Rent the Runway, after successfully experimenting with adding subscriptions to its fashion model since 2015, has raised another round (Series E) at the end of 2016.
Rent the Runway has closed a new $60 million equity investment led by the mutual fund company Fidelity with additional money from existing investors like Bain Capital Ventures and TCV.
Rent the Runway says it has had a profitable year (Ebitda) with revenues growing to over $100 million, Recode reports.
Rent the Runway, founded in 2009, has launched two new subscription products last year:
In March, Rent the Runway launched Unlimited, a $139-a-month subscription that was the culmination of 20 months of tinkering with other monthly subscriptions that didn’t work. Unlimited lets women rent out three articles of clothing or accessories at any given time — think a jacket, a blouse and a purse — with free deliveries and returns and unlimited swap-outs. […]
This month, the startup unveiled a $65 monthly subscription called StylePass that is good for the rental of one article of clothing per month.
This is a significant departure from the usual one-off use case for Rent a Runway: The occasional wedding or big gala one needs a nice dress for.
It seems to pay off: The workwear subscription ($139/month) is already accountable for one-fifth of the total revenue, according to the company.
Rent the Runway is planning to use some of the raised money to build out the Unlimited subscription service amongst other things. Fortune:
According to a statement issued by the company, RTR plans to invest the new influx of capital into four areas: 1) the company’s original a la carte rental product, through which customers can clothing piecemeal; 2) its Unlimited subscription business, which gives women access to a rotating selection of designer clothes for a fixed monthly price; 3) brick-and-mortar store locations, which already exist in six cities; and 4) its operations and logistics platform.
Rent the Runway is also opening “digitally enhanced” flagship stores. The latest, of seven in total, opened late last year in New York City:
The main focal point of the space is the centrally-located “Dream Closet,” which combines built-in displays of clothes with four, 32-inch endcap digital displays (also from Samsung) and a spacious fitting room area. There are no mannequins or racks. The idea, explained Sullivan, is for the customer to feel as if she is walking into a dream version of her own closet back home — a closet that is continually updated with new brands, styles and trends.
The digital displays highlight the depth of clothing available and serve as a “closet in the clouds,” giving customers access to Rent the Runway’s “endless aisle” of online offerings.
“The digital display features a live feed that pulls directly from our site,” said Sullivan. “It isn’t technology for technology’s sake, but technology that really enhances the customer experience.”
The startup also has a store respectively in San Francisco, Chicago, New York City, Washington, D.C., Las Vegas, and Los Angeles.
As for the ambitions, co-founder and CEO Jennifer Hyman has been saying for som time that Rent the Runway can become bigger than Netflix, referring to the often made comparison between the two companies’ model.
In 2015, while Unlimited was still being refined, Rent the Runway experienced a big exodus of staff.
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