Time to share, buy trendy clothes, accessories

YCloset, an online platform that enables monthly subscribers to share expensive garments, dresses and accessories, is gearing up to expand its business in pre-owned luxury goods as its tries to diversity its offerings and generate new streams of revenue.

The expansion plan comes as China's emerging sharing economy is shifting from rapid expansion to a new stage that focuses on streamlining management, systems and operations.

"Today, we should focus not only on doing things of long-term value but on the need to care about our short-term ability to make money," said Liu Mengyuan, founder and CEO of YCloset.

Liu said sharing economy connects a cost-efficient supply with mobile consumer demands, offering pre-owned luxury goods to young female consumers who have a strong need for beauty and finer goods but may not be able to buy new products outright.

The company has launched the new services last September. So far, transactions for pre-owned luxury goods on its platform has grown rapidly, which was unexpected, the company said.

"For consumers who previously couldn't afford to buy luxury items outright, they now have an alternative to access them within their financial capability via our platform," Liu said.

"For those who have many unnecessary luxury clothes, bags or accessories at home, they can easily sell them by simply using the YCloset app. I believe it offers a cost-efficient way to keep idle resources in circulation, even monetize them, and caters to females' need for fine goods."

Currently, YCloset uses both artificial intelligence technologies and artificial means to authenticate luxury goods.

YCloset is one of the many new platforms that have caught consumers' fancy amid the emerging trend of sharing clothes.

Founded in 2015, the platform targets female users, especially those aged in their 20s and 30s living in first-and second-tier cities in China, meeting their strong demand for office, party, dating and travel clothing.

"It's a huge market," Liu noted. "Women's clothes have spawned a sharing market that is estimated to reach over 100 billion yuan ($14.57 billion) in the country in the near future.

"Compared with buying items at a store, clothes rental services will allow women to update their looks more frequently and wear more dresses that they could not afford to buy. So, it is truly a business opportunity."

Merchants appear to welcome this new business model in the sharing economy sector. YCloset has completed an undisclosed strategic funding round from e-commerce giant Alibaba Group Holding Ltd in 2018.

Prior to that, it secured a $50 million series-C funding in 2017, led by Alibaba Innovation Ventures, Soft-Bank China Capital and Sequoia Capital China.

The company claimed it has 22 million registered users and provides different subscription plans. Currently, it provides nearly two million clothing items and covers a wide range of brands, including entry-level luxury dresses, high street brands and designer items.

In December 2019, Swedish fashion brand H&M teamed up with YCloset to rent out clothes in the market, as it sees big potential in the burgeoning sector.

In fact, Liu has a larger goal to build a one-stop shop, saying the platform will continue to diversify its offerings and offer more personalized services to cater to different users' specific needs.

Currently, the company has set up four cleaning and storage facilities in Tianjin, Nantong in Jiangsu province, Chengdu in Sichuan province and Guangzhou in Guangdong province. And it updates the inventory by season and by trends.

"After years of rapid development, the sharing economy is now in a critical stage that requires companies with healthier business models," said Raymond Wang, partner of consultancy Roland Berger.

"Companies need to pay more attention to catering to consumers' real demands and provide more value-added services."