Fashion Rental Startup Le Tote Tries a New Tactic to Lure Subscribers
In the crowded world of subscription e-commerce, all kinds of services are trying to snag—and then retain—customers.
One such player is Le Tote, a fashion rental service for clothing and accessories. Founded in 2012 by Rakesh Tondon and Brett Northart, Le Tote charges a $49 monthly fee to subscribers, who receive three garments and two accessories that they can send back at any time to receive new items. Each set is determined by an algorithm, which analyzes the style profile customers fill out when they sign up. Subscribers can also consult a personal stylist. Tondon described the service as one offering "replenishment," an always available refresh for a woman's closet.
“People are trying to sell you all kinds of things on a monthly basis, but replenishment is a great way to stay in front of customers, to engage people and fill the need for what they want,” Tondon said. “Most subscription commerce companies have failed to go beyond the point of just the subscription.”
Le Tote’s latest move, available today, is called Tote Swap, a way for customers to have a last-second veto on what’s sent to them. Customers can see the products that are about to be mailed out and have 24 hours to switch out whatever they don’t want. The company has more than 50,000 pieces of clothing and around 28,000 accessories in its inventory. The new service means that customers can set the customization level themselves, Tondon said. If they want brands and styles they wouldn’t necessarily choose themselves, they can let Le Tote pick the products. If they want to do things their own way, that option exists, too.
It's the most recent experiment in an online subscription commerce industry that's still figuring itself out, as dozens of companies try to determine the best way to attract new customers and keep them hooked. Fashion is a particularly crowded arena: Stitch Fix provides personal stylists who handpick items; Gwynnie Bee lets shoppers rent and return items from an online marketplace; The Ms. Collection sends a monthly package of styles curated by buyers and stylists; and JustFab lets members choose their favorite pair of shoes from a small selection personalized by a stylist.
A major problem within the industry is customer churn—people try the services out, then quickly cancel when they’re left dissatisfied. Sucharita Mulpuru, an analyst at Forrester Research, said that any subscription service—such as cellular providers and cable companies—often worries about customer retention. But while AT&T locks consumers in with long-term contracts and Time Warner charges fees to disconnect, these e-commerce models don’t have those abilities. If customers don't like the box of stuff chosen for them, they just leave.
“The churn rate—that’s the biggest problem with all these subscription models,” Mulpuru said, pointing to the decline of Shoe Dazzle, once a beloved subscription shoe service that has since fizzled. “Because people say hey, I don’t really need all these kinds of shoes every month, and they churn out really fast.”
Some companies have found success. Among them are Trunk Club, a high-end men’s subscription service that was sold to Nordstrom for $350 million in 2014, and beauty box service Birchbox, which has increased to 800,000 subscribers in less than four years. These companies are filling essential needs for customers, Tondon said, and he hopes to join them. “They’re in the business of trying to fill a void, giving you a taste of what it is that they’re selling to you,” he said. “Companies like us sort of fill that void as well.”
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