Ep. 61: RE-NT’s rental model improves profits and environmental footprint Ankit Podcast

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Ep. 61: RE-NT’s rental model improves profits and environmental footprint

This week’s guest on The WTiN Podcast is Robina von Stein, founder of RE-NT.

Jessica Owen
Hello. My name is Jessica Owen, and I'm the Deputy digital editor at WTiN, and this is the WTiN podcast. Join me and my guests every week as we talk about new and interesting innovations from across the textile and apparel industry, whether it's talking to sustainable startups, quizzing experts on the latest research and development or chatting to companies about their most recent products, you can rest assured that the WTiN podcast will connect you with everything you need to know.

This week, I am joined by Robina Von Stein, who is the founder of rent, a company that helps brands integrate a rental model into their business. Robina talks about how the system works for both consumers and companies, the environmental and profitable benefits associated with renting and the new market she hopes to explore in future.

Jessica Owen
Good afternoon, Robina, and thank you for joining me on the podcast today. How are you? Thank

Robina von Stein
you very much for having me. Yeah, I'm feeling good. It's quite gray in Berlin, but I'm happy to be in the office and working again, yeah, yeah,

Jessica Owen
a sense of normality after all this time. So you were the founder of rent, which actually I initially thought was a clothing rental service sort of aimed at consumers, but I believe it's more of a platform that helps brands sort of integrate this service on their own. Is that right? Just tell me a bit more about what you do.

Robina von Stein
Yeah, exactly, yeah. I founded a rent 2018 which was initially, as you said, a passion rental platform for end consumer where they could rent out items, read them for a specific amount of time, return them and then rent out new items, which you see maybe also in the UK, I think who and other brands are there on the market. But during that time, we always started to collaborate with passion brands to get the garments and the inventory. And these brands were more and more asking us also about how they could integrate circular rental solutions into their e commerce shops or their sales strategy. So we started to actually separate the two streams. And now, since last year, end of last year, we are only focusing on B to B software solutions, so helping brands to enter the rental market.

Jessica Owen
So I wasn't making it up. Then I thought I was a bit confused as exactly who you were, sort of targeting that. Okay, I understand. So I guess changing the traditional and sort of well established business model can be quite daunting and overwhelming, but I believe you've sort of broken it down into four main steps for companies, the first being sort of consulting workshop stage. So what happens here? What's the first step that you take with your clients?

Robina von Stein
Yeah, exactly as you said, like, especially, like big corporate organization need help in order to enter this new disrupting market, because it's completely also disrupting the current business model of produce, sell and throw away into A produce, use, reuse and recycle. And so the first step we do is when brands come to us, as we starting with the consultancy, looking at their goal, why they want to enter the rental market? Is it that they want to reach new, younger target customers? Do they want to sell products in a higher range, or, like, you know, not sell, but rent out products in a higher range, which they can't sell because they're too expensive for their original target customer group. Or do they are focusing more on a sustainability angle? Do they want to enter the circular economy on this way? So, you know, like understanding also about how to design and return items, recycle, like all these steps. And so we first look on what is the company's goal in order to move in the rental industry. And by this that, we analyze the brand and their positioning and so on. And then we look, together with the brand, which of these categories they normally have, like dresses, I don't know, jackets, sports, shoes, whatever. Which of these categories actually makes sense to offer in a rental model for which target customer? Then the next step is okay on which sales channels and how can it work? Like Are we, are we integrating a rental button into the webshop of the brand, or are we more. Offering a separate attack online shop, or what, what, what they want to do, like all depending on what is their why. So what is their goal in entering this market? So this is what happens in this consultancy session.

Jessica Owen
Okay, right? And so it sounds like it's quite flexible, then exactly.

Robina von Stein
So, um, it's our company is not a software as a service solution. So we have one software which we can like license, and that's it. No, because rents are so diverse and so difficult, and the rental model is so new for them that they really need individual treatment. Let's say, Okay,

Jessica Owen
interesting. So you mentioned the software just then. This is all in the second step from what I looked at your website. So how does this work? 

Robina von Stein
Okay, so we decided in the first step on the strategy and also the approach to target the customers within a rental solution. And then the next big challenge in integrating a rental model into your current business is the whole logistic and tracking system of the garments. And so what we developed is together with an identification code of the garment which is either in barcode or an fid code integrated in each garment software which is easy to integrate in your current operation system to run the logistics, send out the garments, return, check and decide what is happening next with the garments. This is all connected, not only on sustainability reasons like what material composition has my garment, so that I know to which recycle I can send it in the end, but also to know what is actually the current price of the garment, because a lot of brands like to work a rent sell model, meaning they rent it out first, but a customer can keep it if they really like it. And so in order to define how much money did we make already with this one garment, and how to which price can we sell it in the market, these are all connected to the data tracking tool we implement it with a software

Jessica Owen
right? Okay, so tell me more about how this works then. So a customer would go on a brand's website, there might be a list of items there, and can they just sort of pick one, and that's when you go and do the scanning behind scenes, just to make sure it's, you know, gets to the right place. It actually gets returned and so on. That's how it works,

Robina von Stein
exactly. So decided by the customer what how they want to offer. It is their customers actually. Let's say you come to the website of your favorite online shop. What is your favorite online shop? Oh, gosh,

Jessica Owen
I don't know. H M. Imagine you come to H M website

Robina von Stein
shop, and for example, there's on the banner at the top of the page a separate page leading to to the rental shop in shop solution. And then you can click on it and you find all the items you can rent. And there, normally you can decide about the time is it like, two days, four, 810, or a month? And depending on the length you want to read the item. You The price is also defined, and then you order it. And in the back end, the software Exactly. We license the software, so we integrate the barcodes and also the software in the system of the customer and their their operational system, and they can use the scanning and match the scan the item to the customer order and so on, and ship out the item to the customer, so thereby it's also secured, you know, against fraud and if the tracking if the customer has returned items. So there's a reminder, integrated and so on as a so many, many different tools. Yeah, okay,

Jessica Owen
right. I understand now that's a lot clearer in my head. So I think the third step then you've called the fulfillment stage, and you've already mentioned there about sort of shipping, receiving and what happens to it. But at this stage, you've also got a repair system, as I imagine, things might get damaged, or, I don't know, odor you might so does everything get cleaned as well and repaired at some point, exactly?

Robina von Stein
So our mission is actually, actually really like forming sustainable anger, and we really want to become completely circle out and transform the industry into a circular economy. So for us, it's really important to keep items long in the circle, so durability, but also when there's something broken, repair, repair them properly. So, as you mentioned already before, we are really flexible. At the moment, in our system, some brands, they like, like to use their own fulfillment centers, because they, I don't know, they have a big house, they have experience within and so on. And we are totally fine with it. But we offer we have. We don't do it in house. We have a partnership with a company who's specialized in returns and also repair system and then recycling. So they're really specialized in all these steps and this. This is a combination we offer the customers so they would take care of packaging, shipping, return and washing, cleaning and repairing. Okay,

Jessica Owen
and so this is for those, maybe smaller, maybe startup companies, they're the ones who are likely to use it, or

Robina von Stein
actually the other way around, because small brands tend to like to take care of this fulfillment on their own, because they don't have that many orders. They want to get the service, and they can maybe fulfill and also wash it on their own, because, I don't know, they have maybe 200 orders a month or whatever, because they don't have a lot of marketing or a big brand, but especially big brands like H M, for example, they really ask us to take care of their fulfillment. They're more tend to have a lot of orders, and they don't have the facilities to repair and watch items. Okay, right?

Jessica Owen
That's interesting then. So then finally, the fourth step in your process is about sort of closing that loop that you've been talking about. So what happens there? Here is this about your recycling, and what happens to it? You know, once it's been worn X amount of times, and it finally needs sort of an end of life solution, exactly.

Robina von Stein
So I think in the circular economy, the most important steps to think about are the starting point. Like this is all about circular design and how to produce items which can be recycled in the end of life. And the second most important step is the afterlife process. And so we included in step four, after life solution, which basically is at the moment, moment focusing on recycling, back to yarn. So basically, if we have the information integrated in the garment, we have different recycler partners. We can send these garments so that they really recycle the garments, so to yarn, it can be reused. So back to virgin material. And this is a really exciting process. So then we can really close the loop completely. Of course, there are other solutions, like upcycling and upselling, like secondhand sales, but these both are not really circular.

Jessica Owen
So moving on. Then, what are the main concerns and worries that you face from brands you work with? Yeah,

Robina von Stein
I think there are two main concerns. The one is cannibalization of their business model, because they're scared that people, I mean, are not going to buy any more garments, but they're only moving into rental and the rental business model is a bit problematic, because although we have seen that we can actually make more money per item by renting out the garment. It takes longer, because if you sell an item, you can sell it for, let's say, 50 euros, but the item you can maybe rent out for only 10 years, so your cash flow is a different so this is something which scares them, because they're not used to it, and they have to adapt to this. And the second thing, and this intervenes, maybe, is customer adoption. Do customer are going to to rent items? How frequent? How often is there? Is there a big enough market,

Jessica Owen
so you just spoke there about sort of consumer adoption. How are you finding that? Because, for example, I know that in some countries, second hand clothing is sort of almost frowned upon, and even with COVID 19, you've got that extra sort of hygiene worry. So what is the sort of adoption like for rental services? Yeah,

Robina von Stein
I don't know, how did you I mean, I recently talked with a client who have a company or a brand in the UK, and they mentioned that it's really, really growing the rental market at the moment. I don't know how you experience it. 

Jessica Owen
Well, I have to admit, we have lots of charity shops, and I personally am quite happy to go on eBay and buy secondhand clothes. So for me personally, I'm open to it, but I was wondering what maybe other countries are like that you work with,

Robina von Stein
okay, yeah, in Germany, I mean, we see a big increase in second hand. This also is actually growing since COVID 19, because people can be more sustainable conscious, and they were like, solando, about you, and also, H M, all these three players are entered the second hand market in the end of 2020, so this is there's a big movement into sustainable secondhand market. But rental is completely different, and I think at the moment in Germany, it's still a niche market. I think people understand it immediately. If you talk about prom dresses, or if you talk about kids or baby like children wear because kids are growing. And so for us and so there, it makes a lot of sense for customers. And if you look into every day where of women, it's a different it's a different area, and it's more difficult to target. And so everybody, and we have some people in the market, also young startups who are entering the B to C business model, as we started before, they all are working, and it's always coming up new, new brands and startups who are trying to enter the market. But in Germany, people are still there's a lot of questions. I would say, yeah.

Jessica Owen
So perhaps, then, do you reckon it will ever fully replace shopping and just buying clothes? Or do you think it will sort of just become more popular in those areas, such as a nice dress for an evening out or a wedding or something like that? 

Robina von Stein
I think it will become popular and it will increase with you know, technology also like um and infrastructure, because in at the moment, to rent out a garment and return it, it's still quite difficult for the consumer. So all it's about comfort, how how easy it is for the consumer to use the service and um, as easy as as it gets, I think people are going to adopt it more and more integrated in their everyday wear. So I think the future will be that people have their basics at home. Maybe they have some items they value a lot, and then they have their, you know, like extraordinary items, which they rent out on a regular basis.

Jessica Owen
Okay, yeah, that makes a lot of sense. So just wanted to ask you now more about the benefits from a rental service. So I read on your website that there were some really interesting statistics on it, and it was something like, by extending the life cycle of garments, you can save so many, I don't know, CO two emissions and things, that's it. Yeah, so tell me a bit more about the savings here.

Robina von Stein
So what we started is in order to give. So this was also a question from consumers, but also from brands. How is it actually more sustainable to why? Or can we quantify if it's more sustainable to rent out garments than to to buy them? And so what we developed is an analyst about how much CO two and water is saved by renting instead of buying garments. And so this means also how much CO tools and water is safe for brands integrating this business. And we recognize that by integrating these models, a brand can, in general, save a lot, a tons of CO two and also water. And we also integrated this trade off, let's say, of excessive shipment and cleaning. But for example, with our fulfillment part, we clean without water. We have a cleaning machine, which is one of these new sustainable cleaning machines which doesn't consume water. And so then the numbers you find on the website are our average. But because we integrated this tech into the garment with the materials and how often it's rented out and cleaned. And so we also have the numbers about how much water and CO two emission was consumed by producing it, and then we calculate it and measure it against the current processes. And so for each brand who works with us, we actually send them an analyst about how much they have saved,

Jessica Owen
and I'm imagining they can then share that data with their consumers as well. And that must be quite interesting for them, exactly.

Robina von Stein
They can advertise and share this with their consumers, with their shareholders. They can share it with the public. Let's say, Yeah,

Jessica Owen
okay, right. And so aside from the sort of sustainable benefits, there's also like efficiency and profitability as well that you speak of which is key, actually to getting people to sort of adopt green, green solutions. So how can companies increase their profits by adopting a rental service. How is that possible?

Robina von Stein
Yeah, I think this is a really important topic you bring up, because in the end, this is the key factor why entering the rental market to leverage on your inventory, increase your revenues per item. And we have seen that we can increase the revenues per item by renting instead of selling it over 500% and this is really, really interesting, because when we work with products which are rented out, which are popular, which rented out often and quite durable, we. Really can rent out items at least 20 to 30 times per customer.

Jessica Owen
Wow. Okay, yeah. And I also read some of that, you can sort of increase the average spend of each customer as well. Is that right? Exactly?

Robina von Stein
We can increase the average spend of customer because, yes, I think it's also written already there, but I think so people are consuming more so, especially if you mix it with I buy and rent out these items, people are starting to spend more on one brand because they have now access to more expensive items also.

Jessica Owen
So are you working with any brands currently? Then are you able to tell me about any you know, success stories at all?

Robina von Stein
Everything we are doing at the moment is a bit undercover, but I can tell you, we did work with adidas together, which was a quite successful approach, although it's a really accessible brand, and was interesting to test with the new business models, and they're really a really great brand and durability and sustainability focus. And this was a success because customers really adapted the approach really quickly and really like to especially young generation. Our target was Gen set, like, between, I don't know, 19 and 25 and they really were, like, experimenting, testing with with new styles. And this was a fun, fun story,

Jessica Owen
yeah. And I imagine, if you have big companies such as Adidas sort of take control of, well, take advantage of these solutions is going to encourage many other brands in the industry to sort of follow suit Exactly.

Robina von Stein
That definitely has a push factor into the whole industry by starting to adapt. So we ought to work with H M together. They recently launched here in Berlin, but they only did it locally, a shop where you can rent out items. And this is also, I mean, at the moment, unfortunately, all retail is closed, but this was also really nice user experience offline. By, you know, they integrate this in them. They have this lab here where it has new business models. And what we did is, we, they have a coffee coffee place where people can come and exchange items and test, test this rental model on a really easy round,

Jessica Owen
okay, I can't, actually, yeah, because I'm picturing the rental service to be online, but you're saying it could also work well in store as well.

Robina von Stein
Yeah, exactly. And this was, this is, this is something we tested here with a lot of brands actually like integrating hybrid models, because in the end, this rental model is a sharing economy model. And if you think about car, car sharing, for example, and bike, or all mobility, it's all about having access quickly when you need it now. And in order to give customers the equivalent, also in the fashion space, we added shops, offline shops and hubs, where people could go, took an item for the evening and return it tomorrow.

Jessica Owen
Wow. Okay, yeah, I think I would prefer to do that. Yeah, that sounds really cool. And it also allows customers to actually see this isn't got rips in it. It doesn't smell. It does look brand new. 

Robina von Stein
It look it brings a lot of trust, which you have more effort to bring in the online space, yeah. And you know, also advertisement, you know, you're in the online in the offline shop, and you see, see see it directly, and you say, Okay, I'm going to try it out. You know, if you put it in front of the customer, it's, it's more difficult to escape than in the online space.

Jessica Owen
Yeah, that's very true. So I've actually seen like recently there, there are other rental services such as well, maybe not exactly like yours, but similar sort of popping up, at least, sort of in the UK. So what makes your company different? Then, is it the, you know, the software and the analytics that you provide? Is that what separates you from others?

Robina von Stein
Um, yeah. I mean, we don't rent out garments, right? It's not under our name. We just because we don't lever but the thing is, we we just help brands to to to become or offer a rental. And I think that that's what makes us different. Um, I think three aspects. First, we don't target A, B to C consumer, so we don't have to leverage a lot or spend a lot of money on marketing to get the customers, but we really leverage on the big brand name. The second thing is our data system and our tracking system, like the software, it's a key element in order to scale the business, in order to bring bring it to success. And the third aspect is fulfillment. And hereby, I mean also what we mentioned before is. And also fulfillment, to make it for customers super easy to use and and test the service. And this means, on the one hand, making the garments looking perfect when they arrive, but also giving the customer the opportunity to pick the up, pick the garments up in the shop, and have this solution.

Jessica Owen
So tell me, then what the inspiration was for starting rent? What was your career like beforehand?

Robina von Stein
So my motivation was that in 2017 I started like thinking about this idea and the concept, and there I was just really unsatisfied with the current situation of overproduction and overconsumption and so much waste in the industry. And you know, I was still, I was myself, somebody who was like a really fast fashion consumer on that time. And I was like exhausted by the items I had in my clothes. And I just wanted to get away from this market dynamics of producing, producing, consuming, consuming. And I thought it was just so bizarre, because, you know, I had all these garments hanging my closet, and we're in, I don't know, barely weren't and so, so this was my motivation to start and change, change this. I mean, it's still a long way, but I see from 2017 to now, 2021, I see there is a lot going on in industry and brands, you know, developing, take back systems, recycling, second hand, all these. I mean, I'm in super optimistic. It look. I'm looking more optimistic in the future than than Dan back then, and from my background, I studied more and studied, and after my study, I was working for some time in consultancy, and then I quickly started the company. So it didn't really took to what it wasn't working too long before I started. But yeah, and I mean, I think this unefficient market problem, where the environment, but also the economy, is suffering, was something which frustrated me so much that I thought, I have to change this, right?

Jessica Owen
Okay, so that's interesting, that it was from your own just frustration, just in your own wardrobe, that actually just inspired you to do that. That's really interesting. And I read that one of the ways in which you sort of helped get rent going was through the fashion for good program. And, yeah, so tell me more about that then, because there's, there's a few other companies such as, I think it was the fabricant pre size, I think they were the same year as you and and they're all doing really well as well. So are these sort of programs really quite vital for you?

Robina von Stein
Yeah. I mean, you're totally right there in 2019 19, we applied for the passion for good accelerator program. And passion for Good is a program which actually is a network program. They match really big brand houses with startups which are exciting for them and and then they help them to to work together to do piloting and also consultancy. And this was a great time and a great kick off, because we learned really the pain points of brands and all that. They just helped us to customize and personalize our software solutions. And this was a really, really helpful push. This was also why and how we started to work with Otis together, for example.

Jessica Owen
Oh, okay, so it really did sort of supply you with a key contact there. Then yes, and many, many more, right? And so do you think startups such as yourselves and the others in your cohort, are you going to be the ones driving sustainability? Do you think in the industry, yes,

Robina von Stein
but not only not exclusively. I think a startup can't drive anything on their own. We need the people all together. We have to work all together. I mean, we, for example, in our business model, we really rely on on brands taking the risk to try out the rental solutions, and we rely a lot on the customers to adopt this, and I think so it's a good ecosystem which is responsibility for change in in the industry and the more sustainable and more conscious consumption and production. But of course, these these new innovators and giving innovators power through money network corporations is also creating a competition in the market where big corporates have to follow up and have to integrate themselves to stay in the in the space. 

Jessica Owen
Yes, that makes a lot of sense. You're almost giving those companies a. Kick really, to not settle where they are. They've they've got to keep going forward. Well, then finally today, what are rents, sort of plans for this year and going forward? Because I got the impression that you're only at the beginning of all this, and perhaps you've got more ideas and dreams of what you'd like to do. So tell me about what the future of the company is. 

Robina von Stein
Yeah. So basically, this year, we plan two new corporations, like with some big brands, which are really, really exciting. And I'm, I'm looking for forward to the release. So we started already last year, but then we had to push it a bit because of the pandemic. I the pandemic. But now this is something and additionally, what I already mentioned to you we started, we are going to start a big pilot in order to spread this model stronger, together with a big fashion house, which have also offline shops, a lot of auction shops in in Germany, in in Sweden, and also in Spain. And so we are also like expanding a bit in location, and went to offer these solutions. So, I mean, this is something which I'm really looking forward to test different markets and also customers. Because, to be honest, the German customer is, if you get him, it's great, because they're, you know, in Germany, we have a big population who spending population, but they're quite difficult to get because they are really risk averse. Don't spend a lot of money on closes and so on. So I'm also interested to look in this Sweden market, also from a logistic perspective, because it's a much smaller country, and also in Spain and there, it's also really interesting to see their cultural differences, and this is something which I'm really looking forward to. Looking forward to. And of course, we constantly working on our technology in order to make it less customizable so that we can scale it better. But as you said, we are in the beginning and at the moment, we are so customizable in order to understand what are actually the most important criteria every band shares in order to bring a more similar, scalable software on the market. 

Jessica Owen
Well, I mean, you've mentioned Sweden and Spain. I'm hoping that the UK is next. I'd love to have a look at one of these offline shops. Yeah.

Robina von Stein
I mean, UK is a super interesting market. We are a bit restricted by what our customers want to do. So I don't decide in which area we enter, not only, at least, but to be honest, let's see. I mean, it's also developing. Everything is changing constantly. So maybe let's see,

Jessica Owen
yeah, yeah, either that or I'll have to fly to the Germany whenever I'm allowed to and have a look at the shops.

Robina von Stein
Then definitely, you always have to give me a call, come over and I will show you to work.

Jessica Owen
That sounds like a great plan. It could be a while yet, though, until we can do that. But hey, let's do that.

Robina von Stein
Let's see finger crossed. 

Jessica Owen
Well, I mean, Robina, I think we're running out of time now unfortunately. But I mean, it's been a pleasure to have you on the podcast this week. Thank you so much for telling me about rent, and I wish you all the best moving forward.

Robina von Stein
Thank you very much for having me, and I'm I'm looking forward to see you in Germany sooner or later.