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The challenge: customers want flexibility, convenience and the latest styles, but high turnover of clothing by China’s urban middle classes is costly both to customers and the environment
The solution: online clothing subscription service leveraging China’s well developed e-commerce infrastructure
What makes it circular? Ycloset has formed collaborative partnerships and harnessed digital technology to create a circular business model that keeps clothes in use for longer
The benefits: customers can change their clothes regularly without the high associated social and environmental impacts
A thriving fashion sector, but at a cost
China’s growing middle classes are accelerating the fast fashion phenomenon as they demand diversity and novelty in their everyday clothing. This shift has seen China’s annual clothing sales rise above the global average of 5kg per person to around 6.5kg.
The fast fashion market is projected to grow by 22.5% by 2020, reaching CNY 654.9 billion (USD 100 billion), while the size of the total fashion market is expected to triple.
The boom in textile consumption is not without cost, as the industry places great pressure on the local environment and natural resources, such as water. In fact, 72 different toxic chemicals found in polluted waters come solely from textile dyeing, of which 30 cannot be removed through conventional wastewater treatment. Moreover, such fast consumption results in a large amount of discarded clothing. China throws away 26 million tonnes of textile waste each year, reusing less than 1% of it, according to a 2016 report from state news agency, Xinhua.
The time is ripe for the transition to a more circular model in the fashion industry, to create an effective system for the use of textiles that meets consumer demands without causing significant environmental externalities. A key building block of this system is the application of new business models that keeps garments and textiles in use for longer.
A business model that keeps clothes in use
YCloset offers an online clothes subscription service. Each month, subscribers can access up to 30 items from a catalogue of over 150,000 mid- to high-end clothing options for a subscription fee of CNY 499 (USD 80). YCloset operates in Beijing, Shanghai and Guangzhou and has just received USD 50 million investment from Alibaba, SBCVC, and other companies, to further expand.
Unlike its European and US equivalents, such as Rent the Runway, YCloset offers everyday attire instead of just formal occasion clothing. The value proposition is providing access to a huge variety of clothing so that people can try out new styles regularly without having to make purchases. The target customers are urban white collar women aged 20-35, who face pressure to dress well (even beyond income level) at their workplace.
The key to building a loyal customer base is convenience in delivery and trust in cleaning quality. YCloset is essentially a ‘wardrobe in the cloud’, accessed via a smartphone app, and picked up or delivered within a day.
YCloset has joined forces with a leading dry-cleaning company to ensure high quality cleaning of clothes. The company has observed that trendy durable clothes can be used by up to 40 different people. There is also the option to buy the clothes after renting them, a popular choice among customers.
Great potential but care needed
YCloset’s subscription model for clothing could play an important role in mitigating the conflict between fast fashion and the environment. By allowing clothing to be reused many times, the model increases utilisation rates, reduces waste, thus relieving pressure on the environment and resources. At the same time it could satisfy increasing demand of consumers for high quality and affordable textile products. Such companies have demonstrated the potential of the access-over-ownership business model for clothing in China. As consumers’ trust level rises, YCloset could potentially expand their scope to special occasion garments and baby clothing, items with a typically short use phase.
However, YCloset’s business model is not simply ‘sharing economy’, it can also be seen as a new model for online retail. Customers, through subscription can try on different styles and choose to buy the ones they like at a discounted price. Sales currently make up to 30% of YCloset’s profit. This sales model reduces the likelihood of impulse purchase; but one may also argue that it could be a new way to further stimulate extractive, consumptive fashion habits. Another concern is that repeated washing of poor quality synthetic clothing can lead to leaks of microfibres to the ocean. A New Textiles Economy report estimated that, with our current linear system, 22 million tonnes of microfibres will be added to the ocean between 2015 and 2050, so that we may end up eating our clothes through the food chain.
To avoid these negative consequences, YCloset could curate their collection carefully with high quality, durable, natural fibres - and also consider how to recycle the most value from end-of-life clothing.
- HQ Location: Beijing
- Date established: 2015
- Operates in 40 cities in China
- In September 2017, completed a USD 50 million third fundraising round
Interview with founder