Second-hand luxury marketplace The RealReal, Inc. showed progress in important metrics that point to profitability on the horizon in its third quarter results, IPO Edge Editor-in-Chief John Jannarone told Cheddar TV in an interview Monday evening. Importantly, the company showed an increase in sales per order, which suggests customers are buying both more items and shopping in more expensive categories as they grow comfortable with the site. The so-called take rate, or percentage of each order that The RealReal collects as a commission, also rose. Those metrics are both critical for the company to attain profitability as it grows.
Jannarone also pointed out that luxury brands such as LVMH Moet Hennessy – Louis Vuitton, Societe Europeenne and Hermès International Société en commandite par actions are unlikely to offer competing platforms. Such companies are far more interested in selling new products. What’s more, it would take years and heavy investment to replicate The RealReal’s platform, which has established strong trust with consumers.