxury-brand apparel and accessories, is taking its e-retailing formula to Japan by launching

Japan is the first international market the web-only retailer is expanding to outside North America. The U.S. site sells to consumers in the United States and Canada.

The RealReal, No. 554 in Internet Retailer’s Second 500 Guide, generated an estimated $15.1 million in sales last year and has said it projects four to five times that for 2013. It has raised $21.5 million in funding to date, including $14 million in a funding round this spring.

“The Japanese are technically savvy and shop for fashion online, they love, buy and understand luxury brands,” says founder and CEO Julie Wainwright, explaining why the e-retailer targeted Japan for its first major expansion. Wainwright says the e-retailer has plans to expand to other markets as well, but declines to say which at this time.

Keisuke Seto will lead The RealReal’s Japanese operation. Seto previously was CEO of Groupon Japan.

The RealReal Japan will use the same sourcing strategy it employs in the United States for the Japanese operation. The e-retailer’s U.S. business model relies on one-by-one shipments coming in from product consigners, who receive a 60%-70% cut when their item sells on TheRealReal also offers “white glove” service—meaning a RealReal representative will pick up consigned items—to sellers in major cities. Wainwright says it will offer the same options, including the white-glove service, to consumers in Japan. It has established a distribution center near Tokyo.

After several years of declines due to recession, the Japanese market for luxury goods is bouncing back. Luxury goods sales grew 14.3% year over year from January to May this year, according to the Japan Department Stores Association, a retail trade organization. Numerous market analyses from retail consultants report that while luxury sales are coming back, Japanese consumers are more discerning about what and when they’ll buy luxury items, which could help The RealReal’s prospects in Japan.

“Japanese luxury shoppers are now also looking for products to offer a value commensurate with their price,” write McKinsey & Co. consultants Katrien Bollen and Brian Salsberg in their Luxury Goods in Japan report. Japanese luxury sales will reach $6.7 billion this year and $6.8 billion in 2014, according to research firm Euromonitor International.




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