The company is reallocating resources from its direct business, including beauty, to develop its luxury cargo business. As part of this, The RealReal will sell through existing inventory and discontinue the beauty category.
Factors Influencing the Decision
According to a spokesperson, the beauty category is a small part of The RealReal’s market, and the company will continue to prioritize its efforts to grow its luxury consignment business. The company’s recent move comes as it faces growing competition from players such as Moda Operandi and Farfetch.
In addition, The RealReal is grappling with shareholder demands for profitability, and as recently appointed CEO John Koryl told Wall Street analysts last month, achieving profitability will take time and strength The company has already laid off nearly 230 employees and closed several headquarters, neighborhood stores and freight offices.
RealReal’s decision to discontinue the beauty business comes as the beauty marketing landscape has changed dramatically in recent years. While the company’s assortment initially featured clean beauty brands such as Ellis Brooklyn, Pai Skincare, and Babo Botanicals, competition intensified, and many players dropped out. Birchbox, for example, was reportedly weighing options, including bankruptcy, late last year.
As part of the shutdown process, The RealReal is offering double-digit discounts on beauty products on its site.
