China clothes sharing start-up YCloset secures US$50m in new funds
YCloset, a Chinese clothes sharing platform where users pay a monthly subscription fee to rent clothes and accessories, has completed a US$50 million fundraising round led by Alibaba Innovation Ventures, Softbank China and Sequoia China.
The series C fundraising round also attracted several investors that took part in the Series A and B rounds, when the platform raised US$10 million and US$20 million in April 2016 and March this year respectively, according to a statement from GSR Ventures, one of the founding investors of YCloset.
Proceeds from the new funding will be used for a platform upgrade and to optimise user experience, as well as to expand the user base and hire more talent, according to GSR Ventures, which has invested in a number of Chinese internet-based “sharing” start-ups including Didi Chuxing and Ofo.
YCloset chief executive Liu Mengyuan said its clothes sharing business will become common on e-commerce platforms in the future due to the low membership threshold and variety of styles on offer.
YCloset will cooperate with Alibaba’s Taobao and Tmall e-commerce platforms, which are the largest online outlets for clothing sales in China.
Alipay users who score above 600 points on Sesame Credit – a credit scoring service on Alibaba’s financial payment tool – will have their 300-yuan deposit requirement waived.
Alibaba owns the South China Morning Post.
Founded in 2015, YCloset charges a monthly membership fee of 499 yuan which allows users to rent unlimited clothes and accessories via its mobile app. It does not charge laundry and delivery fees, and offers discounts for members who purchase the clothes instead of renting them.
The Chinese start-up acknowledged that it has three issues that need be resolved after the new round of fundraising, including clothes cleaning, delivery efficiency and product diversification.
The number of third-party clothing brands that provide outfits to YCloset has reached several hundred, with the retail price reaching an average of 1,500 yuan per piece. YCloset said entry-level luxury brands like Kenzo and Acne Studios became platform partners in August.
Beijing-based Laundromat service chain Fornet is also now a strategic partner, according to the statement.
Liu earlier was quoted as saying the platform targets women aged between 25 and 30 who are a major force in consumer spending, driving demand for office friendly, party and date outfits.
But not everyone is sold on the idea. Cindy Chai, a 28-year-old office worker for an international firm in Shenzhen, said she would not use the shared clothes service over concerns about hygiene.
“The 499 yuan monthly membership fee is also not cheap. It is enough for me to purchase two or even three pieces of clothing at some affordable fast fashion brands every month,” Chai told the South China Morning Post.
However, she believes the concept may appeal to young girls with limited budgets but who are constantly wanting different fashion looks.