New Delhi-based Stage3 joins the fashion rental revolution by offering a wide range of designer wear, and hopes to stand out by focusing on customer experience.
I have never owned a Sabyasachi piece, and I probably never will – not just because they are ridiculously expensive, but because the occasions that demand one rarely come by. But if they do, I don’t need to spend my annual salary on a Sabya lehenga or a designer saree. That’s what the sharing economy has given online consumers like me in India - a chance to enjoy designer goodies without buying them.
New Delhi-based Stage3 is one of the startups trying to get a bite of the sharing economy pie. Launched in October 2016, Stage3 calls itself a “next-generation fashion technology rental and styling platform”. It operates on a rental model and offers designer clothes and accessories for men and women. Going beyond a normal rental model, Stage3 offers free home trials service and personalised styling assistance.
The three founders come with decades of relevant experience.
CEO Sabena Puri, a graduate of Harvard Business School and Columbia University, is a seasoned entrepreneur who recently returned from the US.
Her Co-founder and CBO, Sanchit Baweja, is the former CEO at Buttons ’n’ Threads, a startup that makes customised suits online. A finance graduate from Australian National University, Sanchit has previously worked in investment management and private equity.
Stage3’s third Co-founder is fashion designer Rina Dhaka. With a career spanning over three decades, Rina has dressed Indian and international celebrities, and retails from New York to Delhi. Her work has been displayed at museums across the world, including The Louvre, Paris and The Metropolitan Museum of Modern Art (MOMA), New York.
Stage3 offers customers outfits from high-end designers like Anju Modi, Sabyasachi Mukherjee, Manish Malhotra, Shantanu & Nikhil, Anamika Khanna and Bhaavya Bhatnagar among others.
Stage3 purchases inventories at 40-50 percent discount on MRP and rents them out at one-tenth the cost, averaging between Rs 1,500 and Rs 3,500. In August, they started the Stage3 Shop, which sells pre-owned clothing and designers’ sample pieces and excess inventory.
Stage3 currently caters to customers in Delhi-NCR, Mumbai, Chandigarh, Bangalore, Hyderabad, Kolkata, Pune, Jaipur, Lucknow, Nagpur, Ahmedabad and Ludhiana.
The startup has raised an undisclosed amount of seed funding from Nisha Kumar, the ex-CFO of US-based online fashion rental platform Rent the Runway; Puneet Dalmia, MD of Dalmia Cement; and Balaji Prabhakar, Professor at Stanford University and Chief Scientist at Urban Engines. Their mentors include Anaita Shroff Adajania, the fashion director of Vogue magazine.
Sabena, with experience of over 20 years of in offline and online retail, says that while consumer companies obsessively focus on customer experience in foreign markets, in India, the focus is on low costs.
“It dilutes the customer experience. There is always another player who can do it at even lower costs. The customer experience has to be superior and non-negotiable,” she says.
Sanchit gives the example of Amazon Prime to show that customers are ready to pay more for better service.
Stage3’s USPs include a focus on customer experience with personalisation, celebrity stylists and data analytics to serve customer needs. Stage3 also provides free delivery, alteration, dry clean, return etc.
“We don’t rent clothes; we rent looks – with accessories etc. Our personal stylist understands the customer’s needs and curates the selection accordingly,” Sabena says.
Stage 3 buys inventory based on customer response.
All this is powered by data analytics, making it more of a tech company than a fashion company, Sabena says.
Of their team of 20 people, nine people are involved in technology.
Sanchit believes that the more touch points there are to reach out to the customer, the better.
“Fashion is all about personalisation. We need to understand customers’ preferences in colour, what suits their complexion, etc. In such an effort, omni-channel helps,” he says.
With this in mind, Stage3 opened its Style Room in Delhi in September.
“We wanted to solidify our position online first. In 2018 we will build more on omni-channel and have more styling studios in metros – small ones of about 500 sq ft – with inventory, a stylist, a TV screen where one can view products which are not in the store, etc,” Sanchit adds.
Stage3 keeps an integrated profile of the customer, including measurements and style preferences. Once the customer books an appointment, s/he is given a curated selection with 5 or 7 pieces.
Sanchit says conversion is higher for in-store visits and services by a personal assistant who understands the client’s needs and makes recommendations.
“After a visit to the store, they will place three to four orders online,” he adds.
The Mumbai styling room will open in 2018 Q1, and Stage3 aims to open Style Rooms in Bangalore, Hyderabad, Chennai and Kolkata by the end of 2018.
Stage3 is mainly targeting women in the age group of 20-35 years.
“They are mostly earning a monthly salary of Rs 30-50,000. Millennials embrace new ideas; we have seen interest from Tier-2 and Tier-3 cities too,” Sabena says, adding that the rental model is going to be big in the future, as is the sharing economy.
“Young Indians are very pragmatic. Daily-wear outfits will stick with you, but for dressing up, rental makes sense,” she says.
In July this year, they launched Curve Collection, their plus-size selection which comprises about 20 percent of their inventory and is expanding.
“We’ve had an amazing response to this; it is about making fashion more inclusive,” Sanchit says.
Fashion is the highest margin category in e-commerce. By combining a rental and purchase model, Stage3 has the advantage of sustainability. It has already got a GMV of Rs 1.5 crore in rental alone and a total of Rs 2 crore, in September.
However, there are other established players in the in fashion rental segment to reckon with. These include NCR-based Rent It Bae, Mumbai-based Flyrobe and Bangalore-based LibeRent.
Rental commerce has matured as a market for startups in India, thanks to digitisation and the e-commerce boom.
According to a study by Allied Market Research, Asia-Pacific, which is still in a latent phase of adopting the rental clothing trend, will see the segment grow at CAGR of 11.4 percent, mainly led by India and China. With India’s urban youth being at ease renting everything – vehicles, furniture, fashion and even home appliances – the market outlook seems bright.
Since this is a niche sector, customer experience will be the key - not just providing an array of products like Flipkart or Amazon. And this is where Stage3 wants to score.
But Stage3 is taking one step at a time. The brand has grown 10X in sales since it started. With its first round of funding about to close in 2018 Q1, Stage3 expects to make profit in a year.
“Rentals have good unit economics and we already have high internal rate of return (IRR),” Sabena says.
Whether it is Rent it Bae or men’s fashion rental platform OhLook (based in Hyderabad), the subscription model has ensured a steady generation of monthly revenue. However, Stage3 is in no hurry to start a subscription model.
“India is not ready for it yet. The consumer has to get to know the brand Stage3 first. May be we could think of that possibility after two years,” Sabena says.