There are few businesses you can start with minimal investment and massive growth potential, and if you’re looking for one, clothing rental is one of the best options. Over the past few years, online shopping has significantly grown; the same can be said for rental businesses. Both have increased and sustained their market share due to the convenience they offer customers and a growing interest in sustainability.
The global online clothing rental market is projected to grow from USD 2.4 billion in 2024 to USD 4.9 billion by 2033, exhibiting a CAGR of 7.92%. With this growth, the market offers significant opportunities, particularly in wedding wear, maternity clothes, and children’s special occasion outfits. Here’s what you need to know to start your clothing rental business.
Why start a clothing rental business?
There are several reasons for starting an online clothing rental store instead of a brick-and-mortar one. For one, your audience is much greater than your geographic location. This matters because your local audience may not be big enough if you open a specialized store. Being online opens you up to a much larger demographic of people across the country.
In addition, launching your clothing rental store online saves you many costs associated with a physical location. As a result, there is less need for equipment and staff to manage daily operations. You also don’t need to consider additional rent and energy bills, as you will be operating out of your home, and the bill increase will be negligible compared to a store.
Finally, opening up to online bookings is essential if you already have a brick-and-mortar store for your clothing rental business. It can boost your potential customer base and increase revenue. Plus, with rental software like Booqable, getting started online is nowhere near as difficult as you think.
Start your rental business for just $29/month
Put your toes in the water and test the demand in your area with a rental website for just $29/month.
Market research and finding your niche
Before buying inventory, you need to research your target market. You should look for underserved segments in the clothing rental space. The most profitable niches currently include wedding and formal wear rentals, maternity clothing rentals, children’s special occasion wear, and business attire rentals. For instance, the women’s segment accounted for the largest market share of more than 59% in 2021, highlighting a high-demand demographic.
Your local market might not support a specialized rental business, but an online presence opens up your customer base nationwide. A great first step is studying successful rental companies in your chosen niche. What makes them work? What could you do better? Consider their pricing, selection, and customer service. Finally, look at their reviews to understand what customers value and what frustrates them.
The rental market changes quickly and trends in formal wear shift seasonally, and maternity fashion evolve constantly. Your research should include upcoming fashion trends and changing customer preferences in your niche. With the online clothing rental market expected to expand at a CAGR of 8.5% from 2022 to 2030, staying ahead of these trends is crucial.
Creating your business plan
Your business plan should address initial funding needs, expected profits for the first year, target customer demographics, marketing strategies, and operational processes. It would be best to include specific financial projections for your first two years. The global online clothing rental market is expected to grow at a CAGR of 6.79% from 2025 to 2030, so you can work with these projections.
Account for seasonal fluctuations as wedding season brings different demands than prom season. You should also consider your storage needs and cleaning processes. Will you handle cleaning in-house or work with professional cleaners? Factor these operational decisions into your financial planning, and review and update this plan every six months as your business grows.
Start with building your rental website
Every new rental business starts with a website to get their first bookings.
Setting up your online presence
Your website needs to make booking simple while showcasing your inventory effectively, while professional photos of your items can make a huge difference in rental decisions. You should use rental software to manage inventory tracking, online bookings, payment processing, order management, and customer communications. With the global online clothing rental market expected to reach USD 2.08 billion by 2025, your online platform will be critical for success.
Booqable’s rental software handles these tasks in one system. It lets you build your own clothing rental website or allows you to connect with website platforms like WordPress, Squarespace, and Shopify, making it easier to start taking orders. It tracks when bookings are made, what inventory is available, and when items are due back. This software can also help you manage your customer database and send automated emails.
For a clothing rental website to be successful, it needs clear sizing information and rental policies. You should also include detailed measurements for each item and guidelines about fit as this will help prevent any hesitation from customers when making a decision. In addition, you should make your rental terms, cleaning fees, and late return policies easy to find and understand.
Sourcing your inventory
You should start with quality pieces that serve your target market. You can source inventory through wholesale suppliers who offer bulk discounts, retail store clearance sales, direct partnerships with clothing manufacturers, or even your existing collection if suitable. In 2023, the global online clothing rental market reached USD 1.54 billion, reflecting substantial investment in quality inventory.
When choosing inventory, you should consider durability as much as style as rental items need to withstand frequent wear and cleaning. You should also check the fabric content of each piece as some materials hold up better than others due to repeated cleaning. Additionally, keeping detailed records of your inventory costs, condition, and rental history, will help you to manage items more effectively.
Building relationships with reliable suppliers is essential for a clothing rental business as they can alert you to new styles and help you get better prices. In addition, it’s always better to start with a smaller more focused inventory when starting out, as this will help you to manage your costs and ensure you have the right items for your target market.
Join thousands of rental business owners
In the last 12 months, hundreds of people have started their business with Booqable.
Pricing your rentals
You need to set prices that cover your costs while providing you with a great profit margin. To calculate what you should charge, you need to include the purchase price of clothing, cleaning costs, insurance, software fees, marketing expenses, and shipping if you offer it. Most businesses charge 10-30% of an item’s retail price for a short-term rental but you need to consider your costs and target market.
One great strategy is to offer different rental periods with appropriate pricing, for example, 1 day could be $50, while a week could be $250. This will help you to cater to different demads as some customers need an outfit for one night, others for a week or longer. Booqable allows you to set different pricing for different rental periods, making it easier to manage your inventory.
Seasonality can also affect your pricing, depending on your target market. For example, wedding and prom dresses command premium rates during peak seasons. You should create a pricing strategy that accounts for both peak and off-peak periods, and you can use Booqable to adjust prices automatically based on the time of year.
Managing daily operations
Running a clothing rental business requires attention to detail and strong organizational skills. You should use rental software like Booqable to track inventory location, stock levels, process payments, and send automated emails. This will help you to manage your business more effectively and reduce the risk of errors. Consider implementing a barcode system to track items and ensure they are returned on time.
Develop clear procedures for handling common issues like late returns or damaged items as this will help make the process more effecient. You can then train any staff thoroughly on these procedures whether they are temporary or permanent, the learning curve should be small. It is also important to document everything, from cleaning methods to customer interactions, as this will help maintain consistency and quality as your business grows.
Start your rental business for just $29/month
Put your toes in the water and test the demand in your area with a rental website for just $29/month.
Next steps
Starting a clothing rental business takes planning, but the market continues to grow. Focus on quality inventory and good customer service. Use the right tools to manage operations efficiently. With the global online clothing rental market projected to grow from USD 2,279.9 million in 2023 to USD 6,244.1 million by 2033, reflecting a CAGR of 10.6%, the key to success lies in choosing the right niche, maintaining high-quality inventory, and creating efficient systems for managing rentals
What are the specific legal considerations and insurance requirements for starting an online clothing rental business?
When launching an online clothing rental business, it’s crucial to navigate the legal landscape carefully. This involves choosing the appropriate business structure, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation, each offering different levels of personal liability protection, tax implications, and operational flexibility. Obtaining the right licenses and permits is also essential, which can vary by location and may include a general business license, a sales tax permit, and a home-based business permit if operating from home.
Insurance is another critical aspect, with general liability insurance protecting against customer lawsuits and commercial property insurance covering inventory loss or damage. Additionally, considering specialized insurance policies that cover rental items might be wise. Engaging with a legal expert familiar with the retail and rental industry can provide tailored advice to ensure compliance with all regulations.
How can one effectively set pricing strategies for different types of clothing or rental durations?
Setting effective pricing strategies requires a careful balance between competitiveness and profitability. Analyzing the market and understanding the target customer base are the first steps in determining pricing. Factors to consider include the original value of the item, maintenance and cleaning costs, frequency of rental, and overall demand for the product.
A tiered pricing model can be effective, offering different rates based on the rental duration, with discounts for longer rentals encouraging extended use and higher customer value. Dynamic pricing strategies might also be employed, adjusting rates based on demand, seasonality, and item popularity. Regularly reviewing and adjusting prices based on operational costs, competitor pricing, and customer feedback is crucial for staying competitive and profitable.
What are the best practices for managing hygiene and quality control in the clothing rental process?
Ensuring the hygiene and quality of rental clothing is paramount for customer satisfaction and repeat business. Implementing a rigorous cleaning protocol is essential, using professional cleaning services that specialize in handling diverse fabrics and maintaining high hygiene standards. Each item should undergo a thorough quality check before and after rentals to identify any damage or wear and ensure it meets the company’s standards for the next customer. Investing in durable, high-quality items that withstand frequent use and cleaning is also beneficial. Transparently communicating the cleaning and maintenance processes to customers can build trust and reassure them of the cleanliness and quality of the rental items.
