Back in March, Rent the Runway (RTR) laid off its entire retail staff. The clothing rental brand blamed the COVID-19 pandemic for the cuts. Six months later, the company still hasn't recovered, opting to close all of its stores.
Adarsh Alphons is unfazed by this grim scenario. The ProjectArt founder, whose career has been spotlighted by both CNN Heroes and Inc. Magazine, came up with his own spin on fashion rental. His startup, fittingly named Wardrobe, launches this week.
Benzinga spoke with Alphons about how Wardrobe differs from, not just Jennifer Hyman's RTR, but a whole subsector of rivals, such as Le Tote, Stitch Fix (NASDAQ:SFIX) and Swap.com.
For starters, Alphons insists that Wardrobe is a technology company.
"The only thing we actually own is code," he said. "We're fundamentally different in a few ways that have enormously positive consequences on our economics and ability to scale."
Inventory And Operations
Rather than open outlets or warehouses to store apparel, Wardrobe's clothing items are crowdsourced.
"Wardrobe does not buy inventory unlike other platforms — except for The RealReal and thredUP, but they're not in the rental business," Alphons explained. "And hence we're profitable on a per-unit basis on the first rental of that item itself."
And items are strictly luxury, designer and vintage items, with the bet that these types of selections will be more attractive to consumers.
For example, a Chanel dress that costs $3,500 to buy can be rented for $60 on Wardrobe.
"We have high-end brands that everyone talks about but is generally inaccessible and we're excited to democratize access to it," he said.
Here's how it works: Wardrobe partners with local dry-cleaners, on scale, to facilitate rentals. Dry-cleaners then earn income from the washes they get between each rental.
"Essentially we're sending customers to them," Alphons said. "There are hundreds of local dry-cleaners in every city and the model is infinitely scalable. When they join the Wardrobe network, they would not have to change anything they do and just have better economics."
Such integrations lower the need for unnecessary capital-intensive expenditures and lowers ongoing operational costs, which helps Wardrobe bring down costs for the end-user to rent clothes, he explained. Lenders within the Wardrobe network, along with dry-cleaner, are incentivized because they get a payout from the rentals.
Marketing Via 'Influencers'
Wardrobe aims to differentiate itself from the competition by partnering with fashion influencers (i.e. Lil Miquela). Lenders can start "closets" on Wardrobe and offer up their items to their fans or followers. This keeps customer acquisition costs low and reduces costs for renting items, something that doesn't happen with New York-based RTR.
"We feel there is a bit of a herd-mentality towards subscription models," Alphons said, citing RTR, Armoire and Nuuly. "That's not what customers want right now. We don't ask our users to commit to those models in order to be a part of Wardrobe."
Wardrobe is currently rolling out its services from New York City to the whole of the U.S.
Prior to Wardorbe, Alphons wielded the sharing-economy model on another business called ProjectArt. Touted as "the nation's largest art school," Alphons launched it without owning a single building. ProjectArt works with public libraries in the same way Wardrobe works with dry-cleaners.
When it came time to launch Wardrobe, he had collected enough data to prove the concept could work, but did not know a single venture capitalist.
Enter Airbnb co-founder Nate Blecharczyk. Once he came on board, the round came together pretty quickly, Alphons says.
"Having Nate has been a gift as a validator of our model bar none," he said.
In addition to Blecharczyk, Wardrobe's team includes JD Ross of Opendoor; Fred Ersham from Coinbase; Rus Yusupov from Vine and HQ Trivia.
Blecharczyk's involvement doesn't end there. The goal is to partner with Airbnb to add a closet service to their bookings. So in addition to booking a room on Airbnb, renters can also source outfits, instead of having to carry clothes around when they travel.
Airbnb, which recently submitted a draft registration to the US Securities and Exchange Commission for an initial public offering, could not be reached for comment.
Wardrobe raised its first round last year with some $1.5 million in funding.
"[We] are about to embark on a much larger round soon," Alphons said, adding that "the timing is right" for Wardrobe. Akin to when Uber Technologies Inc. (NYSE:UBER) launched in 2008, at a time when cars "remain parked 97% of the time," Wardrobe hopes to put the "billions of clothes" left unworn in closets to good use.
"We've created a valuable additional stream of income at a time when jobs have been lost on a massive scale globally," Alphons said. "The only other option people currently have is to sell the items at a fraction of the costs that bought it for. On Wardrobe, you can own it and monetize on it at the same time — and still sell it later if you want to."