Will sharing leasing be a new attempt for clothing e-commerce?

The goddess mainly solves the following four major problems: 1. Reduce the procurement cost, 2. Change the traditional inventory system, 3. Limit the rental quota, 4. Clothing cleaning is a barrier.

At present, the goddess has launched three business lines, namely, one-piece dress leasing, monthly fee membership, cloud wardrobe and offline store. “These businesses are all profitable or break even within a year.”

The goddess mainly solves the following four major problems, which are also the main pain points and barriers under this model. 1. Reduce procurement costs, 2. Change traditional inventory systems, 3. Limit rental quotas, 4. Clothing cleaning is a barrier.

On February 16th, the women's fashion sharing e-commerce goddess party announced that it had completed the investment by Arctic Light Ventures at the end of 2016. Jingwei China, the last round of investor Huachuang Capital and a number of international fashion brand investors and investment of 18 million US dollar A round of financing. According to the world clothing and footwear network, this is the largest A round of financing in the domestic apparel e-commerce field.

At the end of 2014, Xu Baizi and the founding team set up the goddess. From the model point of view, the goddess sent out clothing to provide consumers with short-term rental services for dresses, daily clothing and accessories. Members can rent international big names at the original retail price of 5%-10%.

According to Xu Baizi, the main clients of the goddess are 20-25 year old college students and newcomers in the workplace, followed by white-collar women and fashionistas aged 26-30. The former's use scenes are mostly uniforms, with the retail price of about 1,000 yuan, the young designer brand, the frequency is higher; the latter has enough uniforms to meet the party, wedding, company annual meeting, etc. The rigid needs of dresses for special occasions.

Domestic online clothing rental platforms have also been online and secured. For example, “Yi Er San” received an A+ round of 10 million US dollars investment led by IDG Capital; “Dorayi Dream” also completed a 46 million A round of financing. At the end of 2015, the goddess received a $3 million investment from the Huachuang Capital Pre-A.

Xu Baizi revealed that this round of financing will be mainly used for the market to accelerate the growth rate of the monthly membership base, as well as to expand the purchase of daily and high-end overseas brands. It can be seen that the development of the uniforms on the platform of the goddess is relatively rapid.

In addition, the goddess has further strengthened the management team. The newly added strategy leader graduated from the London School of Economics and Political Science and was a stock analyst in the Macquarie Group. Senior talents such as supply chain experts and Red Star Macalline products VP also joined the goddess.

Will sharing leasing be a new attempt for clothing e-commerce?

Traditional clothing e-commerce generally low gross profit, low repurchase and low customer orders, coupled with shrinking offline retail, clothing rental under the sharing economy is really a good business?

According to the world clothing and footwear network, the goddess has launched three business lines, namely, one-piece dress leasing, monthly fee membership, cloud wardrobe and offline store. “Everyone achieved profit or break even in less than a year.” Xu Baizi, founder, told reporters.

Previously, Huayin Capital Investor Yu Yue admitted to reporters that the reason for investing in the field of clothing leasing: “By the influence of social media, fashion size and friends’ culture, Chinese girls have increased their demand for clothing consumption. However, international big names, High-end women's clothing still can't reach domestic consumers with reasonable price and high quality experience. There is a market opportunity in the middle - clothing rental."

The current round of investment, the general manager of Aurora Ventures, Jiang Yantian, further explained the model advantage of clothing leasing: “Clothing is a trillion market, and it is highly mature in the e-commerce field, but it still cannot avoid the inventory caused by non-standardization of goods. Risks, high return rates, and low online customer orders, the Goddess has innovated the underlying model based on the core needs of a new generation of consumers, and has optimized the supply chain and operating models."

As for the investment goddess, Jingwei, the managing partner of Jingwei China, expressed his appreciation for the team's ability to execute, because the goddess is doing a business that needs to fight ideas and fight operations.

An attempt to localize an American experience

In fact, the birth of the goddess was the shadow of Rent the Runway, the originator of clothing rental, more like a localization experiment of American experience.

Xu Baizi was the vice president of Deutsche Bank and Macquarie Group's Hong Kong TMT Investment Banking Department. The investment banking experience has exposed her to many pre-IP Internet startups. At the beginning of 2014, Xu Baizi discovered that several companies in the field of clothing leasing in foreign countries have successively obtained huge sums of financing. Among them, the Rent the Runway, which received $60 million in E-round financing, is a typical case. The founder of the company even claimed to “build Amazon in the rental industry."

Online, clothing rental demand has a long history, but the pain point is obvious: First, to bear the high store rent and personnel costs, resulting in even more than the shoulder purchase price; Second, the purchase channel has no advantage, mostly for the wholesale market of brand-name low-end dresses It is mainly based on vertical scenes such as wedding dresses and performance costumes.

The success of Rent the Runway is based on an internal complex and efficient operating system. According to Forbes Chinese, the company has a total of 5 million members in the United States. The daily website and its software algorithms need to process and send more than 65,000 pieces of clothing and 25,000 to members. Earrings, bracelets and necklaces.

This is what Xu Baizi is good at – she graduated from Columbia University in business operations engineering, similar to the operations research of domestic colleges and universities. Simply put, she uses computers to simulate the entire operational system to improve efficiency. “Maybe you can copy the American experience to China and build the Chinese version of the Rent the Runway.”

At present, the goddess sends mainly to solve the following four major problems, which is also the main pain points and barriers under this model.

01 Reduce procurement costs

Xu Baizi once said that the three main costs of the leasing model are procurement cost, courier cost and labor cost in the back-end supply chain. Although the latter two have advantages over the Rent the Runway in China, the procurement cost will be a major constraint when the platform is small.

Compared with other domestic rental platforms, the goddess brand positioning is relatively high-end, and now the high-end dresses and daily rentals available include Vera Wang, Kate Spade, Valentino, Lanvin, Ralph Lauren and other overseas first-line brands. American brands account for more than 70% of the goddess brand library, but high unit prices mean high inventory costs.

In terms of brand expansion and selection, choosing a reasonable purchase channel to ensure a competitive purchase price is crucial for the goddess. Under normal circumstances, super-brand licensing is more difficult, in order to reduce costs, the goddess sent mostly from the dealer channel.

Under the high-end positioning, Yu Yue believes that establishing a high-end brand procurement channel overseas, ensuring the supply of clothing and reducing the procurement cost is the core value that can be provided to users.

02 traditional inventory system, out

"Traditional e-commerce is mainly based on inventory sales, and the business of renting clothes is actually how many times a piece of clothing can turn around in its limited life, which means how much money can be earned." Xu Baizi told reporters.

However, it is not easy to transport a high-priced dress or bag across the country. It is necessary to consider factors such as timeliness, fit, and quality. In addition, the reverse logistics from the user's hands is also an important part of online leasing, and the requirements for customer service, customer experience and platform inbound and outbound inspection are higher.

This requires a comprehensive rental system.

The goddess used a predetermined pattern, and each piece of clothing was followed by a rental schedule. The advantage is that, first of all, to promote the operation and supply chain operation in the business model, instead of artificially formulating KPIs; secondly, it can directly determine the popularity of the styles, and use the rent pricing to judge the user's hierarchy; again, flexible price adjustment to control the rental situation. Rent fast to increase rents, slow down rents, and maintain a balance between brand and inventory.

In addition, the goddess will increase the inventory of the explosion. Under normal circumstances, the goddess sent each purchase of 3-5 sizes, according to the pre-arrangement within a few days before the shelves, the inventory rate of the high occupancy rate gradually increased to dozens.

The retail price of most overseas channels on the platform ranges from 2,000 to 5,000 yuan. The retail price of most domestic channels is 600-2000 yuan. There are dozens of new products on the shelves every day.

03 Limited rental quota

Xu Baizi found that in order to let the platform traffic roll quickly, the main force point is still uniform. Although the dress is just needed, but the frequency is limited, even the most active social queen, no more than 10 times a year.

The focus of operations naturally falls on how to keep users on the platform for a longer period of time, and recommend products based on user data to reduce the cost of decision making.

The goddess once made a series of attempts on the membership system, paying monthly, and borrowing three pieces at a time. As a result, the clothes with high prices were looted, the loss rate was increased, the relatively cheap ones were idle, and the inventory utilization was very uneven.

Therefore, Xu Baizi decided to use the monthly/package year format to limit the number of free rentals and flexible price adjustment to improve the monthly mode. The launch of 518 yuan monthly and 3588 yuan per year, users can choose any clothing with a total rent of 400 yuan or less. There are no limit to the number of times per month. For each dress, the rent is set for 5-15 days. For the dress, the number of times is calculated. The platform stipulates that the rental time is 3 days.

04 clothing cleaning is a barrier

According to Xu Baizi, the average of each garment on the Rent the Runway can be cleaned more than 30 times. The goddess sent the self-operated laundry center is gradually narrowing the distance. In her opinion, the probability of washing is higher than that of wearing, and the main reason for this gap is cleaning equipment. “The use of the corresponding detergents in each fabric and the placement of specific cleaning equipment will affect the service life of the clothes. ."

At present, the goddess has moved into the self-built 3,000 square meters integrated storage and cleaning center, and high-end commercial laundry systems and equipment imported from abroad have also been put into use. After all, the longer the life cycle of clothes (more than 70% new), the higher the return on investment.

For a long time, the goddess is polishing the back-end operational capabilities, including personnel allocation, efficiency, etc., to ensure that when the clothes encounter non-standard special conditions such as stains, sputum, and opening, they can react quickly.

In terms of costing and profit model, the cost of ordinary e-commerce is mainly composed of logistics, packaging and purchase price of goods. The goddess sends a new depreciation cost of goods (ie, the purchase price divided by the number of leases), but at the same time, it is possible to enter a single item. Rented n times (1 ≤ n ≤ 15), the profit level depends on operational efficiency, and now the gross profit of the leasing model is even higher. According to Xu Baizi in 2016, “the goddess will be profitable in the fourth quarter of recent years.”

As for whether such a rental platform will have malicious damage or genuine package adjustment, in the view of a senior user, the sharing economy of clothing must first be based on trust to collect items, and then the platform will increase user participation and quality through reward and punishment rules. And timely collect and organize user feedback information to form a virtuous circle.

One person who knows the comments of the netizens, this kind of platform is still focused on dresses, wedding dresses and other clothing that will be worn on major occasions. After all, there are not many people who spend a lot of money for a banquet. The biggest problem is that the Chinese people are also resistant to wearing two. Hand clothing, as long as it can be cleaned and disinfected, it will be a promising market.