If you can sell your clothes, why can’t you also rent out your clothes?
By Rotation, a U.K.-based app, is looking embrace the mindset of consumers who sell their belongings on third-party marketplaces like Poshmark and The RealReal — but apply it to a rental environment.
Back in April 2022, the platform secured $2.9 million (2.7 million euros) in seed funding, as reported by PYMNTS, to facilitate its expansion into the U.S. market.
“By Rotation offers a beautiful solution for today’s fashion consumers that merges the best of social media, peer-to-peer commerce for a modernized rental & resale experience,” said Caroline Brown, managing director at Closed Loop Partners and participation By Rotation investor at the time. “The result is an elegant platform that reinspires shoppers to build communities around the products they love while keeping them in use longer. This is a great model for the future of commerce.”
Having entered the U.S., the company’s primary emphasis is on strengthening its presence in New York City throughout this year. By Rotation then intends to extend its reach to two other prominent U.S. cities next year.
See also: Fashion Rental Platform By Rotation Raises $2.9M
By Rotation sets itself apart from rental services like Rent the Runway, Armoire, or Nuuly by using a peer-to-peer (P2P) model, founder and CEO Eshita Kabra-Davies said in an interview with CNBC. Kabra-Davies said this P2P approach aligns By Rotation more closely with sharing-economy companies such as Airbnb and Uber, differentiating it from traditional rental services in the fashion industry.
Within the app, users have the freedom to decide whether they are open to shipping their items to users located in different states. Users may also choose to provide hyperlocal pickup rentals only, which restricts the geographic scope of their transactions.
“The vision is really to be able to walk three streets down and pick up a rental, even last minute, because you have a few lenders in your neighborhood that are the same size as you, and we’ve already seen that happen in London,” said Kabra-Davies.
In 2021, the worldwide market for online clothing rental was valued at $1.9 billion. By 2027, analysts predict that the market will grow to reach $3.3 billion.
Despite the expected expansion of online fashion rental and resale, businesses in this sector have encountered difficulties, notably the expense incurred in sustaining inventory levels.
Rent the Runway and The RealReal, for example, have seen a drastic decrease of around 90% in their share prices following their initial public offerings (IPOs) and have yet to reach profitability up to this point.
In March, PYMNTS reported that Rent the Runway would begin adding a free item to shipments to attract financially strapped consumers.
“The customer is more cost-conscious than she’s ever been before,” Jennifer Hyman, CEO of the pre-owned apparel company, told Bloomberg in an interview in early March.
The decision came at a time when 50% of consumers expressed an inclination to shift toward brands that provide them with more significant discounts.
According to Hyman, the company contemplated lowering subscription fees but ultimately chose to offer users a greater number of items at the existing price in a bid to attract new customers and enhance customer retention.
Read more: Rent the Runway Offers Free Items to Woo ‘Cost-Conscious’ Shoppers
Then there’s The RealReal. PYMNTS reported in May that the resale platform would be refocusing its efforts after experiencing another loss.
During a Q4 2022 earnings call, The RealReal CEO John Koryl highlighted the company’s status as a “bifurcated business.” He explained that two-thirds of the company saw growth, while the remaining one-third did not. During that call, the company revealed it had reported an annual loss of $196 million.
And then during the Q1 2023 call, Koryl reported again that the company had yet to profit.
See also: The RealReal Sharpens Resale Focus but Still Reports Loss
Unlike its counterparts, By Rotation does not own any of the items listed on its platform. Instead, the inventory and listings on the platform are directly sourced from the app users.
By Rotation boasts over 330,000 registered users in the U.K., along with inventory of over 68,000 listings. In the United States, the platform has already accumulated over 1,800 listed items spanning at least 15 states.
As By Rotation expands its operations, the startup is taking steps to foster trust among renters and ensure the protection of lenders’ items from potential damage. To that end, the app enforces certain measures. For example, new users are initially restricted from renting high-value items exceeding $1,000. Instead, they must first complete several rentals of lower-priced items, garner positive reviews, and receive satisfactory ratings for those transactions before gaining access to higher-value rentals.
By Rotation uses smart pricing to help lenders determine appropriate listing fees, and suggests daily rental fees for each item should be around 3% to 5% of its retail value.
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