Objective

Lack of product

Rent the Runway, a large US rental platform, saw record subscriber numbers in Q2 2023, but at the same time experienced a revenue slump. The management team diagnosed itself as having too little inventory depth: not enough inventory in any one product, let alone a large number of products, reducing customer choice, which meant a very high churn rate for early customers.

Rental platforms carry about 20% excess inventory to provide customers with a wide range of choices, but only 15-30% of their inventory is consistently rented, meaning that some products are bottlenecks for customers and the rest is meaningless inventory. The customer experience is also negative because the products they want are always on loan.

The solution to this problem is to build more inventory of popular products, but that's not realistic. A $10 million investment would only get you 400 Hermès Birkin bags and 1,100 Chanel double-flap bags. And even if you had the capital, it would be difficult to get them all, given the scarcity of luxury goods. Of course, customers want to have more brands and products to choose from besides Hermès and Chanel bags.

Lack of a lock-in effect

If your rental platform lacks compelling options, customers will quickly leave. Ribbons, a leading luxury fashion rental platform in South Korea, reports that most of its customers come from searching for product names, not rental items. This suggests that customer acquisition costs are similarly high for luxury goods, and that the behavior of customers entering a rental platform is no different from fashion commerce in general. Even on a typical rental platform, customers are checking to see if the items they want are available and leaving the platform quickly.

In fact, the number of monthly active users on South Korea's leading online luxury fashion platforms - BALAAN, MUSTIT, and TRENBE - is only 16% of their total subscribers, and two-thirds of active users spend less than 30 minutes a month.

Of course, this isn't always a bad thing, and most commerce companies accept it as an inevitability. However, most rental platforms offer a subscription model. One of the keys to a subscription model is to get customers to stay on the platform and stay subscribed, unless your business model is to hope that they forget and unsubscribe.

The power of decentralization

To solve these problems, we build a service based on Web 3.0 that offers all possible experiences in luxury fashion: rentals, subscriptions, and second-hand sales. At its core is D-Rental (decentralized rental), a higher-level concept of peer-to-peer rental using the blockchain. Both the movement and ownership of goods are recorded on the blockchain, which is the basis for trusted rewards for both the lender (lessor) and the borrower (renter) of luxury fashion. Rewards motivate customers to stay on the platform. Furthermore, it builds strong trust in authenticity, which has been a fatal problem in traditional online luxury fashion transactions.

Expectations

Effectively increasing the variety and depth of luxury fashion offerings to absorb more demand, maximizing revenue. Owners of countless luxury brands that are unused and lying dormant in private closets can use smart contracts to make it easier for them to start renting and earning revenue. The more popular the item, the more participants there will naturally be. Proof of ownership via NFTs not only adds credibility, but also ease when expanding into the post-rental journey, such as second-hand transactions.

It also builds tokenomics to ensure customer lock-in. Customers are rewarded for staying and engaging with the platform, whether it's borrowing or renting items, and these rewards can be used organically to enjoy luxury fashion in all its forms. By turning rewards into tangible benefits, which in turn lead to rewards, customers have no incentive to use other platforms - it's cheaper, more diverse, and easier.