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"You're going to demand a bigger discount in the wide-open market; it could be a fake. That's the reason for a super-duper bargain. Ten pieces will be okay and X will be bad. So there's a price ceiling," Sheldon says.
He believes he has found a way to break through that ceiling by taking a cue from luxury automakers such as Mercedes and BMW, which traffic in "certified pre-owned" vehicles -- a fancy way of saying used cars that have been inspected and come with a warranty. He hires experts to inspect every item before it's put up for sale.
"The security of knowing I'm not buying a fake is important," Rice says, "especially given the amount of money I'm spending."
Portero controls the entire process. All goods come through the Armonk headquarters, a squat red brick building in a campuslike setting that houses at least four closet-size safes, security cages and inspectors. Each piece is professionally photographed. No bags are shown dangling from a chipped doorknob in murky mood lighting. A Portero employee prices the item and writes a description. All of which gives the site a uniform look rather than a hodgepodge one. Finally, each purchase is sent out in a port-colored gift box. Portero guarantees all purchases.
The site's main investor, the Atelier Fund, is financed by the Switzerland-based luxury conglomerate Compagnie Financière Richemont SA, which owns or has interests in companies including Cartier, Chloe, Van Cleef & Arpels, Vacheron Constantin, Jaeger-Lecoultre and the designer e-commerce site Net-a-Porter. There is a circular element to Portero. The site sells a multitude of used merchandise manufactured by its primary investor.
Portero makes its money by taking an average commission of about 25 percent from the sales it facilitates. The company expects $10 million to $15 million in revenue this year, says Sheldon, and hopes to be profitable in 2008.
The company's closest alliance is with Tourneau, which dispatches experts to authenticate watches. Tourneau's participation on the Portero site is an extension of what the company was already doing at its stores: buying back watches from customers, encouraging them to upgrade, and then selling the refurbished timepieces.
"We treat Portero like a store with different brands and price points," says Alan Goodman, Tourneau vice president of international stores and licensing.
Goodman says around 1,600 watches have been processed through Portero and the majority of them have sold -- and sold well. "By Tourneau being part of the equation, more people are willing to bid," he says, "and willing to bid higher."
Not every brand has been eager to support the secondhand market, however. Some companies want shoppers to focus on buying new goods in bricks-and-mortar retail outlets over which they have direct control.
Online shopping, notes Reed Krakoff, executive creative director of Coach, is focused on the "transaction" rather than the "experience." And for many brands, the experience of the purchase is as important as the purchase itself. It's partly how they justify the high prices. Sitting down on a tuffet in a Chanel boutique and having an assortment of handbags spread out like chocolates by an attentive sales consultant is an intrinsic part of the Chanel brand.
And of course, snobbery sells. Some brands "don't want someone who can't afford the bag" -- at least a new version of it -- "to have the bag," Phair says.
But part of the overhead in selling luxury fashion is providing customer service. And that now includes giving customers an efficient and financially productive way of getting rid of goods they no longer need or want, says Nissanoff, the Portero co-founder and author of "Futureshop: How to Trade Up to a Luxury Lifestyle Today." "Wearing something that makes you feel spectacular is great, but it feels less special the second time you wear it and even less special the third time," he says. Instead of languishing in someone's closet -- held there by sentimentality or guilt -- or being sent to a consignment shop with limited reach, he envisions such items being sold online by a dealer authorized by the brand.
And for buyers, he argues that the experience of being plied with flattery and Perrier in a boutique has limited value. "The luxury shopping experience, I think, is important, but it's more important in certain situations: if you're going in with your fiance to purchase an engagement ring or with a spouse to purchase a birthday present," Nissanoff says. "The counter to that is the 'I'm getting a great deal' experience."
Of course, deals are relative in the world of luxury fashion. There's a turquoise Gucci crocodile clutch on Portero. Current bidding: $3,599.