Netflix for Dresses: It’s time to Rent the Runway


Gone are the days when you could justify buying an expensive outfit because you will be “putting it to good use.”  Thanks to our society’s shifting culture and the widespread use of Instagram and Facebook, individuals are now facing a difficult decision when deciding what to wear.  

Why?  Well, there are two main reasons.  The first is our culture’s growing dependence on celebrity endorsements that Britney discussed in her presentation last week.  Especially in today’s society, we value celebrity’s opinions even more than in the past, which often inspires us to make the most expensive (and often out of our price range) shopping decisions.  Because we are so connected to our idols, we often take every recommendation to heart, and purchase a product just because they endorse it.   It’s safe to say that “our culture is educating an entire population of people to aspire to a lifestyle that 99% of us can’t afford.”  –Jennifer Hyman (Founder of Rent the Runway)

While this celebrity reliance is not something new, the addition of Facebook, Instagram and other social media platforms into the mix, has made these often high-priced purchases no longer worth the investment.  The widespread idea that you should never wear an outfit twice has become extremely difficult to follow, thanks to living our life on a digital platform.  Take a $300 dress for example.  Prior to social media, you could wear the same outfit to well over 20 events with little to no one knowing. Today, if you post one picture in your outfit on Instagram, users no longer want to wear it again because their followers already saw them in it.  

Because of this, individuals are stuck in a lose-lose situation: they are encouraged to buy the brand they can’t afford, and they feel as though they cannot wear it more than once.  With societal trends moving faster than ever, consumers are increasingly likely to feel that they have nothing to wear, despite their growing closets and declining bank accounts.


It was this very issue that inspired Jennifer Hyman and Jennifer Fleiss, founders of the company Rent the Runway, to establish what some call “a Netflix for Dresses.”  As both graduates of Harvard Business school, the two founders brought together both of the aforementioned issues, with the prominence of the sharing economy, to grow Rent the Runway to be valued at an estimated worth of $600 million dollars.  

Starting in 2009, Rent the Runway began as an online company offering high-end pieces of clothing at a portion of the cost.  Rather than a typical online or retail store, where consumers pay an usually high price to own a piece of clothing, Rent the Runway customers pay a significantly lower rental fee, and send back their clothing after they wear it to an event.  


The typical process goes like this.  Users are able to sort through a variety of trends, designers and occasions, select the size (and a backup size) that they need, and specify a timeframe that they want their outfit for.  Once selected, they are recommended additional items to purchase or rent, (such as jewelry, makeup or hair accessories) that the company believes would go with their desired look.  On the weekend of their event, Rent the Runway ships their outfit from their distribution center in New Jersey to the consumer.  The individual then wears the outfit, that may be valued at over $1,100 dollars retail, for a very low rental fee.  Once the event is over, they ship it back with no cleaning necessary.

Now, you may be wondering: how are users able to know how they will look on the day of their event if the dress only comes two days before? Or even, what provides the trust that is essential to a sharing economy centered company?  This is where customer reviews come in.  Rent the Runway’s customer reviews go further than the typical company, offering customers a detailed platform to share their experience with other users.  After wearing an outfit, users are prompted to post pictures, information about their body-type, as well as details about how the dress made them feel.  They are given a rating scale of 1-5 stars, and are able to highlight any faults, if any, in the piece(s) of clothing that they wore.  

See the figure below for an example.  With details such as her height, weight and body type available, users are able to compare her size with their own in order to best determine whether this outfit would be right for them.

Screen Shot 2017-10-28 at 4.06.20 PM

In addition to this, Rent the Runway also offers a 100% fit guarantee, which includes a complimentary backup size and style option- making individuals even more secure in their purchase.  And if this isn’t enough, they recently expanded their business model with a partnership with Neiman Marcus, and the establishment of five Rent the Runway store fronts in NYC, Chicago, LA, San Francisco and DC.  At these storefronts, users can browse through same-day rentals, book personalized style appointments, and most importantly run into a store if the dress they ordered doesn’t fit like they thought it would.  

In addition to the recent addition of these storefronts, Rent the Runway recently created a new subscription option to their business model, allowing women to borrow not only clothing for special occasions, but also for their everyday lives.  For a fee of $159 dollars  a month, users are able to rent an unlimited amount of items to keep their closets filled with the newest styles and trends.  While a subscriber can only hold four pieces at a time, once a new piece is returned, a new one can be shipped.

Screen Shot 2017-10-28 at 4.05.01 PM

Now you may question, like I had, which consumer would pay the high fee of $159 a month for this, but CEO Jennifer Hyman knows her company’s target market and value proposition, and it’s much stronger than you may think.

The average subscriber of Rent the Runway’s Unlimited service is between the ages of 18-42 years old, and has an average income of 100,000 dollars per year.  This market is composed of over 15 million women in the United States, and there is only room to grow, as the cost for the monthly service will only decrease with increasing  economies of scale.  Rent the Runway has calculated that on average, an Unlimited Subscriber receives $40-50,000 worth of product for 1,600 dollars a year- a 96.8% savings that makes this service extremely appealing.

In an interview with Jennifer Hyman, she highlighted the inefficiency behind today’s typical storefronts.  Because of the rise of what is called “fast-fashion” a typical store works on a three month rotation: it brings in new inventory, holds it for three months, and then puts it on sale to make room for new products.  While this model meets the consumer’s demand for new products, it’s highly inefficient since “consumers care (more) about something being new to them, not necessarily to the market.”  Consumers now preference discounted, short-term pieces, rather than long term, more expensive options: exactly why Rent the Runway’s business model is extremely appealing.


After looking into Rent the Runway in great detail for this blog post, I am very impressed by the amount of research that the company has done in configuring their business model.  Since I haven’t highlighted every aspect of their business in this blog post, I encourage you to read this interview, for more information.  From this interview alone, I can see why both Jennifer Hyman and Jennifer Fleiss were listed as a two of the Eight Women Entrepreneurs to watch by Forbes’s in 2016.  In addition, this article highlights how designers can benefit from the amount of data that Rent the Runway collects on a daily basis.  

Rent the Runway is one of the first clothing companies to utilize the sharing economy in their business model.  In my opinion, it is not long before I envision expensive retailers, such as Bloomingdales and Saks Fifth Avenue, adding similar clothing sharing options to their operations.  Where do you think the future of fashion is heading?





  1. mattwardbc · ·

    I read an HBS case on this company last year in Entrepreneurial Management and I think they have a great value prop. The opportunity is massive and this could totally revolutionize the high end fashion industry. I think the market is somewhat limited to women because guys tend to not need singular outfits, but I may be proven wrong in time.

    1. mgiovanniello · ·

      I did as well, with Prof. Tripsas! I remember loving Rent the Runway as a company, and I’m happy to see they’re still so successful. They’re a great example of a company who’s doing things right – it’s the technology, the business concept, and their customer service that’s made it them win-win for women looking to dress the best for less.

  2. taylorvanhare · ·

    I loved this post Alyssa and I think you did a great job in writing it – providing us with so much background information and really explaining the value proposition and unique options Rent the Runway offers to its customer. I didn’t realize that they had added this knew “unlimited” monthly subscription feature – I can see this taking off immensely as girls can rotate trendy and seasonal pieces into their day-to-day wardrobe. Fun Fact: When I was in New York city this summer they launched their same day delivery service in their app and my boss used it and loved it – she had needed a last minute cocktail dress for an event and the service worked seamlessly. I can see this fitting perfectly with the busy New Yorker lifestyle! (this is a little article on that launch!)

  3. I LOVED your blog post. As Taylor said above, you did a really great job of explaining the Rent the Runway platform with thorough background information to understand how it got to where it is today. I found the paragraph on the monthly subscription of $159/month really interesting. Not knowing the model prior to your blog post, I had the same reaction, who would spend $159/month to rent clothing? However, after reading Jennifer Hyman’s analysis on why that is the price point, I was motivated to check it out. It could almost be argued that Rent the Runway, founded in 2009, was a pioneer in unconventional shopping and with their constant innovations to serve customers, I’m sure the company will continue to be a success.

  4. Hilary_Gould · ·

    I’ve always thought Rent the Runway was a super interesting idea and loved reading more about it. I’ve never used it, but have friends who have and swear by it! I would be surprised if more and more of these types of companies pop up as the sharing economy is growing. I just think about how often my friends and I borrow clothes from each other– if you could tap into a larger network this would be even greater. Although there would be some risks, using a platform like Rent the Runway who own all the inventory eliminates that. I definitely agree that one of the reasons for their success is peoples hesitancy to repeat outfits once they’ve posted in them!

  5. cgoettelman23 · ·

    This was a great blog post! I’ve always looked at Rent the Runway for dresses for special events, but never actually followed through because I was nervous that the clothing wouldn’t fit right. That being said, I think that they have an impressive, interesting take on the future of fashion. I agree with Hilary about how more companies with a similar business model may start to pop up due to the sharing economy. RTR reminds me of how Amazon rents textbooks, but for clothes. It is a great way for consumers to get their hands on designer brands, and they do a great job integrating digital technologies into their business model. While textbooks are (obviously) not designer dresses, they are still expensive and renting them is a great option. Same with dresses! You truly did your research for this blog post, and you’ve possibly changed my mind for the next time I need a dress for an event!

  6. whitmcdonald2 · ·

    Alyssa- thanks for sharing this awesome insight. I am also impressed with the data and research that RTR has done in order to be successful, especially so early in our sharing economy comfortability! I think one of my biggest problems or hesitations with this idea is that I’m super short, with a short torso, short legs, etc. and you’d think that would be easier to shop but things look so different on me even if I see the dress or clothing on a mannequin and I’m not totally sure that a review would satisfy that need to try it on. But to answer your question- I know that we have talked about VR and AR changing every industry, but I really do think that this could change online shopping. I think one of the major disadvantages is the hassle of returning if something doesn’t fit or look right, etc. While I was at Digitas, the interns got an insider’s peek into the Innovation Lab, which is a room that the Tech and Experience Design teams get to play and learn about new technologies so that they can build the newest and greatest products/marketing campaigns. Anyways, one of them was VR for shopping. A very major client and worldwide fashion leaders is investing in a VR app that allows mobile/online shoppers pop up the item of clothing on ~their~ mannequin that is fit to their height, sizes, etc. Pretty cool!

    Rent the Runway is changing the game and the rest of the fashion industry has to or it will be totally flipped inside out! Maybe RTR will adopt a VR aspect to help build confidence in the product that they are receiving just two days before the event!

  7. s_courtney18 · ·

    Awesome blog post Alyssa! I used Rent the Runway once for prom in high school and I loved the process. Although I was skeptical at first about fitting, etc., the use of customer data truly sealed the deal for me. The reviews are incredibly detailed and past users are encouraged to upload photos of themselves, list their height, weight, body shape, and any other comments about fit, which is extremely helpful for potential customers so that they know exactly how the dress will fit their specific body. It’s interesting to see RTR as another great example of a company with network effects–the more users, the better data, and the more customers that the business will generate, which can lead to a greater selection of the most up-to-date fashion.

  8. Great post. BC has a pretty good connection to RTR. Never heard of unlimited, though. Maybe I’ll have to look into it for my wife.

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