Investors December 9, 2019
How Real is The RealReal?
在线视频Following its IPO at the end of Q2, The RealReal’s first quarterly earnings call reported an increase in quarterly revenue and in the number of shoppers. However investors are still concerned that the company is losing money, and we have explored some insights behind The RealReal’s digital performance:
- The number of non-bounced visits (visits that go past the landing page) to therealreal.com experienced a 19.2% YOY Growth in Q3 2019
- Poshmark.com has the largest online market share compared to other luxury consignments
- Shoppers in the US appear to have a preference for luxury consignments over traditional luxury retailers, as seen by saks.com receiving the lowest number of non-bounced visits in Q3 2019 compared to luxury consignment sites
- The RealReal has strong brand awareness, displayed by over 82% of traffic to therealreal.com coming directly and from organic search in October 2019
Market share and brand awareness
在线视频With over 84% of traffic to therealreal.com coming from the US in October 2019 we decided to focus on the company’s market share and brand awareness in the region.
In Q3 2019 there were 10.3M non-bounced visits (visits that go past the landing page) to therealreal.com, representing a 19.2% YOY growth. However the number of non-bounced visits to poshmark.com (a leading competitor) has been significantly higher than other luxury consignments historically and in Q3 2019 there were 53.2M non-bounced visits to the site, representing a 20.4% YOY growth.
在线视频Poshmark aside, therealreal.com has been receiving a higher number of non-bounced visits than both tradesy.com and saks.com, indicating that shoppers are choosing the site over both other luxury consignments and first-hand luxury retailers. In addition in Q3 2019 therealreal.com experienced a 19.2% YOY growth in non-bounced visits whilst both tradesy.com and saks.com experienced a YOY decrease.
Interestingly in Q3 2019 saks.com received the lowest number of non-bounced visits, 3.5M, compared to the luxury consignment sites. During the same period therealreal.com received 10.3M non-bounced visits, poshmark.com received 53.2M, and tradesy.com received 3.9M.
在线视频So where is this traffic coming from?
在线视频At the beginning of Q4 2019 over 82% of traffic to therealreal.com in the US came directly and from organic searches, indicating a strong brand strength. We can also see that traffic from paid search has been decreasing since January 2017.
How authentic is authentic?
A major hurdle for luxury consignments is guaranteeing the authenticity of products. Included in The RealReal’s Operations and Technology expenses is the authentication of products, which contributes to the pressurized margins for the business. But this authentication is what provides buyers with confidence in the site’s products and has done a good job of attracting and increasing the number of shoppers.
However earlier this month The RealReal’s CEO Julie Wainwright stated in an email to customers and consignors that “,” causing the stock to drop significantly.
Despite the reaction from the investment community it appears that shoppers in the US were not overly concerned about this statement. Whilst we see that the average number of daily visits to the site started to drop a few days after Wainwright’s statement on November 6, this started to pick up again shortly after.
Want to know about The RealReal’s international expansion? Download the backing data.