Rent The Runway Case Solution
Rent the Runway is an online renting designing website, which facilitates the customers to rent designer dresses on rent on 10% of their retail price. This business concept was for consumer to groom their self-confidence and empower females through rent the runway. After its launch in November 2009, the company faced the situation in which it had to decide between continuing with its business idea or go for any alternative. After the success of business launch the consumer demand was increasing and owners were thinking if they should increase the funding or add any other product segment i.e. Jewelry and accessories. Increasing the funding’s can help business to acquire more customers.
Rent the run way comes under the industry of formal wear and costume rental industry. There is a huge competition in the industry, almost 70% of business revenue is taken by main players in the industry. There are major factors that help company to generate the revenue i.e. Marriages, The income level of target customers, and students. Rent the runway’s source of revenue through rental service i.e. According to data RTR generated $149 billion in 2008 in US market. Recent decrease in marriage rates and decrease in income level of consumers restricted the entry of new competitors. It is difficult for RTR to differentiate its services. It is important for RTR to develop good relationship with designers and fashion brands.
RTR was facing the problem of capital funding or equity, and differentiating its products from its competitors. After successful launch there is chances that others can copy its business idea. And the negotiation with the suppliers and designers is time taking. It was a challenge for RTR to develop a brand that women prefer to go for. Develop a business positive image to attract consumers there was no one in the industry till now to serve consumers same services. For now RTR do not have enough capital to increase the product line, capture market share.
Timeline of actions
|In 2008, the business concept came into Hyman mind when she saw the closet of her sister
She shared the idea with her friend Fleiss further they meet business investor and presented proposal.
|Von Gutenberg Stated that they will join if designers would be available. Then hy man and Fleiss decided to buy directly from designers.
Fliess and Hyman started to study the rental websites and they only found 2 in US.
Fleiss and Hyman met with 20 designers to convince them outset. As a first experiment they borrowed 130 dresses with retail prices and rent them to Harvard undergraduate students. It was a successful experiment.
After that They done another testing experiment in Yale campus with more options available for women and the rent rate increased to 55%. In September 2009 both went for third trial.
The third experiment was online and for women who were looking for especial occasions and 5% women rented the dresses.
Fleiss and Hyman met legal advisor to about the incorporation of the idea.
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