Business Model Canvas For Clothing Brand – In this article, I describe how the Runway Business Model Canvas effectively solves the problems of renting and making money for their clients. I also look at the infrastructure that Runway Runway requires to create and deliver this value
Runway (RTR) targets affluent middle-aged women in US coastal cities. Women are usually between 25 and 50 and earn good salaries in cities like New York, Washington or San Francisco.
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This customer segment was targeted because they spend a lot of money on clothes, RTR founder Jennifer Hyman said she spent $2,000,000 on a dress she wore once. For women, more than menswear, it’s about self-expression, and it creates a deep emotional connection with what they wear.
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RTR’s business model creates value for its customers in several ways. Clients often work long hours and live in a highly consumerist society despite earning good wages. There are always more things they want to buy and this puts a lot of pressure on their wallets.
Clothes are powerful symbols of status, and Veblen was fine with price usually being an indicator of status and quality.
The Runway Runway value proposition shows the customer how good they can look wearing an RTR shirt
It costs three times as much to rent a Veblen god who rents runways. First, it gives customers access to premium brands or status symbols at lower prices. Second, it allows consumers to shop consummately and frequently without buyer’s remorse. As a result, it allows customers to spend less time shopping.
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A key part of the value proposition is the rental of shirts. A customer who invests in a monthly subscription wears a shirt worth more than 10x the cost of the subscription. For example, a $150 per month subscription lets you rent four $500 shirts at once. The customer saves significantly on the purchase price by renting.
This works because novelty is a key aspect of women’s fashion (witness the success of Zara, which focuses on the rapid production and distribution of clothing lines within a season), and products are often worn multiple times without losing value to the user. dramatic. Unlike a house, which has a fixed and constant value, the half-life of a shirt is much shorter.
For RTR, it is used 3-5 times in 3 months (3% usage rate) instead of 150 times a year to rent the product (41% usage rate – or 60% if weekends are not registered). RTR uses the uncertainty between these two usage rates to set its range.
Buyer’s remorse is a major issue in consumer purchasing, especially for high-end items. As the dopamine hit in the purchase decision wears off, consumers consider the opportunity cost of the purchase and often regret the decision, especially for big-ticket items like an expensive shirt.
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What RTR does is trivialize buyer’s remorse. It does this by reducing the cost and psychological impact of any decision. Subscriptions are already paid for. They are also not permanent because the shirt will be returned. Ultimately, once these objections are removed, “buy-in” becomes easier.
[It should be noted that Amazon uses buyer’s remorse differently – it makes it really easy to return items]As a result, customers need to spend less time making decisions because the financial and ownership consequences of the decision are significantly reduced. If the decision is wrong, the cost is several tens of dollars. Not hundreds or thousands of dollars. This encourages confident decision-making. As a result, RTR customers can save significant time – 68% of customers claim they shop less as a result.
It also helps RTR disrupt the traditional B2C trading process. Because of lower decision costs and outcomes, a user’s product-to-consumer purchase is likely to be faster than traditional e-commerce stores or brick-and-mortar retailers. Dropout rates are also likely to be low.
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Leasing a runway is primarily an Internet-based process. Most rentals are done through the website. It is also the first place customers interact with themselves. It also has a smartphone app and five stores. These are in the rich coastal cities – the densely populated areas of their wealthy clientele. Although these stores are expensive, they act as brand ambassadors and market extenders for women who are unsure about ordering online. They serve only a fraction of RTR’s 6 million customers.
If you look at RTR’s website, there is no way to contact the company via email, phone or chat. You can visit the store or order. Customer service is limited to customers with orders or subscriptions. The low cost insurance that RTR offers is a way to reduce the number of customer interactions and can be a very inexpensive part of the process.
It provides an advantage over brick-and-mortar and e-commerce retailers that must invest heavily in staff to manage customer service because choices and responses are less limited.
Clothing rentals are the main revenue streams for RTR. These are either done on a piecemeal basis or as part of a subscription package. Date rentals are more seasonal – times of the year like Christmas and Eid when people dress up the most. In contrast, the subscription model provides a steady flow of cash throughout the year, allowing you to raise more stock levels.
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RTR also offers insurance and charges late fees. Although these generate cash, they are part of RTR’s business design. What they do is influence customer behavior to improve operational efficiency. It means you don’t have to spend time negotiating insurance coverage in the event of clothing damage. It will reduce the number of customer service representatives and conflict that can lower retention rates, thereby increasing customer lifetime value.
Finally, old clothes are for sale. Any sale at this point would be a net gain, as the lease would cover the purchase and operating costs many times over.
RTR’s main resources are services that allow us to update stock and clothing and return them to customers as quickly as possible. As a result, it invested heavily in dry cleaning and interior renovations to improve occupancy rates. However, the company decided to outsource its logistics to UPS, which decided not to build core competencies.
While customer service and platform development are important, researching RTR’s clothing offerings is central to its business model. These need to be both attractive and sturdy to look good after a few short-term rentals. The first activity increases conversions on the website, and the second increases the ROI of the investment on the element.
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RTR’s main partners are UPS, which provides all logistics. By using a single partner, RTR is able to establish a reliable process that limits the transit time of SKUs and thus prevents them from being leased. It also has partnerships with hundreds of fashion brands. Purchasing power allows suppliers to have a wider brand in key markets, leading to increased awareness and potential sales.
The biggest expenses in business will be the purchase and maintenance of inventory. At retail rates of $10 per item, 30% of the maximum subscription package revenue can be eaten up before other variable costs are taken into account. With $100 million in platform sales today, ongoing efforts to address legacy code will not cost much.
“Big” companies are civilizations. I guide entrepreneurs and startups in the desert on the path to becoming “Big”. At one point, this business model generated profits of 16 billion euros. This is amazing. What factors changed this? Read. Maybe, maybe not.
Imagine a small Italian clothing manufacturer. Your factory makes clothes for everyone, with affordable prices, sold to the public through mono brand stores. Now imagine you want to achieve better results and go global. What would you do? Think about it…
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Can you move manufacturing to a low-wage country? Will you increase advertising? Can you create a franchise? That’s right. You have chosen. Which method did you use?
Let’s take a real example of the world’s best, number one business model. Then we start asking ourselves: why? We’ll find the key factors that drive successful business growth.
A few lines about a company that knows a thing or two about clothing. Inditex. (and Forbes list of the world’s largest companies)
Inditex has prosperous origins. The story begins in Spain in 1963. Where Inditex is the only clothing manufacturer.
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In 1975, the first Zara store opened. Nine new ones between 1976 and 1983
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