The reCommerce business has met the sharing economy. That’s the oversimplified view of the business model adopted by Wardrobe, a new kind of peer-to-peer fashion rental company that on Tuesday (Sept. 8) is breaking out of its New York City beta test and into a nationwide launch.
But before getting into the launch and exploring how the Wardrobe concept will be deployed, as well as potential comparisons to its competitors, it’s essential to understand its business model.
There are three ways to look at Wardrobe. From what they call the “lender’s” point of view, suppose a 40-something woman in Los Angeles looks in her closet and notices that there are three great blazers, three great skirts and two pairs of Louboutins that don’t get much usage. She contacts Wardrobe's headquarters and sends the seven items, which the team photographs and posts on a virtual personal closet. That virtual closet can be viewed on the Wardrobe's website, along with the items' rental prices and minimum terms, which range from four days to four months. The lender can refresh or reduce the items in the closet at any time.
Now suppose a 25-year-old MBA graduate in Los Angeles has three days' worth of job interviews and one day’s worth of office attire. She goes onto the Wardrobe site and searches for blazers, skirts and suits, and comes across the blazers and skirts from the aforementioned lender. Instead of spending hundreds on an outfit that might be worn only a handful of times, she rents two blazers and one skirt, along with a pair of red-soled beauties, for under $85 for the three days that she needs them.
After making her selections online, rather than waiting for a package in the mail, she heads to one of the dry cleaners that Wardrobe has recruited into its distribution network. (Point of clarity: The virtual closet is built by Wardrobe for online viewing; the actual items are sent to the closest dry cleaner in the Wardrobe network). There, she picks up the outfits, which have already been dry-cleaned, and pays the dry cleaner for the transaction.
The third way to look at the business model is from Wardrobe’s point of view. It has a network of dry cleaners (40 currently in New York City) that are happy for the extra revenue. The company has an unlimited number of lenders/suppliers who are getting use out of the clothes that are taking up room in their physical closets. And it has renters who are encouraged to share their experiences on social media. Wardrobe owns no capital-intensive technology, inventory or real estate, and its customers do its marketing. Plus, the company allows renters to pay without having to commit to a subscription, an option its customers have said they prefer.
Think of Wardrobe as an Airbnb model for the fashion industry. In fact, Airbnb Co-founder Nate Blecharczyk is an investor in Wardrobe.
“I think Rent The Runway actually paved the way for Wardrobe, for better or for worse,” Wardrobe Founder Adarsh Alphons told PYMNTS CEO Karen Webster. “They probably spent a couple of hundred million dollars in marketing and PR to get the door open in people's minds and take the stigma out of wearing clothes they don’t own.”
One value proposition that Wardrobe shares with other clothing rental and secondhand sale companies is sustainability. According to the company, the average person uses only 20 percent of their wardrobe, yet fashion sales continue to increase, leading to “fashion pollution.”
"The stuff has nowhere to go,” Alphons said. “It's clogging the arteries of the world. Plus, the economics are bad. I’d rather see our business model than be sitting on a half-million items in inventory. People want to try new things. But if you look at the number of items that are staying in our closets, we're literally just holding onto for no reason. And when people give their clothing to Wardrobe, they still own it.”
Research shows that doubling the use of clothing from one to two years reduces clothing production emissions by 24%, and empowers users to make the industry more sustainable.
Although there are other similar platforms, Alphons notes that Wardrobe is different in that it's crowdsourced. No inventory means no warehouses – and no warehouses means no trucks to have to coordinate, pick up and deliver items. That also means no money needed to buy, store and manage inventory. And all items are insured by the company.
Alphons describes Wardrobe as a peer-to-peer platform with a twist. Wardrobe sits in the middle of it, managing the flows between lenders, renters and dry cleaners, and making sure that all parties get paid.
The company has recruited several influencers and celebrities for launch, including Marci Zaroff, Fabiola Beracasa (The First Monday in May), Alysia Reiner (Orange Is The New Black), Alyssa Coscarelli, Sophia Li, April Calahan (Dressed podcast), Nicole Miller and Shoshanna Gruss. It will also launch the closet of internet celebrity Miquela, making it the first fashion platform to “rent out a physical closet of a virtual being.”
Finally, Wardrobe’s New York beta test shows some positive metrics. The startup has solid metrics, such as the fact that the average lender consigned about $8,000 worth of their inventory to rent out. Over $500,000 worth of designer fashion has been rented out by users in New York City, and the majority of those were trying luxury fashion for the first time. Several lenders have crossed the thousand-dollar mark, and dry-cleaning partners have collectively earned tens of thousands of dollars through partnering with Wardrobe.
“The value prop is access that is unprecedented,” Alphons noted. “And then you can literally feel like Jackie Kennedy without having to run in those social circles. And that's okay. We're living in a world where that is now possible.”