The Realreal is curating the world’s largest and most trusted marketplace for authenticated luxury. Joining a list of companies trying to use e-commerce to upend the market for selling secondhand goods.

The RealReal accepts designer handbags, watches, clothes and other items from consignors. It inspects each item before listing it for sale on its website and eventually shipping it off to the buyer, taking a commission on each sale. This makes it easier to sell and buy used luxury by providing a platform for transactions and verifying that the goods are authentic.

This is in line with key trends shaping consumer behaviour. With shoppers thinking more about sustainability, the company hopes to extend the life cycle of luxury goods, allowing customers to reduce their ecological footprint.

They have three retail stores in NYC & LA and 11 Luxury Consignment Offices across the United States. From  women’s, men’s and kids’ fashion to fine jewellery, watches, fine art and home décor, they carry it all.

In an increasingly crowded space, The Realreal has stood out from other start-ups by focusing on the luxury tier. They focus on luxury apparel items from designers like Hermes and Louis Vuitton, catering to the high-end fashion market, while ThredUp and Poshmark feature lower-priced items.

While the market is intrigued by its growth, RealReal has yet to make a profit. For all of 2018, it lost $76 million on revenue of $207 million.

Worries about The Realreal’s rode to profitability is not unwarranted, as its business model could limit its growth potential. One key hinderance is its reliance on experts who authenticate each item. Every single one of those items must be individually priced, photographed, and precisely described, which is a people-heavy process. These expects probably do not come cheap.

Unsurprisingly, The RealReal is using technological innovation to aid this process, including proprietary algorithms that help set pricing. It says it is working with the University of Arizona to develop technology that would help its team inspect gemstones more quickly.

Authentication and category expertise are huge reasons for shoppers to choose these resale specialists instead of a generalist site such as eBay Inc. or Craigslist. These anti-counterfeiting measures provide a level of trust to new shoppers.

However, I’m not confident that the authentication processes will get efficient enough, quickly enough, for these businesses to last. The key differentiator would be the firm’s ability to generate staying power amongst its users.

One fun fact, the founder,Julie Wainwright, was chief executive of online pet supply retailer Pets.com, which closed months after joining the stock market in 2000. My suggestion would be to stay away for the foreseeable future.