Founders: Jennifer Hyman, 30, and Jennifer Fleiss, 27
Company: Rent the Runway
Founded: November 2009
What Rent the Runway does: The company buys designer clothes and accessories at wholesale prices and rents them out, charging between $40 and $350 for either four or eight days. The site features current and recent-season dresses that cost between $400 and $3,000 retail. Generally, rentals are priced in the neighborhood of 10 percent of the retail price. The designer brands available for rental include Hervé Léger, Proenza Schouler, and Tibi. Users must sign up for a free membership and Rent the Runway earns revenue from rental fees.
Since launching 18 months ago, they have 950,000 members and have more than 45 employees. According to Fleiss, they are hiring an average of one new employee per week. The idea for Rent the Runway came about when Hyman’s younger sister had a “closet full of clothes but nothing to wear” moment. “She was going to a wedding and her closet was jam-packed with dresses, but she still had an urge to buy something new,” said Fleiss. “A lot of that feeling is based on the idea that these days, every woman is her own celebrity. She’d been photographed in all these outfits already and with Facebook, everyone had seen her in them. And, obviously she wanted the excitement of purchasing something new that was on trend and in season. So we started talking to thousands of women about our concept and came up with Rent the Runway as a way that every woman can have more Cinderella moments in her life.”
How they are changing the game: Hyman and Fleiss are effectively democratizing luxury fashion. While doing market research, the partners learned that there was an eager market for their “Netflix for dresses” idea. But signing designers on as partners was a whole other matter.
It was a challenge to get the designers onboard because not only did Hyman and Fleiss not have a fashion background, but they also had to make designers comfortable with the idea of allowing their designs to be available for rental without detriment to their luxury brands. They also had to convince them that Rent the Runway was not going to cannibalize their sales.
“We had to make the designers comfortable with the idea that this wasn’t going to take away existing customers, but it will add new, younger customers to your brand through this method,” said Fleiss. “A lot of times women wear these dresses to special events in their lives and develop an emotional connection with the brand. Then they’ll go out and buy things from the brand afterwards.”
They have also instituted some game changing marketing strategies. College students, with their active social lives and trickling cash flow, are a huge market for Rent the Runway. To spread the word among this market, the company recruited college students to be “runway representatives” on several campuses including NYU and the University of Georgia. The reps hold fashion shows, write blogs, host Facebook pages, and spread the word about renting designer dresses among their fellow students. In return, they students get to include a position at Rent the Runway on their résumés, dress-rental credits, and at some schools, college credit.
What’s next: According to Fleiss, they are working on improving backend functions, such as warehouse automation systems, to make sure they can continue to scale quickly. “We’re also working on making the site more social and giving women more guidance from all of our stylists about what specific things to wear for different events and making sure they have all the resources they need to pick out the outfits they love,” said Fleiss.
Daria Meoli is the Executive Editor at The New York Enterprise Report. She can be reached at email@example.com