Luxury resale tends to be dominated by consignment platforms. Sites like The RealReal buy designer clothes, bags and jewelry, and then mark the prices to a level that will move the inventory.
Or sellers can list their wares on consignment, ultimately netting a percentage of the final selling price.
But, as myGemma CEO Andrew Brown told Karem Webster, there’s a “network” effect to be mined when it comes to designer brands, and in using a platform to buy luxury items directly and sell them directly.
It’s a model that can drive repeat business with minimal customer acquisition cost — complete with loyalty points.
myGemma traces its genesis to 2010, where, as WP Diamonds, Brown’s firm bought gems and resold them on platforms as diverse as eBay, 1stDibs, Chrono24 and Vestiaire Collective.
“We started with diamonds, moved on to diamond jewelry, and then branded diamond jewelry, then branded jewelry across the board,” said Brown.
The horizontal expansion sparked the realization that these affluent sellers and buyers own, and want to own, other upscale goods.
The individual who has a diamond ring or a love bracelet to sell may have a watch that they want to “trade up” into another luxury item, Brown said. Or they may have a handbag — or dozens — to sell while eyeing a coveted Tiffany and Co. bauble.
The audience is there, as PYMNTS Intelligence data showed that nearly half of affluent customers have shopped via online platforms. And second-hand Birkins are more affordable than going directly into the store and buying them off the proverbial shelves.
In 2018, Brown’s firm rebranded as myGemma, moving into new categories such as luxury clothing, accessories and sneakers. While eschewing the consignment model that’s a hallmark of other peers, said Brown, “there’s plenty for us to buy … we turn away far more than we buy.”
In the meantime, the company has pursued a strategy of diversifying its distribution channels. Alongside the myGemma platform, the company now sells on roughly two dozen platforms, including Bloomingdale’s and Farfetch, which was acquired by South Korean eCommerce giant Coupang in December.
Brown remarked that myGemma prices the products differently on each platform, as the third-party sites charge fees, so myGemma increases its prices in a bid to offset those fees.
But the overarching goal is that when a would-be consumer searches for a diamond Cartier bracelet online and sees that among the five platforms that the myGemma price is a bit cheaper, they’ll gravitate there to close the sale, he said.
“We try to be slightly under the market,” he told Webster of the direct-to-consumer pricing strategy.
Minimal Marketing Spend
The “network effect” has been palpable, he said. As much as 40% to 45% of the myGemma site’s monthly volume is from repeat customers. The average order value in recent months has topped $3,000, although the holiday shopping season had its share of $25,000 (and up) purchases. The bulk of sales have come from marquee brands such as Cartier, and Brown estimated that there are more than 100,000 customers on myGemma’s email lists.
“We’ve been very careful — let’s say frugal — in dollar spend, especially when it comes to marketing,” as the firm allocates about 3% of sales to those online marketing efforts.
No matter the item, the business model revolves around quick turnarounds for sellers. The company promises that the process, from price quote to payment, takes as little as 24 hours. There’s also a loyalty program wherein members trade items for store credit, pay over time via buy now, pay later (BNPL) offerings in partnership with Affirm, and do not pay shipping on orders more than $500. Members who sign up for the company’s loyalty accounts earn points whenever they shop or sell, and the points can be used for discounts on subsequent purchases.
All goods are housed in New York, so there are no stockouts or lengthy shipment timeframes, he said.
“Anything you see on the website is ready to ship today,” Brown said.
myGemma, which authenticates the items for sale with in-house staff, also offers insurance products for items such as handbags on its site, a noticeably unique feature in the industry.
Brown said that looking into 2024 and beyond, myGemma’s digital presence has and will continue to include livestreaming on sites such as Instagram and TikTok and working with online influencers, which the company said at the end of last year helped generate roughly 15% of sales. The company has its own livestream team and in-house studios geared toward those efforts.
“We’ve been monitoring livestreaming for two or three years now,” said Brown. “It was really in late 2021 we kind of dipped our toe in … we sell a lot of Louis Vuitton on TikTok and on Whatnot, but we’ve also sold Kellys and Birkins on both.”
In the meantime, myGemma will focus its efforts on handbags and jewelry as well as its current U.S. presence. The total addressable markets, he said, are worth hundreds of billions of dollars, and “we haven’t even been chipping away at the little corners of those markets yet … the categories are vast.”
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