Online Marketplaces have been one of the hottest investment\u2019s targets in the last decade. As traditional platforms business they were able to expand and grow quickly in the digital era that we are living leveraging the well know upsides of this model: strong network effects, significant scale economies, asset light requirements, and no (or even negative) working capital requirements.<\/p>\n
But within marketplaces we have seen a significant evolution of business models with the introductions of notable innovations. When we look today the type of marketplaces business that are growing and consolidating in the market, known by \u201cmanaged marketplaces\u201d, and we compare them against Ebay or Etsy\u2013 as examples of \u201cfirst era\u201d marketplaces \u2013 we see notable differences. To illustrate this phenomenon, I will analyze the example of The RealReal, offering online luxury consignment.<\/p>\n
When we talk about managed marketplace such as The RealReal we see a business model that seeks to control and manage the full customer experience. Here, regardless of who is on the other side of the platform (manufactures, resellers, retailers, etc.) the platform wants to be the owner of the transaction, offering several incremental services to buyers and sellers that allow the marketplace to capture an incremental commission on the sales.
\nThe RealReal was founded by Julie Wainwright in 2011 and today has a GMV (gross merchandise volulme) of over $500 million and an estimated revenue of $70 mm. The company value preposition is to extend the life cycle of luxury items, making consigning of high-end goods effortless to sellers, guarantying, at the same time, 100% authenticity of products to buyers. The company, with more than 4.5 million of users and over 2 million of items sold, has been able to succeed in this space innovating the traditional marketplace business model towards a fully managed platform where The RealReal control every step of the value chain, building the trust that is required in this niche market. Some of the elements that I found particularly innovative are:<\/p>\n
\u2022 They are combining the online platform with physical locations where they offered valuation services to sellers with experts in every product category, removing the traditional frictions of selling second hand luxury jewelry and also increasing the trust in the brand, beyond a particular product.
\n\u2022 At the same time the company is trying pop stores to showcase merchandise for 2 weeks period, combining the online experience with the best of the brick and mortar \u201cshowroom\u201d effect
\n\u2022 The company employ 100+ experts, authenticators, gemologist, and art curators who inspect and price every item that is sold in the platform. Even we are talking of a marketplace that does not owns any of the product that are sold (no inventory capital required), is able to guarantee the authenticity of all the catalog and the revenue potential
\n\u2022 Attractive Freemium model with tiered plans generating an incremental revenue stream. The company offers three different membership plans to visitors, including a free one. Each plan offers different options, allowing the company to capture incremental revenue from membership of attractive customers.<\/p>\n","protected":false},"excerpt":{"rendered":"
Online Marketplaces have been one of the hottest investment\u2019s targets in the last decade. As traditional platforms business they were able to expand and grow quickly in the digital era that we are living leveraging the well know upsides of […]<\/p>\n","protected":false},"author":10330,"featured_media":8867,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-8857","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/dig-it-blog-post-assignment-i-innovative-platforms\/","yoast_head":"\n