After five years of operation, YCloset, a clothes rental firm, is shutting down. On Tuesday, the firm received its final orders.
What’s at stake: The demise of YCloset coincides with a shift in investor sentiment toward the once-popular fashion rental business, which has proven to be capital intensive. As YCloset grew, it struggled to keep up with rising shipping and dry cleaning costs, as well as keeping up with the latest fashion trends.
In 2017, China’s fashion rental sector exploded as the country embraced the “shared economy,” a broad concept that refers to firms exchanging services on a common resource. The word refers to internet companies such as Didi, the world’s largest ride-hailing company. Two famous failures were the bike-rental company Ofo and the car-rental app Togo. Details: On Tuesday, YCloset ceased taking orders from customers. According to a July 9 letter sent to clients, the company expects to stop supporting sales and online channels by August 15, including services on its main app, WeChat micro program, and website.
YCloset once claimed to have 20 million users. The company apologized for any difficulty caused by its choice to close its doors and thanked its consumers for their five years of loyalty. The cause for the shutdown was not given by the company. YCloset customers “could not pick for one-time rentals, and brands in the subscription pool were not that inaccessible in terms of pricing either,” according to Pablo Mauron, Partner & Managing Director China at Digital Luxury Group. “I wouldn’t suggest that the clothing-rental model in China is unsustainable. It may work with the correct positioning and options for consumers,” Mauron noted. Yi23 is another name for YCloset. Yi is a Chinese word that means “clothes.” YCloset, which launched in 2015, followed in the footsteps of Stitch Fix and Rent the Runway in the United States. The company catered to female consumers and offered subscribers the opportunity to rent branded clothing and accessories.
For limitless rentals, the Beijing-based company charged a monthly subscription fee of RMB499 ($70). At any given time, three to five pieces of clothing might be rented. In addition, the company assisted brands in promoting their items by persuading customers to purchase the rentals. According to intelligence database Crunchbase, the company raised a total of $70 million in six rounds of funding from famous investors such as Alibaba, SoftBank, IDG Capital, and Sequoia Capital. Alibaba, a sponsor of American clothes rental platform Rent the Runway, gave YCloset its most recent investment in 2018. UPDATE: A new quotation has been added to the story.
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