Rent the Runway is moving beyond its core rental subscription model into resale, according to multiple sources. The fashion rental platform announced that it will begin selling used designer clothes, and unlike its rental service, membership will not be required to buy secondhand from the site.
CEO Jenn Hyman framed it as a “fuller realization of our value proposition” in comments to CNBC, citing the fact that twice as many customers have mentioned sustainability as a reason for using the service compared to 15 months ago. “We think that we’ll be able to convert more people to shopping secondhand,” she said. “And from there, once they have the experience of buying something from us and seeing the quality, many of those people will end up converting into rental.”
The rise of conscious consumerism, especially among younger consumers, is a leading factor driving the huge growth of online resale, which global investment firm Jeffries estimates generates roughly $30 billion in sales annually in the U.S. Maker marketplace Etsy also staked a claim in the resale sector earlier in June with its plans to buy resale marketplace Depop.
In this increasingly competitive landscape, Rent the Runway’s core rental service may actually give it an edge. “Because we monetize the product through subscription, by the time we’re selling something, we may have already rented it a few times and made money on it,” Hyman told Business Insider. “We don’t have to charge as much as some of our competitors, who only have one opportunity to make their margin. There’s a value to the customer that she’s likely going to find better pricing on our platform.”
Advertisement
Rent the Runway is looking for a comeback after a rough year. The shuttering of events and workplaces had an outsized impact on the service, leading to cost cuts, layoffs and the closure of its retail stores. In September 2020, the company also did away with its unlimited rental option, moving to more simplified subscription tiers. The tide appears to be turning now, however, as consumers look to update wardrobes that gathered dust for over a year, and resale might just be Rent the Runway’s ticket back into consumers’ closets.
