ECO – 200 Survey of economics Esther Lee
A Case Study of an Industry
I chose a shared-merchant ecommerce industry specifically targeted for
women’s fashion. Similar to shared-merchant companies like Airbnb and Uber,
companies like RTR (rent the runway) allows consumers to rent out clothes with a
flat monthly fee. Unlike Airbnb and Uber, they are product dependent retail segment.
Their main competitors are le tote and stitch fix.
The current market structure for these companies is oligopoly. However, as
you will see in the latter part of the paper, there’s a high chance of this market
structure turning into a monopolistic competition in the near future. There’s a quite
a bit of competition among these companies but they mainly differentiate
themselves by offering different type of rental terms and conditions, different price,
offering different type of clothes, ranging from evening gowns to work clothes to
sports wear and to maternity clothes. Each company targets different customer with
various budget.
RTR (rent the runway) started out by allowing customers to rent high-end
evening dresses for fraction of the price. However, they slowly expanded their
clothing lines that customers can rent and recently added their Unlimited service.
The company recommends that the customers allow 2 days for processing times and
delivery of the clothes to your door. They currently offer two different types of rental
service. First one is their traditional rental service. Customers can rent an item a la
carte style for 4 – 8 days with different price per garment. They allow customer to
rent out back up size for free and second style for a minimum fee incase they don’t
like the original dress/clothes. If all fails, they can also overnight you another dress.
On top of this, if you live in the New York area, you can swap out your dress the last
minute at their brick and mortar locations in the city or they utilize their Uber rush
delivery service to deliver you an alternative dress within couple of hours.
Their second rental service that they offer is called Unlimited. It’s a
subscription service where customers pay a monthly fee of $139 and are allowed to
rent any three pieces of items on their site. Unlike the first service, the customers do
not get a free backup size and overnight delivery/Uber rush service for New York
residents. However, you get to rent your clothes as long as you want and return it
whenever you want. Dry cleaning of rented garments and shipping and return fee is
all included. Unlimited subscription fee also includes insurance in case customers
