Last Friday, Chinese subscription-based fashion rental company, Ycloset, announced it would be shutting down its app, WeChat mini-programme and website on August 15.
The Beijing-based company, founded in 2015, was once a leading fashion light in China’s sharing economy trend. It offered members unlimited fashion rentals for 499 yuan ($77) a month. Users could also purchase items, with prices fluctuating based on their level of use. Ycloset reportedly generated 75 percent of its revenue from membership fees, with the rest coming from users’ clothing purchases.
Ycloset has gone through six rounds of financing with investors including GSR Ventures, Sequoia China, IDG and Softbank China. In 2017, Alibaba participated in the company’s Series C funding round amounting to $50 million, and later also led its final round of strategic financing in September 2018 for an undisclosed amount.
However, since October 2018, the platform has run into numerous problems, with controversy over its decision to change content agreements without informing users in advance (meaning promised membership benefits not being honoured), as well as poor reviews for after-sales service and refunds, exposing the shortcomings of the company’s high operating costs.
The uncertain future of Ycloset shows the model of fashion rental services in China will have to evolve if it is to survive. Several other players offering similar services have already closed.