The big event is only four days away and you just found out that the dress you ordered two months ago will not be arriving until after the party. Not so happy? Neither were the hundreds of customers of Rent the Runway when they discovered the garment they were expecting would be arriving late. This was the supply chain fiasco the leader in fashion clothing rental experienced in October of 2019. Jenn Hyman got the idea for Rent the Runway (RTR) when she was home for a Thanksgiving holiday from her MBA stud-ies at Harvard Business School. Her sister was struggling with a decision about buying an expensive dress for an upcoming event, complaining about the lack of outfits she had available, even though she had a closet full of clothes. Jenn realized that women like her sister were more concerned with the experi-ence of wearing an amazing dress than with owning it. She thought that a rent-by-mail model was a potential solution, and, with classmate Jennifer Fleiss, she began to purchase designer pieces and then rented them to Harvard undergradu-ate students. After that test marketing effortand after get-ting input from more than 50 of their Harvard professorsthe two formed Rent the Runway in 2009. Two big trends helped to propel Rent the Runways suc-cess. The sharing economy (discussed in this chapter) is affecting the way consumers get access to many categories of products, allowing them to use or experience the product without having to purchase it. This is especially popular with millennials, either due to financial limitations or a lifestyle goal of living in the present. The other trend is the casu-alization of the workplace that has caused some women to feel the need to differentiate the outfits they wear to work from day to day. That may seem counterintuitive, as casual clothes would seem to be less expensive than more formal business fashions. But with casualization, women are layer-ing, purchasing more blouses, pants, jackets and accessories to build out their wardrobes. Since the early 2000s when this more relaxed dress code began to appear, women have been spending on average four percent more of their paychecks on clothing for work. Rent the Runway meets these needs through a novel approach to stocking your closet. The company started with (and still offers) one-time rentals for special events, but now it earns over 70 percent of its revenue through a monthly sub-scription service. Customers can select from over 15,000 styles offered by 600 brands. For a monthly fee of $89, $135, or $159, members can rent four items at a time and swap them out over the course of the month either once, twice or an unlimited number of times (for the higher monthly rate). When you are ready to swap, simply send the item back via FedEx or leave it at a convenient drop-off boxno dry cleaning required. Its a fashionistas dream come true. Managing all these shipments for so many customersat last count, over six millionis a complex process. Large online retailers like Amazon have a similar challenge, but unlike Amazon, virtually 100 percent of the shipments Rent the Run-way sends to customers are also returned, which requires pro-ficiency in reverse logistics, the set of processes concerned with product returns, recycling and material reuse, and waste disposal. Add to that the need to clean and, in some cases, repair the products. The final challenge is high customer sensi-tivity to on-time delivery. With all these challenges, this dream That nightmare scenario occurred in October 2019 when Rent the Runways systems were not able to keep up with cus-tomer orders. The companys back-end technology systems crashed, leaving order fulfillment workers idle. A new inven-tory management software system designed to better sort and rack clothes malfunctioned at the companys New Jersey distri-bution center, affecting six percent of Rent the Runways spe-cial event customers and 14 percent of customers in its subscription programs. Services were put on hold for 11 days (a lifetime in e-commerce) with orders frozen and those requesting new memberships put on a waiting list. Customers who were counting on receiving a dress in time for an event were understandably angry. They expressed their ire on the phone with the companys customer service team (when the line was finally answered) and more publicly with hundreds of complaints on social media.To make amends, Rent the Runway provided impacted customers a full refund plus $200 in cash. Founder and CEO Hyman also communicated frequently with customers through heartfelt email messages of apology and a commit-ment to do better. You rely on us for meaningful events in your life and to get dressed everyday, the email read. We realize we have let some of you down, and we need to fix it. She explained the reasons for the delays and attempted to paint a picture of better days to come. While the soft-ware that ran the warehouse was the cause of the shut-down, Hyman said that it would ultimately be the key to reducing turnaround times. Rent the Runway appears to have survived its supply chain failure; during the 11-day shutdown, 1,000 new subscription customers asked to be added to the waitlist. The company has since been valued at 1 billion dollars. Hyman noted, Interest-ingly, this warehouse delay that we had I think fostered even greater loyalty in most of our customers, at least thats what weve seen in the last few months. The company is continu-ing to expand, adding athleisure and ski apparel. RTR has also expanded into childrens clothing and items like pillows and throws. It is also supporting travelers through a partnership with W Hotels that allows wardrobe selections to be waiting in a guests room when she arrives at the hotel.In a business largely based on trust and word-of-mouth promotion, customer confidence in the quality of the clothing and timely delivery is critical. At this point in its history, it appears that most of Rent the Runways customers are willing to give the company another chance so that they as customers can continue to enjoy all the benefits its innovative service offers. According to one customer who experienced customer service problems, I thought about canceling, but oh, its so addictive.

Questions:

11-30. Rent the Runway has built its business primarily on the needs of female fashion consumers. Should the company expand its business to include mens cloth-ing? How might delivery/return expectations of male customers differ from those of female customers? What logistics strategies could Rent the Runway use to respond to those differences?

11-31. The sharing economy includes services in many catego-ries that previously required the purchase of physical products. What non-consumable product have you purchased that could be a candidate for a rental approach like that used by Rent the Runway?

11-32. Review the five logistics functions illustrated in Figure 11.5. How should Rent the Runway prioritize these functions for further operational improvement and investment? Explain your assignment of the rel-ative importance of these logistics capabilities