Rent the Runway – Case Solution

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Rent the Runway Case Answers

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1a. Describe at least three value propositions that Rent the Runway (RTR) offered its customers.

i. Rent the Runway’s value proposition is to empower women to make them feel more confident and beautiful. Their dresses allow them to have a powerful emotional experience. “Try new brands new trends, and feel beautiful every night.”

ii. RTR wanted to give every woman their “Cinderella” experience when she wears a beautiful, high-end dress.

iii. The ability to rent designer clothes for a specific event instead of purchasing them. Dresses are shipped to the consumer protected in a quality garment bag that is reusable.

iv. Stylists had a strong role in the business, where they enabled renters to get advice from experts and also provided their insight to cater to the customers’ needs.

v. Special services: second size free of charge, reservation system, and $25 for the second dress.

vi. Customers pay 1/10th of the original price. Thus, consumers maximize their benefits in a cost-efficient way.

1b. Describe at least three value propositions that Rent the Runway offered to the designers that provided/sold inventory to the company.

i. They give designers a new customer acquisition channel that exposes younger women to various designer brands, and that helps in building brand loyalty for both designers and RTR

ii. Their target group is 15-30 years old. Initially, they were able to expand their target age range and attract “older” women. However, expansion of inventory means there is a need for investments that are necessary.

iii. 30% of retail purchases like Zara and H&M are for last-minute shopping. The retail footprint means RTR is able to compete by capturing fast fashion sales as well.

iv. 98% of RTR customers rent brands they’ve never bought before. Thus diversifying their supplier and consumer base and creating brand loyalty with the products they felt satisfied with.

v. Rent the Runway gives the supplies a medium to test out new and unreleased items.

2. Define at least three competitive advantages that Rent the Runway enjoys. Describe how factors such as Value/Quality, Network effects, Cost, and Internet Economics impact each of the competitive advantages that you identified (include at least two factors for each competitive advantage).

I. Competitive Advantage 1: Personalized Customer Experience Online: RTR allows consumers to have their own personalized experience online that caters to
their needs and wants, and makes the process easier for them.

a. Factor 1: Value/Quality: RTR’s website and mobile app can track consumers’ online engagement and provide RTR with a host of consumer metrics: when a consumer clicks, what are they searching on, and what products are they returning to.

b. Factor 2: Cost: RTR is at an early-stage startup, so low consumer acquisition costs are critical. Word of mouth and social media help in maintaining low acquisition costs. The more RTR generates repeat consumers who are satisfied with the results, the more consumer lifetime value (CLV) increases. In other
words, the company will generate more revenue to keep the business running.

II. Competitive Advantage 2: High-Quality Products: RTR brings quality products to its consumers to a point where the consumer has never heard of most of the
designers.

a. Factor 1: Value/Quality: RTR carries over 350 designers’ apparel and accessories. Thus attracting a diverse pool of consumers and delivering the scale and reach that the designers themselves wouldn’t be able to do without going through the traditional sales channel.

b. Factor 2: Cost: RTR’s consumer base is mainly someone who is able to afford to buy/rent the dresses. Their average consumer income is around $100,000. For these affluent consumers, the valuable experience that RTR brings to them is considered the smartest and most convenient way for them to shop.

III. Competitive Advantage 3: Convenience: RTR ensures convenience, timeliness, and personalized service by making the consumer’s life easier and delivering their preferred clothing item to their homes.

a. Factor 1: Internet Economics: Consumers browse RTR’s website, select their preferred clothing item or accessory, and schedule a delivery date for a four-day loan. There are eight-day rentals available, but for an additional fee.

a. Factor 2: Cost: Rentals are often 10% of the dress’ original price. In short, the consumer is getting “high-end designer garments at fast fashion prices.” Stylists will help the consumer in narrowing their options via phone, email, and online chat. They will send two sizes to ensure that the dress fits. The consumer could also choose a second style for backup for an additional fee.

3a. Which technologies did Rent the Runway use to capture which kinds of data during its front-end activities? Include at least three technology-enabled processes.

3b. Which insights and or customer experience improvements did Rent the Runway derive from the analyzed data? (Use one table for both 3a and 3b). Add more rows to the table as needed.