Business

Rent the runway stops that welcome new customers in the middle of Snafus




Rent the Runway, a $ 1 billion clothing rental startup, has put a freeze on expansion so it can solve logistics issues and shipping delays.

The New York-based company will stop registering new subscribers and will not accept new rentals for special occasions that must be delivered before October 15, CEO

Jennifer Hyman

said it in an email to customers Friday.

Ms. Hyman said orders have been delayed in recent weeks due to problems with changes the company is making in the fulfillment business. "We are aware that we have let go of some of you, and we need to fix it," she wrote.

Rent the Runway pays $ 200 to members who did not receive clothing in time for a special event, according to the company's website.

The high-profile startup has a large number of customers who pay up to $ 1[ads1]59 a month to borrow clothing and other items such as home decor or rent dresses for special occasions from high-end clothing brands.

The company has been experiencing growth pain for the past year, The Wall Street Journal reported in July. Some aspects of the service did not keep up with the growth, including technology systems and customer service. In early July, Rent the Runway sent out a separate "We are sorry" email that promised to double the customer service staff and make other changes.

During the summer, the company opened a large distribution center in Arlington, Texas, something a spokeswoman said at the time would help improve delivery times and expand the West Coast range. Previously, it filled all orders from a hub in New Jersey.

Most subscribers and special customers have not been affected by the latest issues, a person close to the company said Friday.

Top executives at the company have discussed how much to spend to improve the customer experience at the expense of profits, the Journal reported earlier. Unlike many start-up startups, Rent the Runway has been profitable since 2016 when capital expenditures such as building new stores are removed, and Hyman wants to maintain profits along with strong customer experience, the Journal reported earlier.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

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