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Rent the Runway: Strengths, Weaknesses, and Future Growth
Introduction
Rent the Runway is an innovative online business that rents out designer dresses for ten to fifteen percent of the retail price to young women. Co-founded in 2009 by Jenn Hyman and Jenny Fleiss, it is marketed as Netflix for fashion that provides women with the best night of their lives by empowering them to feel special and beautiful on big occasions. The company showed rapid growth by attracting over 150,000 registered members within its first two months. The relevant question now is whether Hyman and Fleiss should pursue another funding round ahead of schedule to expand in new directions or adhere to their initial plan toward cash flow breakeven. Whatever path they choose, it is primordial that RTR deal with significant problems regarding their technology deficit and operational logistics, as well as smaller issues such as inventory shortage and marketing.
Main body
Firstly, Rent the Runway (RTR) has not reached its maximum efficiency because of the co-founders lack of technical expertise. RTR is primarily a technological service with a fashion component, and it requires an executive branch that reflects it. Before the launch, Fleiss and Hyman had already lost out on thousands of dollars because of their incapability to manage website development and dependence on bad recommendations from former classmates. Even after finally deciding not to outsource website management, RTR suffers from poor site usability and a confusing checkout process resulting in a high rate of car abandonment. While the co-founders have a vision for the product and a customer experience geared towards online personalization, they cannot judge the web developers quality of work or identify missing skills in the engineering team. If RTR wants to institute innovative measures, they need to pay attention to their technology deficit, hire an experienced CTO, and expand their engineering team.
Secondly, RTR struggles with inefficient operational and logistical systems. RTR warehouses have to wait for dress returns and take them to be dry-cleaned or mended before shipping them off to the next customers. The rental process and distribution need to be optimized and error rates reduced to avoid delayed shipments, long waiting lists, and frustrated customers. Fleiss recognizes that their warehouse is often chaotic, and directly after the launch, they were scrambling to meet demand because its processing system is essentially manual (Eisenmann & Wining, 2012, p. 8). Fleiss states that RTR needs to analyze customer rental patterns and develop algorithms to optimize inventory according to fashion trends and peak demand periods for different kinds of dresses. Efficient operations and logistics are among the most important facets of RTRs business model and thus require a hired expert to meet future demand.
Technological deficit and inventory management are RTRs most serious problems, but smaller issues could also be tackled to boost credibility. Despite their projected demographic, RTR is in heavy demand by women in their thirties and older, and the inventory needs more choices to meet their preferences. Additionally, current marketing strategies have focused solely on PR without taking advantage of brand ambassadors, even though forty percent of their members come from word-of-mouth referrals. It is difficult to get women to be comfortable renting dresses online without fittings, and brand ambassadors who have cultivated a sense of trust with their audience are the most optimal way to achieve that. RTR needs to utilize its insights on customer demographics and appeal to develop innovative ways to improve conversion rates.
Conclusion
In conclusion, Rent the Runway has the hallmarks of a successful online business, but several wide-scale changes have to be made to ensure future growth. Hyman and Fleiss need to address their companys lack of technological and logistical expertise, given its importance for business efficiency and customer satisfaction. Their dysfunctional website and logistical errors are causing them to lose a hefty amount of profits. Additionally, RTR needs to take advantage of modern data collection methods and use existing customer insights to attract an even bigger clientele and sustain current growth.
References
Eisenmann, T. R., & Winig, L. (2012). Rent the runway. HBS No 9-812-077. Boston, MA: Harvard Business School Publishing.
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