The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
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.
With consumers tightening their belts in China, the battle between global fast fashion brands and local high street giants has intensified.
Investors are bracing for a steep slowdown in luxury sales when luxury companies report their first quarter results, reflecting lacklustre Chinese demand.
The French beauty giant’s two latest deals are part of a wider M&A push by global players to capture a larger slice of the China market, targeting buzzy high-end brands that offer products with distinctive Chinese elements.
Post-Covid spend by US tourists in Europe has surged past 2019 levels. Chinese travellers, by contrast, have largely favoured domestic and regional destinations like Hong Kong, Singapore and Japan.