Case Study - Rent the Runway

Rent the Runway, founded in 2009, has emerged as a highly successful e-commerce platform revolutionizing the fashion industry through its unique rental model. With a vast collection of clothing and accessories from over 700 designers, Rent the Runway offers customers the opportunity to rent and wear high-end fashion items for special occasions or everyday wear. The company’s business model encompasses both one-off rentals and a popular subscription service, which accounts for 75% of its revenues.

Rent the Runway’s subscription service allows customers to select up to eight items per month for a fee of under $100. This affordable and flexible pricing structure has resonated with consumers, attracting a user base of almost 200,000 subscribers. On average, Rent the Runway subscribers wear approximately $30,000 worth of clothing from the platform each year, highlighting the significant value and utility the service provides to its customers.

To facilitate the rental operations at scale, Rent the Runway operates a network of giant warehouses strategically located throughout the United States. These warehouses not only store the vast inventory of designer clothing but also house one of the world’s largest dry-cleaning operations. With the capacity to process over 2,000 items per hour, the company ensures that each piece of clothing is meticulously cleaned and maintained to meet the highest quality standards before being rented out again.

Rent the Runway’s revenues from subscriptions and one-off rentals exceeding $100 million per year. This impressive revenue stream has contributed to the company’s valuation surpassing $1 billion, underscoring the significant market demand for the rental of designer clothing and accessories.