What: the BOF reviews the state of the fashion rental market.

 Why this is important: Department stores have also tried these services, and for now, are unable to operate them at a profit. Major market players are also still looking for the wining formula.

The Business of Fashion reviews the fashion rental business model, through several examples of various size, from Ponybox (2,000 customers) to Runt the Runway (2,5m subscribers). This business model is challenging, as it comprises on the one hand the capability to stock the right inventory at the right price point, marketing and customer service, but also be efficient in reverse logistics in order to be profitable. Runt the Runway posted a net loss of $76,4mn in Q1 2022 for a total revenue of $131,4mn. As a consequence, its stock value has plummeted by 90%.

Rental is less successful than second-hand, however this is still a business model that attracts newcomers (such as Ponybox). It appears that niche markets are interesting for such a model, and the two key elements to consider are on the one hand, what to do with the leftover stocks (and how to maximize the resale process) and how to make sure that bi-directional supply chain is fully working and efficient. In-house delivery service instead of relying on third parties is also part of the equation.

How to make rental work