Real Choices at Rent the Runway 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 untal after the party. Not so happy? Neither were the hundreds of customers of Rent the Rumway when they discovered the garment they were expecting would be arriving late. This was the supply chain flasco 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 studles at Harvard Business School. Her sister was strugging with a offers. According to one customer who experienced customer service problems, 1 thought about canceling, but oh, its so addictive. 30 Questions for Discussion 11-30. Rent the Runway has built its business primanly on the needs of female fashion consumers. Should the company expand its business to include men's clothing? How might delivery/return expectations of male I 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 categories 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 Rurway? 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 relative importance of these logistics capabilities. dothing for work Rent the funway 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 earn over 70 percent of its revenue through a monthly sub. scription service. Custorners can select from over 15,000 styles offered by 600 brands, For s monthly fee of 589,5135 , 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 icave it at a convenient drop-off box no dry clearing required. its a fashionista's dream come true. Managing all these shipments for so many customers-at last count, over six million-is a complex process. Large online retailers like Amazon have a similar challenge, but unlike Amazon, virtually, 100 percent of the shipments Rent the Runway sends to customers are also returned, which requares proficiency in reverse logistics, the set of processes concerned with product returns, recycing 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 yensitivity to on-time delivery. With all these challenges, this dicam arrangement for fashion customers can easily become a supply chain-nightmare. That nightmare scenario occurred in October 2019 when Rent the Runway's systems were not able to keep up with customer orders. The company's back-end techinology systems crashed, leaving order fulfillinent workers idle. A new inverfory manogement software system designed to better sort and rack dothes malfunctioned at the company's New fersey distrbution center, affecting six percent of Rent the funmay's special event customers and 14 percent of customers in its subscription programs. Services were put on hold for 11 days expanded into children's dothing and items like pillows and throws. It is atso rupporting travelers through a partnership with W Hotels that allows wardrobe selections to be waiting in a guest's foom when she arrives at the hotel. in a business largely based on trust and word-ot-mouth promotion, customer confidence in the quality of the clothing and timely defivery is critical. At this point in its history, it appears that most of Rent the Runway's customers are willing to give the compary 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, Tt thought about canceling, but ob, its.so addictive =30 Questions for Discussion 11-30. Rent the Runway has bult its business primarly on the needs of female fashion consumers Should the company expand its business to include men's clothing? How might deliveryoreturn expectations of male 1 customers difter from those of female customers? What logistics strategies could Rent the fiumway use to respond to those differences? 11-31. The sharing economy includes services in many categofies 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 furway? 11.32. Review the fre logistics functions intustrated in figure 11.5. How sbould Rent the Runway prioritize. these functions for further operational improvement and imestment? Explain your assignment of the relative importance of these logistics capobilities. decision about buying an expensive dress for an upcoming event, complaining about the lack of outits she had available. even though she had a closet fut of cothes, fenn realized that women like her yider 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 elassmate Sennifer. Fleiss, she began to purchase designer pieces and then rented thern to Harvard undergraduate students. After that test marketing effort - and after getting input from more than 50 of their Harvard professors-the two formed Pent the Runway in 2009 Two big trends helped to propel Rent the Rurways suecess. 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 "casualiration of the workplace" that has cavised some women to feel the need to differentiate the outhits they wear to work from day to day. That may seem counterintuitive, as casual cothes would seem to be less expensive than more formal business fastions. But with casualization, women are "layering, " purchasing more blouses, ponts, jachets and actersories to buld out their wardrobes. Since the early 2000 shen this more relaxed dress code began to appear, women bave been spending on average four percent more of their paychecks on dothing for work Rent the Rumway meets these necds through a novel approach to stoking your closet. The company started with (and still offers) one-time rentals for special events, but now it earne over 70 peecent of its revenue theough a monthy subscription service. Customes can select from over 15,000 styles offered by 600 brands. For a monthy fee of $89,5135, or 5159, mernbers can rent four items at a time and swap them out over the course of the month ether once, twice or an tenlimited number of times tor the higher monthily tatel When (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 understandaby angry. They expressed their ire on the phone with the company's customer service team (when the line was finally answered) and more publicly with hundreds of complaints on soctal 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 heartiflt emait messages of apology and is commitment 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 o picture of better days to come While the sottWare that ran the warehouse was the cause of the shutdown, Hyman said that it would ultimately be the key to reducing turnaround times. Rent the Rumway appears to have survived its supply chain failure during the 11 -day shutdown, 1,000 new subscription customers asked to be added to the waitid. The company has ince been valued at 1 billion dollars. Hyman noted. "interest. ingly, this warehouse delay that we had i think fostered even greater loyalsy in most of our customers, at least that' what weve seen in the last few months." The company is continu: ing to expand, adding athleisure and ski apparel. RTR has atso expanded into children's clothing and items like pillows and theows it is also supporting travelers through of parthershlp with W Hotels that allows wardrobe selections to be waling 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 cualty of the dothing and timely deliecy is critical, At this point in is history. it appesis that most of Rent the Rurways customers are wiling to give the company another chance so that they as customen can continue to enjoy all the benelits its innovative service Real Choices at Rent the Runway 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 untal after the party. Not so happy? Neither were the hundreds of customers of Rent the Rumway when they discovered the garment they were expecting would be arriving late. This was the supply chain flasco 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 studles at Harvard Business School. Her sister was strugging with a offers. According to one customer who experienced customer service problems, 1 thought about canceling, but oh, its so addictive. 30 Questions for Discussion 11-30. Rent the Runway has built its business primanly on the needs of female fashion consumers. Should the company expand its business to include men's clothing? How might delivery/return expectations of male I 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 categories 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 Rurway? 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 relative importance of these logistics capabilities. dothing for work Rent the funway 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 earn over 70 percent of its revenue through a monthly sub. scription service. Custorners can select from over 15,000 styles offered by 600 brands, For s monthly fee of 589,5135 , 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 icave it at a convenient drop-off box no dry clearing required. its a fashionista's dream come true. Managing all these shipments for so many customers-at last count, over six million-is a complex process. Large online retailers like Amazon have a similar challenge, but unlike Amazon, virtually, 100 percent of the shipments Rent the Runway sends to customers are also returned, which requares proficiency in reverse logistics, the set of processes concerned with product returns, recycing 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 yensitivity to on-time delivery. With all these challenges, this dicam arrangement for fashion customers can easily become a supply chain-nightmare. That nightmare scenario occurred in October 2019 when Rent the Runway's systems were not able to keep up with customer orders. The company's back-end techinology systems crashed, leaving order fulfillinent workers idle. A new inverfory manogement software system designed to better sort and rack dothes malfunctioned at the company's New fersey distrbution center, affecting six percent of Rent the funmay's special event customers and 14 percent of customers in its subscription programs. Services were put on hold for 11 days expanded into children's dothing and items like pillows and throws. It is atso rupporting travelers through a partnership with W Hotels that allows wardrobe selections to be waiting in a guest's foom when she arrives at the hotel. in a business largely based on trust and word-ot-mouth promotion, customer confidence in the quality of the clothing and timely defivery is critical. At this point in its history, it appears that most of Rent the Runway's customers are willing to give the compary 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, Tt thought about canceling, but ob, its.so addictive =30 Questions for Discussion 11-30. Rent the Runway has bult its business primarly on the needs of female fashion consumers Should the company expand its business to include men's clothing? How might deliveryoreturn expectations of male 1 customers difter from those of female customers? What logistics strategies could Rent the fiumway use to respond to those differences? 11-31. The sharing economy includes services in many categofies 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 furway? 11.32. Review the fre logistics functions intustrated in figure 11.5. How sbould Rent the Runway prioritize. these functions for further operational improvement and imestment? Explain your assignment of the relative importance of these logistics capobilities. decision about buying an expensive dress for an upcoming event, complaining about the lack of outits she had available. even though she had a closet fut of cothes, fenn realized that women like her yider 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 elassmate Sennifer. Fleiss, she began to purchase designer pieces and then rented thern to Harvard undergraduate students. After that test marketing effort - and after getting input from more than 50 of their Harvard professors-the two formed Pent the Runway in 2009 Two big trends helped to propel Rent the Rurways suecess. 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 "casualiration of the workplace" that has cavised some women to feel the need to differentiate the outhits they wear to work from day to day. That may seem counterintuitive, as casual cothes would seem to be less expensive than more formal business fastions. But with casualization, women are "layering, " purchasing more blouses, ponts, jachets and actersories to buld out their wardrobes. Since the early 2000 shen this more relaxed dress code began to appear, women bave been spending on average four percent more of their paychecks on dothing for work Rent the Rumway meets these necds through a novel approach to stoking your closet. The company started with (and still offers) one-time rentals for special events, but now it earne over 70 peecent of its revenue theough a monthy subscription service. Customes can select from over 15,000 styles offered by 600 brands. For a monthy fee of $89,5135, or 5159, mernbers can rent four items at a time and swap them out over the course of the month ether once, twice or an tenlimited number of times tor the higher monthily tatel When (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 understandaby angry. They expressed their ire on the phone with the company's customer service team (when the line was finally answered) and more publicly with hundreds of complaints on soctal 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 heartiflt emait messages of apology and is commitment 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 o picture of better days to come While the sottWare that ran the warehouse was the cause of the shutdown, Hyman said that it would ultimately be the key to reducing turnaround times. Rent the Rumway appears to have survived its supply chain failure during the 11 -day shutdown, 1,000 new subscription customers asked to be added to the waitid. The company has ince been valued at 1 billion dollars. Hyman noted. "interest. ingly, this warehouse delay that we had i think fostered even greater loyalsy in most of our customers, at least that' what weve seen in the last few months." The company is continu: ing to expand, adding athleisure and ski apparel. RTR has atso expanded into children's clothing and items like pillows and theows it is also supporting travelers through of parthershlp with W Hotels that allows wardrobe selections to be waling 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 cualty of the dothing and timely deliecy is critical, At this point in is history. it appesis that most of Rent the Rurways customers are wiling to give the company another chance so that they as customen can continue to enjoy all the benelits its innovative service