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Business Operations Business Models

How Does The RealReal Make Money (Business and Revenue Model)

The RealReal business model

The RealReal logo
Here’s what you should know:
  • What is The RealReal, and how does The RealReal work?
  • How does The RealReal make money?
  • Consignment Fees from Sales
  • Subscription Revenue (First Look Membership)
  • The RealReal profit and revenue
  • What is the The RealReal business and revenue model?
  • The RealReal funding, net worth, and market cap
  • The RealReal subsidiaries, acquisitions, and exits

How does The RealReal make money? Well, here is a full, in depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the The RealReal business and revenue model, how much money The RealReal makes per year, and how The RealReal works.

What is The RealReal, and how does The RealReal work?

The RealReal is an online and brick-and-mortar consignment marketplace for authenticated luxury goods such as apparel, jewelry, home decor, fine art, and more.

Founded in 2011 by Julie Wainwright, The RealReal began trading on the NASDAQ on June 28, 2019, under the ticker symbol “REAL”.

Since that time, The RealReal now has more than 27 million members as well as selling more than 22+ million items on its platform in 2021 alone, making it one of the world’s largest online marketplaces for the authenticated, resale of luxury goods.

So, how does The RealReal work? To shop on The RealReal, first either download their app on the Apple App Store or Google Play store; or go to their website and create an account.

Once signed up, you can shop and browse from discounts up to 90% off retail prices by your favorite designers. After you’ve found what you’re looking for, simply add the item to your bag and head to checkout. You have up to 14 days from the shipment of the item to make a return.

Some of The RealReal’s competitors include Poshmark, EtsyDepopVintedMercari, and other marketplace apps that sell luxury goods.

The RealReal App in Apple App Store | The RealReal Business Model | How Does The RealReal Make Money | How Does The RealReal Work
Source: Apple App Store | The RealReal

How does The RealReal make money?

According to The RealReal, The RealReal has more than 27 million members and has sold 22+ million items on its platform. Including the $1.5 billion of gross merchandise value (GMV) it handled in 2021 alone.

So how does The RealReal make money off of all these sold items?

Below is a breakdown of how much money The RealReal makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how The RealReal makes money in 2022

The RealReal has a revenue model that makes money in two (2) ways; from the consignment fees it collects from sales and subscription revenue from its First Look membership.

#1. Consignment Fees from Sales

The RealReal makes most of its money from the consignment fees “commission” it collects off of each sale made on its platform.

As noted above, The RealReal processed $1.5 billion of gross merchandise value (GMV) for roughly 797,000 active buyers in 2021. Of that, The RealReal takes between a 15% to 80% consignment fee on all of it. You can see the simplified breakdown below or click here for The RealReal commission chart.

How much does The RealReal take? (The RealReal consignment fee percentage)

  • 15% to 80% consignment fee (depending on the price of and category of the item)

Note: The RealReal sold more than 22+ million items on its marketplace in 2021.

#2. Subscription Revenue (First Look Membership)

The RealReal also makes money through its subscription service, First Look, that they offer to shoppers.

For $12 to $49.95 per month, First Look members get exclusive benefits such as early access to shop from 10,000+ daily new arrivals 24 hours before everyone else, “secret sales” for members only, unlimited upgrades to 2-day shipping, and more – depending on the membership you have. Which you can see below.

How much does The RealReal First Look subscription cost?

  • First Look: $12 per month
  • First Look Platinum: $49.95 per month
The RealReal First Look Membership | The RealReal Business Model | How Does The RealReal Make Money | How Does The RealReal Work
Source: The RealReal

The RealReal profit and revenue

In 2021, The RealReal reported $467.7 million in revenue.

Note: Because The RealReal, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of The RealReal’s publicly released financial reports, including annual reports, through The RealReal’s investor section on their website.

What is The RealReal business and revenue model?

The RealReal makes money through a few revenue models that they combine within their company, they are:

  • Commission based business model
  • Subscription business model
  • Transaction based business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model

The RealReal funding, net worth, and market cap

According to The RealReal’s Crunchbase profile, The RealReal has raised $356.9 million over 10 rounds and has a market cap of $218.9 million as of August 2022.

The RealReal subsidiaries, acquisitions, and exits

To date, The RealReal has not made any acquisitions, investments, or exits.