Quentin Caruana was pushed into the retail business following the subprime mortgage crash of the last recession.
The former president of Irvine’s Sage Credit Co., formed in 2003 and which at one point employed more than 600 and grossed over $100 million annually, moved away from the mortgage industry and into reselling on eBay before opening a Laguna Beach consignment shop.
Now, the entrepreneur, with about a decade of experience and knowledge in the garment and retail trade, is looking to nab a piece of the growing fashion resale market with his Irvine-based Marque Luxury.
The business, which launched in 2017, focuses on supplying pre-owned designer goods to retailers—ranging from department stores and boutiques to institutional customers such as the U.S. military.
It’s now growing at a rapid clip via the opening of physical showrooms in the U.S. and overseas, an educational program for buyers and strategic acquisitions.
“This particular industry, the retail business has been growing at a very rapid pace and it’s projected to grow 25 times the rate of retail in the next five years,” Caruana said.
“When I started the business, there were no real wholesale suppliers that supply this type of product. There were many consignment shops and there are some notable resale shops like The RealReal and Poshmark, but from a wholesale perspective, there’s very few, if not no, wholesale suppliers located in the United States.”
That’s one of the main points of differentiation for Marque Luxury.
While vintage and reselling has been on the rise, particularly with respect to luxury goods, the fast growers have been focused on the direct-to-consumer channel. That is, they’re selling directly to the end user. Marque Luxury is focused on working with buyers and other wholesalers to be the supplier, essentially handling the sourcing and authentication of the product before the Balenciaga clutch or Hermès scarf hit store shelves or online shops.
It uses a company called Entrupy for help with the authentication process, which employs a microscopic scanning device that takes a picture of the product, uploads the image to the cloud and then the item is determined to be “authentic” or “unidentified.”
Marque Luxury sources from throughout the world, a skill Caruana first picked up during his time running the Laguna Beach store, attending trade shows and educating himself on the supply chain with more specific learnings coming from Japan and its more mature resale market.
The company also has an educational division, Marque Mentor, focused on providing information and guidance to those interested in the business of reselling.
The company charges $49 a month for the program, which has been operating for six months. Caruana said membership is currently “in the hundreds” but “we expect it to grow into the thousands this year.”
Last year’s acquisition of the blog Closet Full of Cash was one way of boosting the educational segment of the business.
To that end, future acquisitions could focus on some of the better-performing wholesale clients Marque already works with, which not only do well on the product sell-through side, but they’re also adept at the actual sourcing. Caruana also said software-specific programs that could help with the point-of-sale process could be future acquisition targets.
The executive said another acquisition could be announced in the second or third quarter of this year.
Helping fuel Marque Luxury’s growth was its partnership at the end of 2019 with Singaporean firm Polaris, which provided the Irvine firm financing to more quickly grow the business and added buying operations already established in Southeast Asia.
Caruana declined to say how much the business generates in terms of revenue, citing some potential financing opportunities on the horizon, but noted Marque has been growing year-over-year.
Having adequate capital or the right partner is key to building a sizable footprint in the fast-growing market.
The competitive landscape is already filled with big name players amid what is expected to only be expansion for the overall industry.
Reselling varies widely in its meaning and can encompass everything from traditional donation and thrift stores, such as Santa Ana-based Goodwill of Orange County, on up to the luxury resellers Marque Luxury supplies.
Oakland resale site ThredUp Inc. in its annual report said the second-hand market is projected to grow from $28 billion in 2019 to $64 billion by 2024. That’s based on a 6% compound annual growth rate.
COVID-19, in some cases, accelerated a trend that had already been on the trajectory with consumers focused on value, ThredUp President Anthony Marino said in the company’s report.
“Brands whose core proposition delivers value and convenience have the opportunity to gain share. Amazon, off-price and resale are emerging as winners,” Marino said.
The executive also pointed to another factor: youth consumption driving sustainability trends in fashion, which Marino said indicates that group’s “genuine desire to be part of the long-term solution to fashion waste.”
One look at the competitive landscape Marque Luxury sits within indicates about as much.
Online reseller Poshmark’s (Nasdaq: POSH) shares shot up 141% in its first day of trading last month. The company had a recent market cap of $6.1 billion. It joined San Francisco-based luxury reseller The RealReal (Nasdaq: REAL), with a market cap of $2.4 billion, among the public second-hand fashion retailers.
There’s also Tradesy Inc. of Santa Monica, Paris-based Vestiaire Collective and, for the streetwear set, Detroit-based StockX and 1661 Inc.’s GOAT of Culver City.
Last year, Marque Luxury didn’t seem to miss a step.
“Fortunately, during the time of COVID our business has grown in general because there’s been more demand for the product at the consumer level. But, more importantly, our supply chain was never really disrupted because we had such a diversified supply,” Caruana said.
About 60% of its goods are sourced from Asia, with the remainder from domestic via a team of about 10 buyers.
Marque Luxury then uses its site or its showrooms to present the goods to buyers.
New York was the most recently opened showroom for Marque Luxury with another in Dallas slated to open this month. Additional showrooms scheduled to open this year will be in Miami, Chicago and Seattle.
Caruana estimates 10 to 15 showrooms in total domestically keeps Marque accessible to most of its buyer base.
The company currently has U.S. showrooms in Irvine, Los Angeles, Las Vegas, Atlanta and New York. Overseas, the company anticipates opening more in Asia, adding to the base of already-open locations in Japan, Singapore, Hong Kong, Indonesia and South Korea.
The showrooms range from 700 to 3,000 square feet, the latter located in Irvine.
The physical outposts are important to the strategy because it strengthens relationships with buyers who oftentimes want to see the product they’re buying in person.
“One of the biggest variables in our product offering is the condition grade. It varies on these pre-owned products,” Caruana pointed out.
Marque’s customer base of nearly 1,000 includes department stores, off-price retailers, pawn shops, consignments shops, boutiques and even beauty salons. It also caters to institutional-level buyers such as the U.S. military, a relationship that began two years ago with the Marine Corps and now includes the Army. Goods sourced through Marque are sold on military bases in the exchanges there. The company in the past has also done business with cruise ships, although that industry is clearly on hold due to the pandemic.
“It’s really a 50/50 mix between the institutional level buyer and the average reseller, but they’re growing. Not all, but let’s say the cruise industry has been on pause for this entire [COVID] period and will be on pause for who knows how long, but other areas like the military have grown. In the pawn industry, they’re considered a financial institution so they never closed,” Caruana said of the buyer mix.
OC Fulfillment Center
To accommodate the growth in product, which Marque Luxury owns (it doesn’t take the product on consignment), it plans to open two additional fulfillment centers.
The first location would be another spot in Orange County, with a second on the East Coast most likely in New Jersey.
All in all, demand seems to continue to rise as luxury pieces retain and even see their value increase over time.
“People not only see these items as a fashion item,” Caruana said, “but they also see these items as an investment, an asset. As a result of that, there’s upward pressure on the pricing.”