Tom Haverford's Rent-A-Swag becomes real with CoutureSqd and Le Tote

By Carmel DeAmicis , written on November 14, 2013

From The News Desk

In the TV show "Parks and Recreation," Aziz Ansari plays the perpetually failing entrepreneur Tom Haverford. In every episode, Tom Haverford will reliably pitch the worst business ideas ever, from phones that smell good to condoms with pictures on them. If he wasn't a fictional character he would probably have qualified for "Bravo's Startups: Silicon Valley."

But eventually, Tom gets it right with Rent-a-Swag -- his idea for a high end clothing rental shop for teens. When special occasions arise, parents don't have to fork out big money for nice tuxes or ties. They can just rent the swag -- Tom's personal clothing collection -- for a chunk of time.

Rent-a-Swag sounds a lot like Le Tote and CoutureSqd, two newish startups that allow people to pay a subscription to rent out regular clothing. 

Le Tote was the first such company, launching over a year ago and then going through Y Combinator class of Summer 2013. CoutureSqd came next, coming out of beta last March with a similar business model.

Both startups market themselves as the "Netflix for clothes." Monthly subscribers get a complete outfit sent to them -- the normal kind, not designer. When they send it back they get another outfit. That way they can rotate through new styles, try out risky pieces they might not want to buy, and keep their wardrobe fresh.

What Le Tote and CoutureSqd are doing is exciting and it’s risky. It’s venture at its best, which means there’s a good probability of them both failing.

They arrived in the wake of trailblazer Rent the Runway, a startup that has been around since 2009. It lets women rent ball gowns and other designer gear for those special occasions. But where Rent the Runway focuses on special occasions, high-end products, and short-term (4 to 8 day) rentals, Le Tote and CoutureSqd offer regular clothes on a monthly basis, for the everyday rental girl.

In the e-commerce 2.0 era, clothing companies aren't trying to take on Amazon with broad ranging products. Instead, they're innovating on the e-commerce experience itself. After all, curated selections and a unique approach are the only way they can hope to beat Bezos's company, since they're not going to compete on price.

The unique approaches to e-commerce run the gamut. True&Co uses an algorithm and tons of data about women's bodies to help women find the perfect fitting bra. Stitch Fix sends women monthly clothing boxes picked out by a stylist who reviews customers' individual profiles. Nasty Gal offers a distinct, potent brand for a particular type of shopper. BeachMint has celebrities.

And Le Tote and CoutureSqd now offer rentable monthly outfits.

CoutureSqd has kept a pretty low profile since its March launch. It's charging less than Le Tote -- $35 compared to $49 -- and people keep the four items they're sent for a month. The founder of CoutureSqd, Mary Wu, is bootstrapping. She's got much less money to work with than the male Le Tote founders, who are sitting pretty on $1.75 million from the likes of Andreessen Horowitz, Google Ventures, and others.

In contrast, Wu is running the operation out of an apartment, where boxes and racks of clothes abound. The CoutureSqd website reflects that -- it's not nearly as pretty as Le Tote's. Wu needs to up her logo and website style game. The user interface matters for winning consumer trust, particularly in a visual field like fashion with an experimental business model like online rentals.

That said, in the clothing space, it's not a zero sum game. If the "Netflix for fashion" idea gains traction and consumers like it, there's room for multiple players. That's a big "if" though. E-commerce rentals for videos eventually worked, but that doesn't mean clothing will.

There's a lot of factors to take into account. Inventory management will be a beast, both in the early stages and the scaling stages of these companies. Clothing will get worn out, stained, or damaged by customers and new clothing will have to replace it.

Consumers will have varying sizes, tastes, and ages, so the rental stock will need to meet a huge array of demands. The startups will need to nail down shipping logistics and prices, given that they'll be sending the same clothes through multiple shipment cycles.

It's bound to be  a pricey venture just to get off the ground and a complicated one to scale.

But if Le Tote and CoutureSqd nail down the particulars, get their operations in line, and can do both affordably, the market potential is huge. Women love clothes. And with the rise of the metrosexual male, it's clear guys do too.

Furthermore, people love new clothes. They love mixing up their wardrobe, surprising those who see them frequently with new pieces, experimenting to try trendy things. But they don't love investing money in a risky clothing purchase, just to wear the crazy top or leather tights once and never again.

Renting clothes lets people keep their wardrobe fresh while experimenting with new looks. And if a customer likes an item they rented from Le Tote or CoutureSqd, they just keep it and the company charges them the purchase price.

Sounds like the perfect way to shop.

[Image courtesy Rent A Swag]