Kirti Sharma, a 23-year-old who graduated from college before the pandemic, landed her first job a month ago, after multiple rejections since last year. The job means the world to her. On her first day of joining, she wanted to feel confident and make a good impression. And, to make that happen, she wanted to wear her dream outfit. However, she could not afford one. That’s when her friend told her to rent it out. It worked and Sharma had a great first day at work, wearing what she loves the most, a high-end fashion outfit.
Thanks to fashion rental startups, millennials are able to experiment with different styles from leading brands and designers for different occasions without burning a hole in their pockets. “Indians have always been consumers of luxury fashion. Right from the maharajas who loved to carry the Louis Vuitton trunks! However, the consumption of luxury fashion has drastically increased in the last two decades with more and more Indians traveling abroad and getting exposure,” said Ashri Jaiswal, co-founder, Ziniosia, a handbag rental startup.
Additionally, after the pandemic, there is an increased awareness among consumers about sustainability and saving money for rainy days, both of which are taken care of by fashion rental startups. There are 44 online fashion rentals startups in India, according to Tracxn data. Some popular names include Flyrobe and RENT IT BAE (RENT IT BAE acquired Flyrobe in November 2019), Liberent, Ziniosa, The Clothing Rental, Wrap’d, Swishlist and Dress Bank, among others.
“Our aim wasn’t to get people already renting to start renting from Flyrobe, the challenge was to convert buyers into renters. Changing habits takes time. Having spent over seven years in the space, I can proudly state that the country has accepted fashion rentals in the occasion wear category,” said Aanchal Saini, CEO, Flyrobe and founder, RENT IT BAE, while explaining how the space has changed over the years.
Problems Rental Startups Address
When Ziniosia spoke to its customers before launching, it identified some of the major problems that renting clothes could solve. “Renting is an affordable alternative to shopping. You save big bucks when you rent and it makes luxury fashion affordable for everyone and not just the ones with deep pockets,” added Jaiswal.
Additionally, millennials like to be seen wearing a new outfit for every occasion and renting solves that problem. “Most rentals are at 10-15 per cent of the market price making the most economical and practical choice,” said Deepa Kalro, CEO at The Dress Bank.
She also added that when The Dress Bank was started six years ago in Bengaluru, people still pigeon-holed renting clothes to costume stores that weren’t maintaining hygiene standards and it took a while to convince customers. However, the startup now claims to have been on a growth curve.
Another key issue that it resolves is the closet space shortage. When you rent clothes you don’t have to worry about storage and maintenance.
“Seven years ago, our customer was an aspirational class, renting purely because of affordability issues. Today, our customer base is that of millennials: They may be able to afford to buy, but they prefer to rent because of the reasons including not wanting to hoard, maintaining the outfits post use and sustainability,” said Flyrobe’s Saini.
However, just like many industries, the pandemic hasn’t been kind on rentals as well. But, with the festive season approaching and the increased consciousness towards reducing carbon footprints, things are looking up for the industry.
“When you rent an outfit, the outfit has a chance to reach its maximum potential of usage, instead of being used just once or twice. Also, we live in a world where once we post a picture in a particular outfit on social media, you wouldn’t want to repeat it. Besides, certain outfits like wedding and maternity clothes don’t have a practical use for later,” added Kalro.
Back To Normal
The startups say that even though the business was hit for a while, the demand for rental is today more than pre-COVID times. “When the pandemic hit, we weren’t sure how the rental industry would be impacted. But 1.5 years down the line, we’re seeing a response like never before! Our customers are renting more than ever. Also, with the trend of intimate weddings, more and more brides are now opting for rental wedding wear,” said
Flyrobe claims that over the years, it saw traction in the C2C model and the pandemic further boosted the model. “Post the pandemic, consumers are seen to be not missing a chance to make a buck if given a chance. And they are not cluttering their homes with things, which are never going to be used again. We are now able to get products as new as 10 days old. A bride who got married 10 days ago is willing to give out her bridal outfit and make money from it,” said Flyrobe’s Saini.
The pandemic has brought major financial insecurity for Indians whether or not people have lost their jobs/have got pay cuts. Indians now are more cost-conscious than before, and this conservative behavior will stay for the next couple of years, claim these startups. “The concepts of mindful consumption and environmental sustainability have started to creep in now when people are conscious about what and how they consume. And this is a boost for the fashion rental space,” added Saini.
The Unit Economics
The users of most rental startups usually discover them online today. Social media is the biggest channel for them to reach the target audience. Most customers are aspirational men and women who like to consume content from social media. With each passing day, WhatsApp is also becoming a very important channel for these startups to reach customers. “A lot of our customers like to chat with us on WhatsApp before they make a decision to buy or rent from us,” said Jaiswal.
Though these startups are profoundly reliant on digital media, they also have consumers reaching out through word of mouth. And, they partner with a variety of brands in different price ranges.
For instance, Ziniosa, has a variety of brands ranging from Louis Vuitton, Gucci, Sabyasachi, Valentino, Prada and Dior and The Dress Bank houses Forever New, Van Heusen, Mango, Raymonds, Manyavar, PN Rao, Paresh Lamba, Louis Philip, etc. Some also create styles as per demand or partner with designers who can cater to specific requirements and also have in-house brands. For instance, Flyrobe has in-house labels called Niyoosh and Ekaksh which has 6,000-plus SKUs to choose from.
But is recovering the cost tricky in this business?
“We are able to rotate a women’s wear product between 10-12 times and for mens, between 15-30 turns. In the early days, we were only able to do 4-5 turns before we had to move the product out of the inventory. Unit economics wise we make a profit on every order now,” said Flyrobe’s Saini. Sabyasachi, Shantanu & Nikhil, Divya Reddy, Rimple & Harpreet Narula are few names associated with Flyrobe.
Flyrobe’s inventory is divided into two categories: Company owned inventory and marketplace inventory. The marketplace inventory is further divided into two categories: one, a designer-owned (B2C) where the designers put their products on rent via Flyrobe and two, customer-owned C2C, where it takes expensive designer outfits from users and rent them via Flyrobe. “In both these cases, the product owner gets a percentage of rent every time a product is rented and it is controlled by technology. They can check their earnings on their dashboards that are credited to their bank accounts every month,” she added.
“Recovering the cost is not an issue. We only put up items on rent that have a high chance of being rented. Curation is key,” added Ziniosia’s Jaiswal.
Globally, brands such as Gucci and Burberry are partnering up with circular fashion companies to promote sustainable fashion. With increased awareness towards sustainability in India after the pandemic, the space is expected to grow in the coming future.