Why We Can’t Share Our Closets
There was a time when the “sharing economy” was booming—and fashion didn’t miss the wave. One of the most visible outcomes was the rise of fashion rental services. I even did my first internship at a domestic fashion rental startup around 2020.
More than four years later, I found myself wondering: What happened to all those fashion rental services? So I did a quick check. The service page of the startup I worked for still exists, but it no longer feels actively operated. Even Rent the Runway—the first major fashion rental company and one that made it all the way to being publicly listed—reported an EBITDA margin of around 16% for the first half of 2024. And even that seems less like profits generated from “rental” itself, and more the result of revenue from resale.
Water purifiers rent well. Cars rent well. Furniture and electronics rent well. So why does fashion seem unable to coexist with rental? Let’s look at why fashion and rental can behave like oil and water—and why this business model struggles to be sustainable.
At its core, a fashion rental business is straightforward: it lends out fashion items—clothing, bags, accessories—and earns a fee. The revenue model may look similar across players, but the business can operate very differently depending on how inventory is sourced and how much of the rental value chain is controlled.
The most intuitive model is the fully integrated one: the company purchases inventory outright and internalizes the entire logistics process. This is essentially the model Rent the Runway chose. The business holds inventory risk by buying items upfront, then manages end-to-end operations—shipping to customers, processing returns, dry cleaning, and warehouse storage.
But once you internalize the full logistics system, the cost base becomes enormous—especially given that many fashion rental companies are still relatively small startups.
That’s why alternatives emerged: models that outsource parts of the logistics value chain, or avoid owning inventory altogether by operating a peer-to-peer model, like By Rotation. In theory, a lighter model should reduce cost pressure. But are these “asset-light” rental companies thriving today? Not really. Few have reached a scale where robust financials are publicly visible, and many appear unable to escape losses—gradually drifting into what looks more like a secondhand resale platform than a true rental business.
Mentioning resale naturally leads to another question: we hear all the time that secondhand platforms—Karrot, Bungaejangter, Vestiaire Collective, Fruits Family, KREAM, and others—are doing well. If resale is thriving, why isn’t rental, which can be cheaper than buying, working better?
Let’s dig into why fashion rental is structurally difficult to sustain—both from the supply side and the demand side.
The profit cycle of fashion does not match the profit cycle of rental.
When auditors review fashion businesses, one of the first line items they focus on is inventory. Fashion trends move fast—and they often evolve in a thesis–antithesis–synthesis cycle. What was “in” last season becomes much harder to sell the next. Y2K was everywhere, then suddenly it became “old money.” Mini bags became micro bags, then nano bags—and now big bags are back, threatening fashion lovers’ wallets all over again.
But fashion rental businesses are structurally designed to accumulate inventory over time. Like any fashion vertical platform, they need a wide range of brands and styles—a large SKU portfolio. The difference is that unlike conventional retail, where inventory is sold and disappears, rental items return to the company. And they return used.
The obvious solution would be to maximize the number of turns per SKU within a season. But even that is constrained by physical reality. The full cycle—rental request → picking/packing → shipping → use → return → cleaning → relisting—takes at least a week even under ideal operations. Within a three-month season, that implies a theoretical maximum of roughly eight turns per item, even before considering demand volatility and operational bottlenecks.
Couldn’t a company simply merchandise high-demand items and push utilization higher? Compared with other rental categories (cars, furniture, water purifiers), clothing has two structural disadvantages: the rental period is short, which caps what you can charge per cycle, and the operational cycle is fast, which raises per-unit operating costs. The result is a business where pricing power is limited, but handling costs are high.
From the provider’s perspective, fashion rental is already structurally challenging. But then you might ask: if the business is so difficult, why does it keep coming back?
From a consumer perspective, the appeal is obvious. People who love fashion (myself included) buy a lot of clothes and still feel like they have nothing to wear. Many items get worn only a few times before they sit unused. So even if rental is hard to monetize, doesn’t it still satisfy a real consumer need? Maybe that’s why founders keep trying.
But based on my own experience, the demand-side value often fails to persist over time.
The target audience for fashion rental tends to be high-involvement fashion consumers—people who want variety, who care about dressing for different occasions, and who are willing to experiment. To attract them and to stimulate desire, many platforms stock primarily luxury or designer items.
Yet the same inventory and turnover constraints discussed earlier mean that platforms inevitably accumulate items that are no longer on-trend. The whole point of rental is to keep up with trends without constantly buying, but when you browse the site, the reality often doesn’t match that promise. And the pieces that are in high demand can look visibly worn because they’ve been rented so often.
Then, ironically, the customers most likely to find rental practical may be those who are less trend-driven and more functionally motivated—someone who needs a tweed jacket for a wedding but doesn’t want to spend $200–$300 to buy one, and would rather rent something classic for $30–$40. But that audience is also less willing to invest time and effort into changing their consumption habits from buying to renting—especially for fashion.
This creates a contradiction: the platform is designed to appeal to high-fashion, high-novelty consumers, but the model’s economics push the offering toward items that don’t always meet those consumers’ expectations. At the same time, the more practical consumer segment may not convert strongly enough to sustain the business.
And fashion is, ultimately, an industry driven by desire. For many people, part of the thrill of consumption is the joy of ownership. I’ve even experienced this personally: I discovered certain brands through rental, but later ended up buying new items from those brands—or purchasing similar styles new. If the item is basic, I think, “I might as well buy it.” If it’s special, I realize there aren’t that many occasions in Korea where I’ll actually wear it enough to justify even renting it.
So far, we’ve looked at the structural limits of fashion rental from both the supply and demand perspectives. Reading it back, it sounds like I’m saying “no” to everything—so I’m slightly afraid my former company might message me after this.
Still, there may be models that can partially overcome these constraints by choosing the right type of product. Vivrelle, for example, offers subscription-style rental of high-end accessories—items that don’t require dry cleaning and tend to depreciate more slowly. A model like that may have a better chance of success.
(That said… if theft happens, the downside risk is huge. So maybe the trade-off is simply a different kind of challenge.)