Imagine sauntering into a Missoni boutique and asking to rent that cute little $1,250 black number to wear to a college frat party? You'd be laughed out the door. Now, go to RentTheRunway, try the same thing and prepare to be welcomed with open arms.
RentTheRunway is a novel online/offline company that connects customers with couture, minus the painful price tag. Launched by Jennifer Hyman and Jennifer Fleiss in November 2009, the site already has 2 million members and rents 6,300 dresses a week at prices ranging from $50 to $400 per rental.
The business school pals came up with the idea after Hyman's sister Becky mentioned she had a closet full of dresses but "nothing" to wear to an event. "There's tremendous social pressure on women to wear something their friends haven't already seen," says Fleiss. This effect is magnified when people's pictures are featured on Facebook. "A dress kind of becomes 'old news' once it goes up on Facebook," Fleiss continues.
It was hard at first for Hyman and Fleiss to convince designers to allow their clothes to be rented. Naturally, designers thought the site would cannibalize their retail business, or worse, tarnish their reputations. "What designers discovered is that a different type of customer is renting from us. The majority of our members rent a brand they have never owned before. So it becomes a customer acquisition channel for these brands." explains Fleiss.
Watch the video to find out more about how RentTheRunway president and co-founder Jennifer Fleiss runs the business:
Fleiss and Hyman signed up 30 designers for their launch. But, even though many others said "no," the co-founders continued to work on getting more designers on board.
Customer service is extremely important to RentTheRunway. The company calls its service reps Customer Insights professionals and relies upon advice and input from that team to constantly improve their service. Watch this video for more information on how Customer Insight reps suggest new product lines for the company:
Possibly the easiest people to convince were the venture capitalists who backed the team. Instead of writing a traditional business plan, Hyman and Fleiss brought their idea to life with a series of videos they took of potential customers on colleges campuses trying on dresses to rent. Remembers Fleiss, "The girls would twirl around like Cinderellas and it was obviously a magical moment for them to be able to wear couture." Investors, most of whom were male, were similarly charmed. Within weeks, the team had raised $2 million to test the concept. Weeks later, with 100,000 customer signups, they began raising another round and have raised a total of $16.5 million.
Here are Fleiss's pointers on raising capital: