Secondhand Sellers Are Going Premium

In theory, a weakening economic environment seems good for secondhand platforms: People are more likely to sell valuable items from their closets while bargain hunters emerge. In practice, it is a bit more complicated.

The RealReal, an online marketplace for luxury resale, said on Tuesday that gross merchandise value—the total value of goods sold through its platform—fell 7% in its second quarter, worse than the 5.7% decline that Wall Street analysts were penciling in. ThredUp, which sells more generic brands, fared better and reported revenue growth of 8%, exceeding expectations. Both companies reported narrower net losses than analyst expectations, sending The RealReal up 6% in after-hours trading and ThredUp by 2.8%.

Despite better-than-expected profits, the selling environment isn’t exactly hospitable for either platform.

ThredUp, which tries to keep its pricing 60% to 70% lower than what consumers could buy at regular retail, is facing a very promotional environment in which brands are offering steep discounts on new products. On the company’s earnings call on Tuesday, ThredUp said the market for selling clothes remains competitive, though it is improving.

Meanwhile, demand for luxury goods has generally been lukewarm in the U.S. Even the prices of highly coveted secondhand watches such as Rolexes have fizzled recently. ThredUp is projecting a slowdown in top-line growth this year compared with 2022, while The RealReal is expecting a slight decline in sales volume.

Both platforms are trying to attract wealthier, more resilient customers by upgrading their product mixes, even if it reduces their customer base in the near term. ThredUp said the budget shopper continues to look more challenged and said it is focused on attracting the “incrementally more premium buyer.”

The RealReal, meanwhile, has tweaked its commission structure for consignors by allowing them to retain more of the revenue earned from the sale of the most expensive, in-demand items while reducing incentives on products selling for less than $100. While that has reduced the company’s sales volume, it helped improve gross margins to 65.9% last quarter, up about 9 percentage points from a year earlier.

The tricky part for both platforms is that they haven’t been around long enough to know how their target buyers and sellers behave during downturns. Given that both businesses are, to some extent, supply constrained, further weakness could be a good thing if it encourages more people to raid their wardrobes. And, judging by the strong record at off-price retail during downturns, demand for value products should hold up.

So far, though, a weakening economic environment hasn’t been a bonanza for secondhand goods.

A new investment fund targeting celebrity-founded consumer brands has secured US$40 million in commitments and is rapidly approaching its US$50 million fundraising target, signalling growing investor appetite for alternative opportunities beyond traditional asset classes.

The Global Talent Fund, which has a maximum raise of US$100 million, focuses on building and investing in consumer businesses alongside celebrities, athletes, and influential personalities who play an active role as co-founders rather than simply endorsing products.

The strategy is based on the belief that changes in consumer behaviour, particularly the rise of social media and digital engagement, have fundamentally altered how brands are built and scaled.

GTF founding partner Jeremy Hunt, who is helping lead the fund’s strategy, said consumers increasingly feel connected to personalities they follow online and are more willing to support products developed by those individuals.

“Consumers are searching for content to engage with, and when a celebrity they like or follow takes them on the journey of creating a product or brand, they genuinely feel part of that process,” he said.

The fund is targeting high-growth consumer sectors including wellness, hydration, beauty and recovery, areas Hunt believes continue to benefit from strong global demand and ongoing innovation.

Rather than backing celebrity endorsement deals, the fund is seeking businesses where talent is deeply involved in product development, brand creation and long-term growth.

According to Hunt, authenticity remains one of the biggest differentiators between successful celebrity-backed brands and those that fail.

“The consumer can see clearly if someone is simply being paid to promote a product,” he said. “The winners are typically the brands where the celebrity has genuinely helped build the business from the ground up.”

The model has attracted support from several prominent Australian investors and business families, reflecting broader interest in alternative investments with global growth potential.

Hunt said consumer brands offered a level of tangibility that many investors found appealing.

“Consumer brands are what we touch, feel, smell and taste every day,” he said. “Our investors understand the growth potential in the model, but they also want to be part of the journey.”

The fund’s rapid progress towards its fundraising target comes amid growing recognition that celebrity influence, when combined with strong commercial execution and scalable business models, can create significant enterprise value.

With several high-profile celebrity-founded businesses generating billion-dollar exits in recent years, supporters of the strategy believe the opportunity remains in its early stages.

For more information, contact marc@kanerbridge.com.au

Secondhand Sellers Are Going Premium

The RealReal and ThredUp have gone upscale to improve profitability—a challenge in tougher economic times

With US$40 million already committed, the Global Talent Fund is attracting investor attention with a strategy focused on building globally scalable consumer brands alongside high-profile talent.