Le Tote Inc., Union Station and Rent the Runway—which are all online retailers featured in this year’s Hot 100—are using a rental business model to crack into the online apparel industry.

A number of women are sharing clothes. And they aren’t even sharing with women they know.

While it may sound unorthodox, three online retailers recently featured in the Internet Retailer 2018 Hot 100 are proving that the clothing rental business model works. The Hot 100 edition profiles the most innovative online retailers.

Le Tote Inc., Union Station and Rent the Runway Inc. each are taking a unique approach to clothing rental, such as a subscription model or a focus on formal wear.  Here’s how each merchant approaches clothing rental:

 

Le Tote

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Boxes from Le Tote

Le Tote CEO Rakesh Tondon launched the web-only merchant in 2013 as an apparel rental subscription service. A shopper pays a flat fee every month, starting at $59, and Le Tote mails her a box of five pre-worn garments that she selected online (Le Tote provides recommendations). She can wear the items as many times as she wants in the month before returning the box, and she can receive as many boxes as she wants during the month.

Today, the retailer has hundreds of thousands of customers and Tondon said late last year that Le Tote’s 2017 sales were projected to be “well north of $150 million.” Sales have grown 100%-150% year over year, every year since the retailer launched.

 

Rent the Runway

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Rent the Runway was among the first online retailers to try the apparel rental model in 2009. At first, the merchant focused on special occasion dresses for women to rent. However, the retailer recently shifted its focuses to its clothing subscription rental service.

The retailer launched the service in January 2016 and it quickly became popular, flooding the retailer’s five stores, said Hampton Catlin, senior director of engineering at Rent the Runway.

Shoppers were stopping at the stores before work to rent pieces of clothing, often lining up before it opened. Some of those same shoppers would then return pieces after work the same day, Catlin said. The retailer extended its store hours to accommodate shoppers.

 

Union Station

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Union Station bridesmaid dressBridesmaid dress rental service Union Station allows brides to select a dress for members of her wedding party, and then her bridesmaids can rent the dress for $60 (cocktail dresses) or $75 (full-length).

The consumer selects two sizes—her size and a backup—and receives the dresses two weeks before the wedding. After the bridesmaid wears it, she returns it in the prepaid packaging and Union Station dry-cleans it.

The service is meant to cut out the frustration often associated with bridesmaid dress shopping in which the dress is often expensive and all about someone else’s taste, whether in style, cut or color, and not something the consumer would otherwise purchase.

To date, Union Station has outfitted more than 50,000 bridesmaids, has six employees and has raised $4.5 million in funding.

To read more about these companies and other innovative online retailers, download the free issue of Internet Retailer’s 2018 Hot 100.

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