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Jennifer Hyman, Rent the Runway
Scott Mlyn | CNBC
Rent the Runway began selling its secondhand luxury clothes Thursday on Amazon as the subscription-based startup continues to chase profitability.
Hundreds of items from the company’s “pre-loved” collection, plus new, never-worn pieces from its “design collective,” can now be purchased directly from Amazon through a virtual Rent the Runway storefront.
Secondhand items from more than 35 brands, including Tory Sport, rag & bone, Tibi, sita murt and Kate Spade, will be available at deeply discounted rates.
Rent the Runway, which lets customers rent designer clothing and accessories a la carte or through regular subscriptions, has been struggling to turn a profit ever since the Covid pandemic cut a hole into its business.
The company’s losses have been steadily narrowing now that customers are back out in the world and in need of fresh outfits again but for its fiscal third quarter, it still reported $36.1 million in losses.
The company already has partnerships with ThredUp and off-price banner Saks Off Fifth to sell its used designer duds, but the Amazon collaboration with its design collective line, which features exclusive pieces created by up-and-coming designers, marks the first time the retailer will sell clothes that are yet to be worn.
Rent the Runway CEO Jennifer Hyman said the relationship could be a “key engine” of growth for the retailer. The deal was completed during the company’s fiscal third quarter and contributed approximately $4.6 million to adjusted EBITDA during that period, the company said.
“It really brings Rent the Runway much wider brand awareness,” Hyman said in an interview with CNBC. “Launching programs with major retailers like Amazon is a scaled way to find a home for inventory departing our rental ecosystem, while also further monetizing those units.”
The resale market, and Amazon’s wide customer base, offer a path to profitability, Hyman said.
The total resale market in the U.S. is on track to top $64 billion by the end of 2024, according to research firm GlobalData. Worldwide, it’s estimated to be worth between $100 billion and $120 billion, according to research from Boston Consulting Group.
When BCG’s research was published in October, resale products made up approximately 25% of secondhand buyers’ closets. In 2023, that number is expected to jump to 27%.
Overall, BCG expects resale to comprise about 15% of the total luxury market by the end of 2023.
— CNBC’s Melissa Repko contributed to this article.
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Image and article originally from www.cnbc.com. Read the original article here.