Amazon Fashion Deal Shows Where Rent the Runway Is Looking for Growth – Sourcing Journal

First, there was a deal with second-hand titan ThredUp. Last year, the resale-up of Saks Off Fifth followed. Now Rent the Runway has another revenue-boosting partnership, a first for the emerging rental pioneer.

Amazon Fashion’s new storefront, which opened for business Thursday, brings RTR’s wares to the e-commerce giant’s throngs of shoppers who increasingly use the platform to discover new brands. What’s new is that the arrangement not only includes items in good condition previously worn by RTR customers, but also gives Amazon its first crack at unworn fashion created through the Design Collective, a group of up-and-coming designers who conjure up clothing for the recent public. a company that laid off nearly a quarter of its employees in September.

When it called investors on earnings last month, RTR came up around the Amazon news. At the time, chief financial officer Scarlett O’Sullivan said the company had begun to wholesale some of its exclusive designs to an unnamed third party.

Data CEO Jenn Hyman told analysts on a December call what makes RTR’s products so attractive to potential partners.

“Our data is not just about what customers do on our site,” she said. “Our data is about how the item is actually worn. It’s about fitness. It’s about the quality of the product. It’s about production. How items should be produced. And we’ve seen that when we use data to make products, it renders best on our platform. I think other retailers have also recognized that our data provides a significant advantage and that it could be blockbusters on their sites as well, and have reached out to us.”

And data is nothing but Amazon’s first language.

RTR x Amazon Fashion

Customer feedback from Rent the Runway reviews is at the heart of the Design Collective, which counts “Emily in Paris” star Ashley Park among its newest contributors, along with creatives like Ronny Kobo, Marina Moscone, Estaban Cortazar, Adam Lippes, Busayo and Peter. I am. RTR describes the collective as a platform where “up-and-coming designers, seasoned favorites and fashion icons” can turn insights from the company’s customers into on-trend designs that members want to wear.

But Forrester vice president and principal analyst Sucharita Kodali says the new relationship suggests RTR is “not operating from a position of strength” and has “essentially thrown in the towel.”

“I don’t know why you would give up the one asset you have, which is your customer data,” she said.

Kodali likens the deal to “the endgame of chess.” “You’re about to lose… so you give up your tower as a last ditch effort to delay… the end of the game,” she said.

Additionally, the details of the arrangement suggest that Rent the Runway could be testing the waters to see if working with Amazon will pay off in the long run, she pointed out.

“I’m sure it’s a limited supply [Rent the Runway’s] a way to convince ourselves that it’s not that bad and you know, I’m not totally…prostitution, but the truth is, it is,” Kodali said. “Amazon is huge, it represents tons of customers, it’s where people start their search process more often than not, and if you can show up and get some units at a time when you don’t have the luxury of spending money to get your own customers—maybe too.”

Secondhand fashion is only a fraction of Amazon’s business, but its $86 billion resale potential makes it ripe for investment. Rounding out the RTR range is the digital juggernaut’s Shopbop curated collection of pre-owned luxury bags and accessories. And luxury vintage store What Goes Around Comes Around, which opened last year through Amazon’s luxury division, has everything from $7,150 Chanel handbags to $12,500 Rolex watches to $545 Hermès scarves looking for new owners .

“The Rent the Runway collection continues to expand our offering of popular and designer fashion,” said Muge Erdirik Dogan, President of Amazon Fashion.

The product launch through Amazon could maintain and even increase Rent the Runway’s sales momentum after the company finished the third quarter with $77.4 million in revenue, up 31 percent from the comparable quarter. It should be noted that while subscription and reserve rental revenue rose 27 percent, turnover from the “other” parts of the business jumped 83 percent, indicating a healthy growth trajectory.

“We believe strategic relationships like this can ignite a new growth engine for our business,” said Hyman. “They also showcase the demand for our products outside of our community and allow more customers to experience exclusive, data-driven fashion from our best design partners.”

However, customers accustomed to finding size-inclusive clothing from both Rent the Runway and Amazon Fashion may be frustrated by the less accommodating sizes available through the new partnership. While Amazon’s The Drop and “Making the Cut” regularly carry clothing in sizes 3X and up, and RTR carries a size 24W, many of the styles offered in both the pre-owned and Design Collective sections of the new store are coming out on the 16th.

Still, the 35 second-hand brands on offer—including Derek Lam and Rag & Bone—satisfy a range of lifestyle needs, from office wear to casual weekend wear. And the bottom line for the partners is that the connection helps each diversify their exposure and get in front of new audiences.

Time will tell if this arrangement has legs.

“Amazon seems happy to do business with anyone who is willing to supply them. And they seem happy to do business with anyone who is willing to share their customer base with them,” Kodali said. “You know, more power to Amazon for that. I just hope Rent the Runway recognizes[s]…why they do what they do and what they hope to gain from it.”

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