Cudoni, a luxury resale platform backed by eBay, announced its shutdown earlier this week, citing the economic climate as the reason for its unfeasible operations.
This has raised concerns about eBay’s potential to gain market share in the used luxury sector. However, in its latest earnings call on Wednesday, April 26, eBay confirmed that it is still committed to doubling down in the category despite the setback. The company reported revenue of $2.5 billion, which is up 1% on an as-reported basis.
See also: eBay-Backed Cudoni Shuts Down, Highlighting Growing Competition in Luxury Resale
In fact, San Jose, California, company has set its sights on selling more luxury items, such as watches, in order to increase revenue. Additionally, eBay plans to offer refurbished items to attract shoppers who are more price-conscious.
During the summer of 2021, eBay introduced an authentication service for luxury handbags, expanding its authentication guarantee program. This service allows buyers to receive professional authentication for both new and pre-owned handbags from 16 well-known luxury brands, including Saint Laurent, Gucci, Celine and Balenciaga.
At the time, Charis Márquez, eBay’s vice president of fashion, stated that the authenticity guarantee has revolutionized the process of buying and selling luxury items on eBay.
However, eBay had announced that all qualifying handbags sold for over $500 in the U.S. would undergo a thorough authentication process conducted by the company’s team of trained authenticators. The process involved and still involves a detailed physical inspection and the use of advanced technical equipment in a state-of-the-art facility to ensure the authenticity of the items.
“Demand for luxury items on eBay is soaring — an iconic Hermes Birkin bag was recently sold for $98,000 and our watches business doubled last quarter, said Tirath Kamdar, general manager of luxury at eBay, in 2021. “People come to the marketplace knowing that they’ll find the designers and items that they’re coveting. And now, eBay is delivering a more seamless and accessible experience that lets shoppers buy and sellers sell luxury handbags with total confidence.”
This news followed eBay’s initial efforts to collaborate with independent experts to authenticate the sneakers sold on its platform.
About year later, eBay sought to expand its authenticity guarantee to the U.K. During that time, eBay had reported that a handbag was sold on its platform every 15 seconds, and nearly two-thirds of the handbags listed on its platform were pre-owned.
Initially, third-party platforms such as Poshmark, The RealReal, and eBay had a significant portion of the secondhand market, which fueled a global value of $184 billion in 2022.
The rapid growth of the resale sector led to the widespread adoption of peer-to-peer (P2P) transactions, allowing clothing and accessories to have an extended lifespan while meeting consumer demand. However, it also caused significant disruption for brands.
Consequently, an increasing number of brands looked to enter the resale market not only to protect their image but to also gain market share with a new type of clientele that could convert into loyal customers.
See also: Trove Leads Lululemon, Canada Goose and Carhartt Into Resale Boom
Naver acquired Poshmark in late January. In a press release on Jan. 5, at the time of the acquisition, the Korean internet company said its procurement of the social shopping platform would generate a global online fashion reCommerce contender and hasten its initiatives to construct a worldwide eCommerce portfolio and penetrate markets that were previously unexplored.
“As part of Naver, we’ll benefit from their financial resources, significant technology capabilities and leading presence across Asia to expand our platform and enhance our user experience,” Poshmark Founder and CEO Manish Chandra said at the time of the acquisition.
See also: Naver Completes Acquisition of Poshmark and Aims to Grow Globally
Then there’s Wallapop, a Spanish company that operates a peer-to-peer marketplace for secondhand goods, recently secured an additional $87 million in funding led by Naver, bringing the company’s valuation to $832 million. In the TechCrunch report on Jan. 18, the company intends to use the funds to expand its platform throughout Europe and invest in research and development. Wallapop was founded in Spain a decade ago and has since expanded to Italy in 2021 and Portugal in 2022, according to the same report.
See also: Wallapop Raises $88M to Grow P2P Resale Marketplace
And then there are certain players in the market who have centered their entire business around luxury, such as The RealReal, Vestiaire Collective, and Rebag.
Rebag, for instance, raised $33 million in its latest funding round and has since worked to streamline the reselling process and making it more transparent. To achieve this, the company has developed a proprietary digital pricing tool that offers customers a free appraisal and the assurance they need to carry out high-value transactions, often without having to inspect the item in person.
Furthermore, Rebag has recently launched a Wallet feature, which allows secondhand luxury buyers to become sellers and investors, thereby increasing its inventory.
See also: Rebag’s AI Solution Brings Transparency, Confidence To Luxury Resale Market
Based on eBay’s recent earnings call, if a buyer purchases a handbag worth more than $500 on the platform, they are expected to spend roughly $2,600 on handbags alone. Additionally, this same buyer is even more inclined to spend around $5,600 on other categories available on the website, such as apparel or shoes.
This allows eBay to engage in cross-selling and upselling to these customers, thereby boosting the company’s overall revenue and profits.
Furthermore, by understanding the purchasing habits of their customers, eBay can offer personalized recommendations. For example, if a buyer purchases a designer handbag, eBay may recommend high-end clothing and shoes to complement their purchase. If the buyer has shown an interest in home and garden products, eBay can suggest products in those categories. In this way, eBay can create a loyal customer base, increasing sales and revenue.
So, does eBay finally have what it takes to take on luxury? Apparently one of the most popular questions on Google is, “Does anyone still use eBay?”
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