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Running Head: LOPEZ, SEMESTER WRITING SAMPLE | 1
NEW JERSEY CITY UNIVERSITY
School of Business Administration
MKTG 422 E-commerce. #2531
Christian Lopez
Rent the Runway is a profitable B2C e-tailer that is reaping the benefits of a first mover into the
luxury apparel and accessory rental service by recognizing the market opportunity among the
modern American woman.
3/30/15
CERTIFICATION OF AUTHORSHIP:
I certify that I am/we are the author(s) of this work and that any assistance I/we have
received in its preparation is fully acknowledged and disclosed. I/we have also
cited any sources from which I/we used data, ideas or words, directly quoted or
paraphrased. This work was prepared by me/us specifically for this course.

LOPEZ, SEMESTER WRITING SAMPLE | 2
Two recent Harvard Business School graduates Jennifer Hyman and Jennifer Carter
Fleiss founded Rent the Runway in 2009. Rent the Runway is a B2C e-tailer that allows women
to rent dresses for a small fraction of the price that luxury dresses have. The company has a
selection of over 1,500 dresses that subscribers can choose to rent online. Rent the Runway also
has four retail stores with a fifth store opening in Chicago next month.
The idea for the company came to co-founder Jennifer Hyman when she was watching
her younger sister get stressed out over what she would wear to a friend’s wedding even though
she had a closet full of dresses. Her sister was willing to spend a large portion of her salary just
to look good on this one day even if she likely would not wear this dress ever again (Wortham,
2009). When Jennifer asked her sister why she could not just wear one of the dresses form her
closet, her sister replied she had “already worn those dresses before and that she did not like
them anymore” (Roberts, 2013). The co-founder then thought to herself that there had to be
better way to go about shopping for special events and if there was not she would then create a
better way, so Rent the Runway was born (Wortham, 2009).
Rent the Runway started as a special occasion dress rental company for women who were
trying to find something to wear to events like weddings, proms and bat mitzvahs. Before Rent
the Runway most of these women would wear a dress one time for this special occasion and
never wear it again. This action is sometimes done purposely because of social media’s impact
on consumer’s lives. Everyone’s life is documented with videos and pictures much like
celebrities are. Just like celebrities normal people that are not famous now also do not like to be
photographed twice in the same outfit.

In fact co-founder Jennifer Hyman said in an interview with Fortune magazine that when
the company was doing research, Rent the Runway found that “50% of our closets are things that
have been worn once or twice” (Hyman, 2014). The statistic adds to Rent the Runway’s belief
that people could actually save money renting instead of buying clothes. The price of buying a
new dress is a lot more expensive then renting and the customer is renting a higher quality
garment then the on that the customer might be able to afford.
Women go on to Rent the Runway’s site, enter the date of the special event the women
are shopping for, browse the online catalog of over 1,500 dresses Rent the Runway has to offer,
find a dress the women like and then make sure the size needed is available. Then the customer
adds the dress to the shopping cart and follows the checkout process. The dress is delivered to
the customer in time for the event, the customer wears the dress, takes pictures to capture the
memories and then sends it back when the customer is done with it and before the rental period
expires. The dress is returned mailing it back in the prepaid envelope that Rent the Runway
provides to every customer.
Rent The Runway also creates strategic alliances with designers to offer dresses that are
not for sale in the retail marketspace therefore bringing that appeal of exclusivity to the woman
who does not want to be wearing a dress that anyone can buy. It also helps different
demographics of women to discover these luxury designers creating brand affinity earlier in their
lives compared to those designer's usual customers. Later in life customers might shop directly
from that designer because customers now know the designer well after renting the runway for a
couple of years (Wortham, 2009).

A user can also schedule an appointment with one of Rent the Runway’s stylists at one of
the retail stores the company owns. The appointment comes with a fee but it helps women who
may be indecisive or might not know what size to choose in these luxury designers due to never
having worn the designer before.
Rent The Runway said that the retail stores have been a great way to increase the
customer base and is highly attributed to the reason the business is doubling the customer base
year over year (Roberts, 2013). The retail space helps women who may be on the fence about
purchasing something before seeing and trying it on. The customer might be new to renting items
so the woman could have a lot of questions that could only be answered trying on the items and
talking to a store representative that can walk the customer through the process. Women get
fitting help from the stylist, get help with style tips, and get helped with what fashions are
currently in trend and how to best wear these pieces (Wortham, 2009). The women coming to the
retail stores can leave with a dress that day from the store or have it ordered through the online
store if the size was not available in the retail location.
The company’s revenue model is both subscriptions based and profit is made on each of
the dresses once the particular dress is rented enough times to cover its full retail price in the
non-subscription revenue sales model. Rent the Runway also generates revenue through its retail
locations where they hold their appointments and charge a fee to do so.
In today’s economy everyone is looking to save money and that’s why Rent the Runway
is thriving (Wortham, 2009). Rent the Runway’s co-founders spotted the market opportunity and
decided to create a new market that did not exist before Rent the Runway. This new business is

giving women the chance to feel like and dress like an A- list celebrity but without paying the
expensive price tags like them.
Rent The Runway is now more than 5 years in and the company does not have any
competitors yet. This has allowed Rent the Runway to really grow the business and not sacrifice
or rush processes and features because of having to keep up with competition. The founders saw
something lacking in the marketplace so the ladies created a business to fill the need and fix the
problem of overspending on underutilized dresses. Rent the Runway is not disrupting a market
instead the company is creating a new one (Hyman, 2014). The rental platform and discovery
commerce are both very young and there are still lots of growth in these fields.
First mover advantage is something very strong to have against competition but it is also
really difficult to obtain. As the company trying to create the new market Rent the Runway must
go through and address challenges and problems that people did not know even existed (Liang,
Czaplewski, Klein, & Jiang, 2009). These companies are constantly discovering new problems
that have to be addressed and as the company to first move in Rent the Runway has to make sure
problems are fixed and risk is lowered as fast as possible to be able to continue to grow. A first
mover who fails to address the problems that arise or goes out of business leaves the door open
for a new company to learn from past mistakes and to do the job a lot more efficiently (Liang et
al., 2009).
Much like how when two parties are negotiating a deal, whoever moves first and makes
an offer reveals valuable information about what the other party is willing to pay or offer
(Loschelder, Swaab, Trötschel, & Galinsky, 2014). A first mover into the market also reveals
valuable information to the competitors of what it takes to thrive in this new market. In the

negotiating example the other party in the deal can gage the price the other person or company is
willing to pay because of the first move and can use this information to then make the deal more
advantageous (Loschelder et al., 2014). Rent the Runway’s competitors would learn from the
company’s first moves and not commit the same errors the company did just through monitoring
Rent the Runway and learning from the company. So if a company fails to address problems and
fails all together, the work the initial business did just made it easier for a competitor to claim
what that company worked hard for. First mover advantage helps but companies need to
continue to develop new ideas and or products and services to maintain this competitive edge.
When a competitor does come around to try to challenge Rent the Runway’s control over
the market the competitors will have a very uphill battle to fight. Having no competitors has
allowed Rent the Runway to really lockdown and refine all the logistics needed to run the
operation at the top of its efficiency. The company is vertically integrated so Rent the Runway
owns everything including the dry-cleaning and inspecting of the articles that are sent out to rent
(Hyman, 2014). Hyman also said the company has a seamstresses and workers washing and
steaming the clothes all in house at a Rent the Runway facility in NJ. Having control of the
logistics that go along with the business is very important when first growing because having to
rely on someone else for daily operations brings an increased level of risk and limits the speed
that one can move and grow a new company.
Rent the Runway is closely connected to customers through Instagram where most of the
customers cannot wait to brag about how great the dress looked when they rented the runway.
The interaction with the customers through social media and the integration of real life customer
photos onto the company’s site has provided Rent the Runway with the best word of mouth

advertising. These are complementary resources that have helped keep the company at the top of
the market with no competitors after more than 5 years in business.
Rent the Runway has also developed a native app for smart phones to make the rental
process more convenient, allowing customers to rent no matter where customers are through
their cell phones. “According to Millward Brown Digital, people who shop from mobile visit
more retailer sites than those who shop from the PCs (6.2 retailer visits per month on mobiles
versus 2.9 on PCs)” (Moses, 2013).
Rental dresses existed in the past but no business has ever tried to expand to offer the
dress online to make the choice of renting to be more convenient then having to visit a physical
location. The online e-commerce platform is booming for a couple of reasons like convenience
of not having to leave the house, the convenience of making purchases whenever customers want
like at night when customers are browsing on cell phones right before falling asleep. At night
physical stores are all closed so customers can not shop in store and most of the time the item
customers are looking to buy is cheaper from an online e-tailer. Items are cheaper online because
the e-tailer does not have the overhead a brick and mortar does and as of right now customers
also are not required to pay sales tax on items. Rent the Runway realized shoppers are headed in
the mobile direction and that customers are more active in the mobile platform so the company
made a native app to make the rental experience more convenient.
Rent The Runway has constantly expanded the dress selection over the years to be able to
accommodate more women at any given time. The company has recently rolled out a new
service called “Unlimited.” This new service allows women to transition from using Rent the
Runway for only special occasion dresses to using the company for everyday style clothes

(Hyman, 2014). A new customer’s first month is $49 and then following months the subscription
service transitions to a $99 monthly charge. Jennifer Hyman CEO and co-founder of Rent the
Runway described the new unlimited feature as a way to compete against the disposable fashion
companies like H&M and Zara who offer hot designer style clothing with cheaper materials
(Strugatz, 2014). This method allows H&M and Zara to offer the styles women want at prices
customers can afford. Unfortunately the cheaper materials used on the clothing makes the
garments very susceptible to damage. Women wear the cheap articles of clothing once or twice
before the materials start to rip or fade due to the lack of quality. Jennifer Hyman believes the
disposable clothing trend is coming to an end once customers experience real designer clothing
with Rent the Runway (Strugatz, 2014).
Women are hooked on Rent the Runway after realizing the large difference in quality
when comparing the disposable knock off to the real deal from a luxury designer. The new
“Unlimited” subscription leverages the vast amount of customers already subscribed to the
company along with the back end logistics of the largest dry cleaning business in the country
(Liang et al., 2009).
The site has since swelled to 5 million shoppers and was projected to book about $48
million in yearly revenue in 2014 (Griffith, 2014). On average Rent the Runway’s customers are
30 years old, make $100,000 and are self-described as smart (Harrist, 2015). Jennifer Hyman
recently said that the ultimate goal for Rent the Runway would be to get to a point where the
company has partnerships in place with hotels so when someone goes on a trip the customer
would not need to carry suitcases. When customers arrive at the hotel room their closet would
already be filled up with clothes that were pre-selected through Rent the Runway (D'onfro,
2015). Jennifer Hyman also said in that interview that the two massive shipping companies UPS

and FedEx need to be put out of business because they are inefficient beasts and their prices are
too high. Rent the Runway has achieved a great amount of success already and with a team of
innovators and a visionary CEO like Jennifer Hyman there’s no telling what the company will
achieve in another 5 years.

Cite Sources
D'onfro, J. (2015, Mar. 14). This startup founder wants you to be able to go on a vacation
without packing a suitcase. Business Insider. Retrieved from
http://www.businessinsider.com/rent-the-runway-future-plans-2015-3
Griffith, E. (2014, Dec. 19). Rent the runway raises $60 million. Fortune Magazine. Retrieved
from http://fortune.com/2014/12/19/rent-the-runway-raises-60-million/
Harrist, M. (2015, Mar. 16). At sxsw, retail's data driven future is on display. Forbes. Retrieved
from http://www.forbes.com/sites/oracle/2015/03/16/at-sxsw-retails-data-driven-future-
is-on-display/
Hyman, J. (2014, July 16). Interview by Jennifer Reingold [Web Based Recording]. Fashion
forward. Retrieved from https://www.youtube.com/watch?v=hc0RdVK-qK0
Liang, P., Czaplewski, J., Klein, G., & Jiang, J. (2009). Leveraging First-Mover Advantages in
Internet-based Consumer Services. Communications Of The ACM, 52(6), 146-148.
Loschelder, D., Swaab, R., Trötschel, R., & Galinsky, A. (2014). The First-Mover Disadvantage:
The Folly of Revealing Compatible Preferences. Psychological Science (Sage
Publications Inc.), 25(4), 954-962. doi:10.1177/0956797613520168
Moses, L. (2013, Dec. 4). People shopping on mobile devices visit more sites than those on
pc.Adweek. Retrieved from http://www.adweek.com/news/technology/people-shopping-
mobile-devices-visit-more-sites-those-pc-154157
Roberts, D. (2013, Dec. 30). Holiday party dress central: How we started rent the
runway. Fortune Magazine, Retrieved from http://fortune.com/2013/12/30/holiday-party-
dress-central-how-we-started-rent-the-runway/
Strugatz, R. (2014, July 17). Rent the runway’s next phase. Women's Wear Daily. Retrieved from
http://wwd.com/media-news/digital/rent-the-runways-next-phase-7802628/
Wortham, J. (2009, Nov. 08). A netflix model for haute couture. The New York Times. Retrieved
from
http://www.nytimes.com/2009/11/09/technology/09runway.html?_r=0&adxnnl=1&adxnn
lx=1427733124-qv1H3dd3L9lNOGLvoNl68w

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