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Luxury resale platform Rebag is launching consignment. Formerly known for its buyout model, which pays the customer upfront for a flat rate, the platform will now offer consumers three options at point of sale: ‘buyout’, ‘trade’ and ‘consign’. The goal is to make the consignment process more appealing to online resellers, and fix what ails the model at the same time. Can it work?
Unlike buyout (where Rebag buys the bag from the seller for a fixed price), consignment means the seller gives Rebag possession of the bag and authorises the company to sell it for them. Typically, expected consignment profits are murky as most resale platforms give a non-binding indication of price (the final amount depends on how much the bag goes for). Rebag’s consignment option has a fixed, guaranteed price range. It’s a bid to onboard more consumers by giving them more options in a competitive resale field.
As it nears its 10-year anniversary, Rebag is eyeing growth. “You get to that place where you have to become a bigger company,” CEO Charles Gorra says. “We’re at that juncture, even though we operate as a startup.” The company says it is tracking toward profitability in the near-term and currently has 150 employees. Rebag declined to share revenue. Gorra estimates that for every buyout user, there are multiple sellers that would opt to consign using Rebag’s new model.
“We want to be the leading player in this sub-segment of the luxury resale market,” Gorra says. “Not having a consignment proposition was a hurdle there. If we want to own that sub-set, we have to have the broadest value proposition for each specific user and each specific use case.”
Gorra is hoping Rebag’s spin on the consignment model will lure them. The company identified three problems with traditional consignment it wants to solve: ambiguous payout amounts, fluctuating commission rates, and uncertain timelines.
“Consignment has lots of negative biases on the seller side,” Gorra says. “The [traditional] model, by design, has lots of frustrating experiences: [The seller] has very little control over what happens.” Other resale consignment sites offer sellers data-driven price estimates, but tend not to guarantee that this is actually how much the seller will make once the piece sells. Some also reserve the right to discount items, rendering earnings lower than expected. Aspects of the consignment model have evolved points of competition, from seller payout timelines to commission rates.
The accessory resale platform is partnering with the British auction house in a bid to establish itself as a high-end player, in what CEO Charles Gorra calls ‘a meeting of the minds’.
Like the primary luxury industry, resale has seen a pullback in consumer spend amid a still-constrained consumer economy, which could prove a challenge to Rebag’s growth ambitions. That said, just as ultra-luxury consumers are still spending, the pullback is less of a concern for ultra-luxury resale, Fashionphile founder Sarah Davis told Vogue Business in March — and this is the arena Rebag operates in. Plus, according to The RealReal’s 2023 Luxury Resale Report, published in August, average luxury resale order values are up and Gen Z spent 40 per cent more on vintage bags on the site this year compared to last.
Initially, Rebag’s buyout-only model was its answer to these shortcomings. “We thought, we’re going to create something fast and immediate,” Gorra says. But, over time, the company saw a need to go beyond this option. Rebag sellers were going to third-party sites to consign on items that could have otherwise gone via Rebag.
Rebag’s point of difference is to offer sellers a binding price range for consignment. This, Gorra says, is key in an arena in which most consignment quotes are not guaranteed. “If it’s an indicative, non-binding quote, it doesn’t mean anything, right? It’s misleading.”
The consignment range is calculated using Clair, the same AI pricing technology Rebag uses for its buyout and trade options. “We now have almost 10 years of data — the market’s, our own. So it comes up with a realistic expectation,” Gorra says.
He also notes the site’s competitive commission rates. Rebag’s will range from 35 per cent for bags up to $750 to 15 per cent for bags worth $7,500 to $50,000. Trade analysts agree that a 40 per cent consignor fee is fair, according to consignment service Around The Block.
The CEO knows that this model can’t solve all of consignment’s pitfalls — namely, uncertain sales timelines. While Rebag can guarantee a price range and a 15-day payout period, what it can’t ensure is how quickly an item will sell. “The catch is that it’s gonna take a little time,” the CEO says. “That is always the one uncertainty in the consignment process.”
The minimum end of the consignment quote’s range is rarely lower than the buyout option — whereas the top end has the potential to eclipse the buyout offer by a thousand-odd dollars. This means sellers who consign — meaning they’re willing to wait to receive their earnings until Rebag sells their item, rather than receiving a buyout payment upfront — have the potential to make more money, and aren’t risking losing out as they know the minimum payout from the get-go.
The assumption that sellers will want to — and be able to — wait longer for a larger payout is predicated on the same logic as Rebag’s wallet feature, which will also be available to those who consign. With the platform’s current buyout model, if a seller chooses to keep the funds in their Rebag wallet, they can earn 1 per cent interest per month — meaning they can make 12 per cent extra on a sale if they let the money sit for a year. If someone is selling a multiple-thousand-dollar bag, they’re likely in a position to wait a couple of months for their earnings. “These are usually discretionary dollars that can be moved around a few weeks — particularly when there’s a higher payoff,” Gorra says.
Rebag is betting that this minimum-earning guarantee will be enough to draw sellers used to other consignment options — but knows it will take time to change habits. “We’ll have to do a lot of education,” Gorra says. This involves messaging (via press and Rebag’s own channels). It’s also enlisted influencers to post educational content about the new offering. Ultimately, it will come down to conversations with sellers. “We’re going to have to have this conversation one by one, because it is technical,” Gorra says. “But we think we can get people there.”
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