The Unlimited rental plan that was initially debuted in 2016 was an offering that helped launch Rent The Runway into rental subscription stardom. Fast forward four years, the company is putting the kibosh on its unlimited subscription plan due to the ongoing COVID-19 pandemic. Instead, the company plans to offer a new three-tiered model.
Rent The Runway customers will have the option of renting four items a month for $89, eight items a month for $135 or 16 items a month for $199. The Unlimited rental option was originally offered at $159 per month.
Starting next week, the Unlimited model will be completely eliminated, but existing subscribers will still be able to use their existing unlimited plan until the beginning of next year.
The Unlimited offering served as a driving factor in the company’s early growth as it got both customers and brands interested in the concept. The offering initially went viral.
“It’s what helped us grow from making these small orders from brands to making orders that are larger than a lot of retailers are,” said Chief Merchant Officer Sarah Tam. “And that interest from brands led to our current model, where we do a lot of revenue sharing with more than 200 brands, which is good for both of us.”
But like many retailers and brands, Rent The Runway was hit hard by the pandemic. The company’s business model was initially built on the idea that customers would rent expensive articles of clothing for lavish events like a wedding or a gala. The service then evolved to offer more than just fancy attire as customers were looking to rotate their entire closet and many would even have their clothes shipped to their offices. But now with social distancing mandates in places and most companies operating with a remote workforce, consumers’ interest in renting clothes is no longer at the same level it was once was. That being said, according to CEO Jennifer Hyman, eliminating the Unlimited offering was a move that has been in discussion for quite some time.
Since the rise of the pandemic, customers have been pausing the service or opting out altogether which forced the eCommerce platform to restructure its company by announcing the layoff of its entire retail team.
By forgoing the Unlimited plan, the company is further aiming to stabilize its revenue stream and cut down on costs associated with dry cleaning and laundering among other things. The logistics behind the plans aren’t easy to manage either. Just last October, the company had to temporarily shut down its service due to extremely high return volumes and its inability to keep up with the demand.
While the move may seem drastic, in reality, it’s actually not. According to Rent the Runway data, 70 percent of its Unlimited members were renting an average of 8 pieces per month, whereas only 6 percent would rent more than 16 items per month. So, if the majority continues to rent at roughly 6 items per month, they would actually be receiving a discount.
Some simple, quick math: $159 (Unlimited plan) – $135 (8 items plan) = $24 in saving
Rent The Runway is also not too concerned with this shift as its competitors like Nuuly and Le Tote currently do not offer an unlimited plan. Le Tote phased their offering out just about two years ago, brought it back earlier this year and then ultimately went bankrupt leaving the offering a bit unclear as to where it stands today.