Inside The RealReal, Cost-Cutting Was a Tough Sell Even as Losses Mounted
The RealReal won a following with its consignment store for second hand Prada loafers and Gucci purses. But inside the company, some of its leaders resisted proposals to focus on turning a profit. Now the retailer’s stock is in the dumps and its former CEO Julie Wainwright is gone.
Top executives at The RealReal have been promising a path to profitability to investors and analysts since the company went public in 2019. But the online consignment store for used luxury goods—from rare $57,000 Hermès crocodile handbags to $40 T-shirts—has been losing more and more money, in part because of its labor-intensive process for authenticating items and its opening of a string of posh bricks-and-mortar retail stores.
To stem the gusher of red ink, members of the company’s finance team routinely identified what they thought were obvious places to rein in expenses, such as charging consignors for the costs of shipping apparel and other goods back to them if The RealReal rejected the items for sale on the site, said two people with direct knowledge of the matter. But Julie Wainwright and Rati Sahi Levesque—the company’s CEO at the time and its current president, respectively—would regularly push back on the proposal, citing concerns that imposing return shipping fees would discourage consignors from sending in other items, the two people said.