Is The Real Real a Viable Business?
TheRealReal reported earnings last night. Simply, the losses are pretty staggering. The big questions I have are: what are they investing in and are is it producing results?
A few tidbits: 1 - GMV growth but escalating expenses.
2 - Ops + Technology = 50% of gross revenue.
3 - Marketing only 12% of gross revenue. Repeat business is 84% fo total. Where will new customers come from is the question I have after seeing this?
4 - SG&A is 3x their marketing expenses.
5 - Flat business during the pandemic but appears to be on the way back.
6 - 30% of new consigners are coming from their stores. I think for this business to survive it likely needs to be something like 60%.
7 - Isn't international a big missing component here? Feels like there are about a half-dozen cities they could enter, if not from a supply point of view at least from a buyer one.
8 - There were (IMO nonsensical) rumors that TRR was working on its own private label brand, which made no sense to me at all. No mention of that here but wouldn't that kill the point of the site?
I'm left wondering a simple question: How is this not a subsidiary of L Catteron in a couple of years? Tick tick...
