Following the rise of peer-to-peer sellers like Poshmark and rental companies like Rent the Runway, emerging startup DesignerShare is combining the two so that women can make money by renting out what’s already in their closets.
The site, which launched nationwide at the beginning of this year, is a service designed to enable users to rent out designer pieces to one another for a profit. Unlike consigning, it allows them to keep a coveted handbag or special-occasion dress that has been sitting in their closets, while making money by loaning it out to other users. To start, lenders must fill out a personal profile and then build their wardrobe, including detailed information about items they’re looking to rent, along with photos.
Like other peer-to-peer sellers, users are given autonomy over pricing, though DesignerShare suggests listing 10 percent of the original price for a minimum borrowing period of one week. When the rental is complete, users receive 75 percent of the rental price and DesignerShare keeps the rest. (For comparison, Poshmark users keep a 70 percent cut of commission, but they don’t keep the item.) The company handles shipping and delivery, as well as dry cleaning and returns.
So far, the only other company to tackle peer-to-peer luxury rentals is Villageluxe, which received $2 million in seed funding from investor Carmen Busquets in May. While DesignerShare has so far been bootstrapped, it is currently open to all users, whereas Villageluxe remains invitation-only and is only available in select cities.
Co-founder Sarah Perkins, a former fashion writer based in Chicago, said she was inspired by her own personal habit of swapping designer looks with friends while in college in Santa Clara, California. Her freshman year coincided with the launch of Rent the Runway in 2009, and as she and her friends passed around luxury dresses for sorority formals, she maintained an interest in the sharing economy.
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As services like AirBnB continue to thrive — as well as rising programs like DriveShare, an app that allows users to rent out vintage and luxury cars — the sharing economy is on track to reach its expected value of $335 billion by 2025, according to a study by PricewaterhouseCoopers. Though the fashion industry has experimented with an array of alternative, data-driven business models, Perkins said she was inspired by a particular void around luxury peer-to-peer rental. However, the challenge remains in finding a captive audience of consumers, given that high-end shoppers can be particularly hesitant about sharing clothing.
What Perkins said sets DesignerShare apart from companies like Rent the Runway is that it includes its own user-generated inventory, and thus isn’t beholden to timely trends. As a result, it includes more high-end designer looks and brands. For example, the website currently has offerings from Gucci, Miu Miu, Chanel, Christian Louboutin and Lanvin — brands that aren’t typically available on Rent the Runway. Additionally, DesignerShare has the added benefit of working independently and renting items without forging official brand partnerships first, a barrier for Rent The Runway.
“Rent the Runway has had nine years to build an incredible wardrobe inventory, but they have to stay ahead of trends and buy in an editorial way,” she said. “DesignerShare is purely what the marketplace demands. Rent the Runway skews contemporary because that’s what they’re able to afford. We allow anything from contemporary to true luxury including items like a Birkin bag.”
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A selection of Chanel items currently available to rent on the site
Since DesignerShare opened its business nationally — prior to January 2018, it was available only to users within a 30-mile radius of Chicago — it now has 4,000 users, located mostly in Chicago as well as the East Coast and southern U.S. So far, customer acquisition has come mostly from word of mouth and organic Google searches, Perkins said, given the lack of similar services.
Still, scaling a company with this model can be challenging. Perkins said the company — which is now made up of 12 employees, including summer interns — is continuing to experiment and learn from its mistakes, like early-stage sloppy packaging and wrinkled garments. The company now partners with TideSpin on dry cleaning, and the cost is split equally between the renter and the lender. (Meanwhile, Rent the Runway’s model fits the cost of maintenance and item insurance into the cost of the rental.)
DesignerShare is also behind its peers due to its lack of a mobile app, though the site is optimized for mobile. While Perkins said an app is on the horizon, she is first focusing on the pending relaunch of the site, which will be designed to be more user-friendly. Another important piece of the updated site will be a focus on community building to encourage repeat shoppers, particularly for women who find other lenders with similar styles and sizing.
“This isn’t a corporation renting out to our customers, it’s a women-to-women experience. I think that’s what makes it special,” she said.
