Is Rent the Runway over-promising on deliveries?
Rent the Runway (RTR), the clothing rental startup with a $1 billion valuation, on Friday announced it would not accept new subscriptions or new special-occasion clothing rentals that need to be delivered before Oct. 15 as it works through supply chain challenges.
The announcement came after RTR’s social feeds in recent weeks have been bombarded by complaints about delayed and canceled orders, as well as long wait times.
In an e-mail to customers on Friday, CEO Jennifer Hyman said, “We realize we have let some of you down, and we need to fix it.”
She noted that the delays began Sept. 13 and were “due to unforeseen issues associated with a significant software transformation” at its New Jersey distribution center.
Some of the complaints were from frenzied buyers who selected an item they planned to wear at a special event. RTR promised to make $200 payments in such situations.
Subscribers pay up to $159 a month to rent everyday wear or special-occasion dresses temporarily. RTR has said more than 70 percent of orders from its core monthly service are for everyday clothing. A source close to the company also told The Wall Street Journal the “vast majority” of subscribers and special-event customers hadn’t been affected by the recent issues.
Yet RTR also sent out a “We’re Sorry” e-mail in July. At the time, RTR promised to double its customer-service staff and make other changes to improve deliveries.
RTR has achieved profitability on an EBITDA basis since 2016, but its wide breadth and narrow depth in inventory assortments — as well as extra steps such as dry-cleaning — complicates turnaround times. The Business Of Fashion said the model “heavily relies on an error-free supply chain.”
Bloomingdale’s, Urban Outfitters, Banana Republic and Ann Taylor are among those also embracing the rental model. RTR attributed the shortfall to growing pains.
“Upgrading systems while still running the business at full speed is complex,” Ms. Hyman wrote in the e-mail. She added, “We are sorry, and we own this.”
- An Update From RTR – Rent The Runway/Facebook
- Rent the Runway Stops Accepting New Customers Amid Snafus – The Wall Street Journal
- Rent the Runway stops accepting new customers as operations melt down – Recode
- Rent the Runway Offers Cash and Apologies to Angry Customers – Business Of Fashion
DISCUSSION QUESTIONS: Are Rent the Runway’s delivery issues a short-term hurdle related to rapid growth or a longer-term issue tied to supply-chain complexities? Will further steps have to be taken to recover consumers’ trust?