Luxury handbag resaler Rebag has closed on $15 million in a Series D funding round, even as questions abound over the consumer’s appetite for pre-owned goods amid growing coronavirus anxiety.
Proceeds from the funding round will enhance technological advancements in Rebag’s proprietary software, such as Clair by Rebag, which allows for instant merchandise pricing offers. The funding will also help scale Rebag’s Infinity Program, a hybrid rental/resale model that gives customers up to one year to trade in their purchase for a new style. The program offers varying tiers of credit applied to the follow-up purchase, designed to foster long-term loyalty versus one-off buying behavior.
The resale platform touted its ability to secure funding during the coronavirus outbreak as a testament to the enormous power of the resale market and the future of circular fashion.
“Over the last few years, we’ve witnessed the tremendous growth potential of the resale market,” said Birgir Ragnarsson, partner at private equity firm Novator, which led the round that included existing investor General Catalyst and brings ReBag’s total raise to $68 million. “I am a firm believer in Rebag’s unique positioning, luxury expertise and cutting-edge innovation. By continuing to be a leader in the secondary market, Rebag bridges the gap between technology, luxury and the future of retail.”
“We believe the current environment is going to accelerate the transition towards resale. At Rebag, we built a brand and a platform that can cater to that growing audience. New opportunities will arise, and we are gearing up to capitalize on the secular trends towards resale ubiquity,” founder and CEO Charles Gorra said.
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Gorra launched Rebag in 2014 as a digitally native brand and has since opened several brick-and-mortar stores in places like Manhattan, Los Angeles and Miami. Rebag said stores closed due to coronavirus restrictions are expected to resume activity in line with government mandates.
The burgeoning resale market was in growth mode before the coronavirus pandemic, and retailers and brands such as Ralph Lauren and Nordstrom were looking at plans to enter the space. Others, such as Macy’s and J.C. Penney, have partnered with ThredUp to test in-store thrift shop-in-shops. And now secondhand selling app Mercari has jumped on the bandwagon with its own handbag authentication process.
Typically, consumers need a bargain when economies are in a recession, which was expected for global economies slowing down after years of growth. Prior to the pandemic’s growth-halting impact, many questioned how much runway truly lay ahead of resale markets. Some believe the resale business appeals to a niche clientele, and not necessarily the broader consumer base.
With the steepest recession since the Great Depression looming on the global economic front, there are now concerns that consumers without jobs will focus more on basic needs than on deals for handbags and apparel on the secondary market. On the other hand, some cash-strapped shoppers might need to scour resale markets like ThredUp for deals even better than the markdowns mainline retailers are offering.
And while luxury goods tend to perform better than the moderates market, that too was before COVID-19’s new normal, as consumers are likely to be concerned about what kinds of microbes pre-owned merchandise might carry. Executives at Rebag declined to comment on how they plan to address potential sanitary issues around the products they accept.
There’s also the issue of inventory. When stores reopen en masse, out-of-season goods are expected to flood the market at deep discounts, likely impacting the off-price channel and secondhand market.