Subscription Model Turns Rent the Runway into a Real “Dressflix”

1/8/10Follow @wroush

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rent these things and how big of an issue sizing and fit and damage were. All of those questions that would have been the obvious ones to ask, they had asked and had found clever ways to get answers. They’d been scrappy and creative—and all of this while they were still in school, going to class and passing exams.”

Interestingly, while Fleiss says Rent the Runway erred on the conservative side in its first round of purchasing, Friend says its inventory might have started out even smaller. “We’ve been extremely hands-on from early in the process, helping the Jennifers determine the right level of inventory,” says Friend. “And I think the answer we all arrived at ended up changing the funding requirements significantly. We could have easily underfunded the business and then had a false negative. But in my mind, I said ‘Let’s do it right, and figure out if there is really demand for this thing,’ and then go from there.”

The next three months will be crucial ones as Rent the Runway tests whether adding to inventory raises conversion rates, and whether it can keep ahead of demand. The startup has shrunk its wait list from 50,000 down to the 5,000-10,000 neighborhood, and inventory is now growing fast enough that customers are being let into the site after no more than a week’s wait, Fleiss says.

And now that it’s launched subscriptions, the company plans to expand in other ways, she says. Starting in April, Rent the Runway will offer designer accessories such as bracelets and necklaces. In May, it will introduce bridal rentals—aimed not at brides (a big market unto itself) but at bridesmaids, who will be able to get package deals. And by the fall, the company hopes to offer maternity clothing. “The more we talk to customers, the more we see there is all this enthusiasm for all these different verticals,” says Fleiss.

And the company has also seen unexpected demand from flyover country. “We had always intended to focus very much on the East Coast for our first few months, because the shipping is easier, we can turn around inventory faster, and we know the target market better,” says Fleiss. “But we have seen a ton of demand on the West Coast and throughout the country.”

About 35 to 40 percent of Rent the Runway’s orders are coming from the East Coast, and about 20 to 25 percent from the West Coast—but the remaining 35 to 45 percent have come from everywhere in between. “It’s girls on college campuses or in places like St. Louis where you don’t have access to a lot of these designer brands,” Fleiss says. “The geographic dispersion has been really interesting, and it gives us confidence that this is not just for trendsetters in major metropolitan areas, but it’s a mass market.”

That’s what investors like to hear, and that’s what could build the startup into a true “Netflix for dresses.” So keep your eye on the runway.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://www.dailygrommet.com Jules Pieri

    It was really fun to read this nearly real-time analysis of the learning curve of Rent The Runway. These founders are moving fast, confronting the right issues, and responding well. If they can pull this off in a still-rough economy, imagine what it will be like after the real rebound.

    I like the “green” aspects of this story…”re-use” rather than buy.

    If anyone wants to see a video of the “Jennifers”, and our review of Rent the Runway, here is our Daily Grommet story: http://tinyurl.com/yeo2jdt

  • Mary

    If you poke around the website you’ll see absolutely nothing that describes the range of sizes this outfit makes available. Apparently if one needs to ask, one is probably too large.

  • Fashionista

    I am a member of the site and I love it! The waitlist sucks though. You can bypass the waitlist if you’re invited by another member. If you want me to invite you, just respond to this. No biggie.

  • felicity

    do you mind inviting? thanks in advance

    felicity fernandez

    felicityfernandez@gmail.com

  • Suzie

    @Fashionista
    I’d really appreciate you inviting me :)

    suziekloss@hotmail.com

  • blake

    @Fashionista
    could you invite me please ide appreciate it so much

    lordess83@yahoo.com

  • keelin

    fashonista-
    please invite me?! prom will be here soon!
    it would be much appreciated!

    keelin_shelbyx3@hotmail.com

  • http://www.somymom.com Jennifer Litz

    I don’t get it. You can buy these name brands at Nordstrom’s or Sax, on sale, for $200 or not much more, many times, if you just do a little hunting. $200 to rent a dress? No thanks.

  • Nikki

    FASHIONISTA,

    PLEASE INVITE ME!

    NIKKI

  • Fashionista

    Sure Nikki, what is your email addy?

  • lori

    @Fashionista
    i would super appreciate it if u could invited me!!! I need a dress for my parents wedding!!! thanks in advance!!!

    montes88laura@hotmail.com