This startup wants to curb fast fashion by helping you rent out your closet

By Rotation, a U.K.-based clothing rental app, hopes to eliminate the need for fast fashion by making peer-to-peer clothing rental mainstream in the United States.

The startup expanded to the United States in May. By Rotation aims to grow usage in New York City this year before expanding to two other major U.S. cities next year.

By Rotation may sound like another rental service such as Rent the Runway, Armoire or Nuuly, but its founder and CEO Eshita Kabra-Davies is quick to point out that its peer-to-peer structure more closely resembles sharing-economy companies such as Airbnb and Uber.

By Rotation has taken a social media-style approach to building its community of lenders and renters by encouraging dialogue and giving users the option of receiving notifications when their favorite lenders list new items.

Individual users decide if they are willing to ship their items to users in other states. Some will offer only hyperlocal pickup rentals.

“The vision is really to be able to walk three streets down and pick up a rental, even last minute, because you have a few lenders in your neighborhood that are the same size as you, and we’ve already seen that happen in London,” Kabra-Davies said.

By Rotation founder & CEO Eshita Kabra-Davies

Source: By Rotation

The digital fashion rental market is expected to more than double in value from $1.3 billion in 2021 to $2.8 billion by 2030, according to data from Verified Market Research. Meanwhile, online resale is expected to reach $38 billion by 2027, according to ThredUp’s 2023 Resale Report. 

Despite the expected growth, online fashion rental and resale has proven to be a difficult business, especially on Wall Street. The challenges have come partly because many in the space hold a lot of inventory and spend a lot of money to do so. 

Shares of Rent the Runway, ThredUp and The RealReal are all down about 90% since the companies went public. All three companies have yet to become profitable.

By Rotation does not own a single item listed on its platform, making it a standout among the other major rental and resale players in the U.S. Instead, the inventory and listings come from the people using the app. Kabra-Davies describes it as a “very cost-efficient business model” that is “completely different to what the incumbent players are doing in the U.S.”

“No one is doing what we’re doing,” according to Kabra-Davies. “We don’t need to sell. We don’t need to tell people, like, please list your items, we will give you money for it; nor do we need to buy any items to build up that supply.”

In the U.K., By Rotation has more than 330,000 registered users with more than 68,000 listings. U.S. users have already listed more than 1,800 items across at least 15 states, according to Kabra-Davies.

The growth is happening organically, she said. The startup plans to start marketing in the U.S. this summer.

As the app grows, the startup is taking steps to ensure renters are trustworthy and lenders’ items are protected from damage. For example, a new user cannot rent an item that has a retail value above $1,000 through the app until they have completed several other lower-priced rentals and have been reviewed and rated for those rentals.

By Rotation uses smart pricing to help lenders determine listing fees. It recommends that each item’s daily rental fee be about 3%-5% of the item’s retail value, Kabra-Davies said.

By Rotation has not publicly shared its valuation, but it is actively seeking new investors for its third round of funding. The company raised $3.8 million in prior rounds, according to Kabra-Davies. 

Despite being early in its fundraising, the company is on track to be profitable by spring 2025, according to Kabra-Davies.

Randi Wood, a renter from the Los Angeles area who is using By Rotation to lend out items from her small business, Entre Nous Showroom, recently rented a dress from By Rotation for a trip to Mexico. She described her experience as “really great” and said she appreciates how the user-run app drives interactions.

“The person that I was renting the dress from, she was very communicative, and it was like, right away, we were having a back-and-forth conversation,” Wood said.

‘Racist and broken’ system

The desire to create something different led Kabra-Davies toward her business in the first place. The idea for By Rotation first came to her in late 2018, while she was planning her honeymoon to Rajasthan, the state in northern India where she was born and from where she emigrated.

“I wanted to wear nice clothes on my holiday and I thought about renting but there was no sort of digital fashion rental player here in the U.K. or even Europe,” she said. “I started thinking about how I actually just wanted to reach out to all these women that we see on social media, who seem to wear one outfit once and never repeat them ever again.” 

Kabra-Davies admits the concept of reaching out to someone unsolicited to borrow their clothes is a bit weird, so she did what many people do. She purchased some new outfits to wear while on vacation.

But those outfits took on a new meaning once she arrived in India a few months later.

“There was a lot of textile waste. And I just couldn’t help but feel that I was probably part of this problem. I had bought new clothes for this holiday, and I wasn’t sure that I loved what I was wearing,” she said.

Kabra-Davies was deeply concerned about how one of her passions was hurting people in the country where she was born. In fact, a new report from the European Environment Agency found that 90% of used clothes and textile waste from Europe ends up in Africa and Asia.

It just kind of felt racist and broken,” she said. “I was investing in all these nice clothes. It was actually very problematic to the entire world in terms of climate crisis.”

Shortly after returning from her trip, while still working in investor relations at Marathon Asset Management in London, she decided she wanted to merge her corporate business experience with her lifelong love of fashion and her newfound concerns about the unintended consequences of fast fashion. So she began By Rotation as a side hustle.

The app officially launched in the U.K. in October 2019, about six months after By Rotation was incorporated, and Kabra-Davies transitioned to running her new company full-time.

A lean business model

As By Rotation moves into the U.S. market, Kabra-Davies hopes the low-cost business model can give it more room to grow — and give the startup an edge over its established competitors.

Martha Petrocheilos, a lender based in New York, said she uses By Rotation because it has “the latest and greatest of fashion.” In the past, she said, she has tried Rent the Runway but found that it had “really old inventory,” which she attributes to the company “[holding] inventory as opposed to individual lenders.”

The lack of inventory also makes By Rotation more sustainable and helps prevent the apparel from ending up in landfills.

Esther Gross holds one of her dresses listed to rent on By Rotation.

Source: Esther Gross

Esther Gross is still setting up her By Rotation closet in New York but has experience using the app from when she previously lived in the U.K. She compares renting out items from her wardrobe to “a new investment asset class.”

Gross started a spreadsheet to keep track of the retail cost and rental revenue of each item in her digital closet. “There were four items that I made the full price back on in the U.K., and then there was another seven that I made over 50% of the price back,” she said.

Over time this revenue became her shopping budget, and she “was never buying more than what I was making on By Rotation.” 

It’s By Rotation’s lean business model that is helping attract attention from competitors.

The startup has “essentially no cost of acquisition,” said Kabra-Davies, who also said she’s been approached by at least two public companies in the rental and resale space.

One of the companies has “looked at our app and also our documents,” she said. Kabra-Davies has met with the other at least once.

When asked if she was open to selling her company, she said, “There’s a price for everything, but I’d love to see the ticker ‘BYRO.'”

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How Timberland, Vans, VF Corp. are making sure their cotton isn’t ‘greenwashed’

Smallholder Farmers Alliance purchase of organic cotton from farmer member.

Norielle Thomas, Smallholder Farmers Alliance

As the harvest season finished at the end of January in Haiti, retail giant VF Corp. made a notable purchase: what is believed to be the first-ever verified regenerative cotton crop grown in the country. 

For the holding company behind brands like Timberland, The North Face, Supreme and Vans, the purchase was significant. For one, it signaled a broader approach to sustainable farming, evolving from an earlier focus on organic cotton — where the emphasis is on the elimination of inputs including pesticides and synthetic fertilizers — to regenerative cotton agriculture practices, which place greater importance on soil health, water retention, and local economic benefits, in addition to the chemical input management.

Timberland had already reintroduced cotton to Haiti following a 30-year absence from the country in collaboration with the Smallholder Farmers Alliance, a nonprofit that establishes farmer cooperatives. After five years of study and field experiments, the company introduced its first products made with Haitian-grown organic cotton in the spring of 2021, including two types of sneakers and a tote bag. But the focus quickly moved to regenerative agriculture, a practice more activist shareholders are pressing with big consumer companies. 

“Regenerative agriculture is really important to Timberland and VF because it’s about restoring the soil,” said Atlanta McIlwraith, Timberland’s director of social impact and activation. “We feel like it’s a way to directly address climate change. I think a lot of brands talk about sustainability, and we do as well, but if you think about sustainability, it’s really about doing no harm and maintaining things as they are. And regenerative is really drawing a line that’s higher.”

Behind the scenes, there is another notable aspect to the agricultural first related to technology. With support for Timberland, VF Corp. and VF Foundation, the Smallholder Farmers Alliance worked with Terra Genesis — a Thailand-based firm that VF just announced this week it has a collaboration with on sourcing regenerative rubber — and the Data Economics Company to create a farm data tracking service to verify regenerative cotton crops.

When a farmer decides to work with the Smallholder Farmers Alliance, a local agronomist will start coming to their farm and collecting data on regenerative farming, as well as establishing the standards that these farms must meet. If a farm passes the survey, farmers profit not only from the cotton sale, but from the data that verifies the cotton is regenerative.

VF Corp’s efforts with regenerative cotton in Haiti come at a time of growing pressure from consumers for companies to adopt more sustainable practices.

Three out of five consumers in a recent survey claimed that at least half of their last purchase consisted of socially responsible or sustainable products, according to the IBM Institute for Business Value

“This consumer demand drives the brands and big companies to want to use more of these products produced in that way,” said Jennifer Hinkel, managing director and CGO of the Data Economics Company.

Consumer brands facing greater ‘greenwashing’ scrutiny

But corporate sustainability claims are being more aggressively challenged by regulators and politicians.

Last year, the Federal Trade Commission charged Kohl’s and Walmart with falsely advertising their rayon products as bamboo since 2015, with the companies agreeing to pay $5.5 million in combined penalties.

The FTC is weighing even stiffer penalties for “greenwashing” and is currently contemplating a revised set of rules for environmental marketing claims, with a public comment period set to end later this month.

“If there’s no traceability, there’s no evidence that it is what you say it is,” said Patricia Jurewicz, founder and CEO of the human rights nonprofit organization Responsible Sourcing Network. “People want to know. You don’t want to be saying that there’s better cotton in this product, if in reality, there’s cotton in there that could be contributing to forced labor or other harmful practices,” she added.

This data collection process also gives smallholder farmers a greater say in their relationship with big brands, shifting the balance of power a little in an industry that long favored the consumer companies, according to the Food and Agriculture Organization of the United Nations, especially with food crops. The Rockefeller Foundation is currently looking at similar regenerative verification for food agriculture around the world.

The way that the data is collected and packaged is designed to give ownership to the farmer for licensing. “You don’t actually get ownership of the data as VF or a customer. You get to license it and use it for specific purposes,” said Data Economics Company managing director and CTO Arka Ray. 

Data Economics Company serves as the operating system for the entity managing the effort for farmers, Smallholder Data Services, and the farm level data traceability all the way through to the end purchasers, such as VF, and traceability back to compensating the farmers. Empowering small farms in direct connection with larger brands and markets, will be important to bringing sustainability through to the consumer end market, Hinkel said. 

Taking regenerative agriculture global will be a challenge

Applying this approach to the cotton industry and associated products will be complicated. Most cotton is blended with other cotton crops based on characteristics of the cotton, including color, strength, length, and price point, “and what’s realistic for some of the fast fashion that’s out there,” Jurewicz said. “What’s harder is applying these technologies to conventional cotton, to all the cotton that’s out there, rather than just to the real responsible cotton,” she said.

Even with progress made in recent years on organic cotton production, it’s still a tiny piece of the global industry. The 2020/21 global harvest of certified organic cotton was up 37% year over year, according to the Textile Exchange, but that represents 1.4% of all cotton grown globally. And Haiti, in particular, plays a very small role in global production, having only reinitiated cotton farming in recent years. The top five cotton-producing nations — India, China, the U.S., Brazil and Pakistan — control 77% of the global output, according to OECD data.

Nevertheless, while regenerative agriculture may be an emerging concept in developed markets like the United States and Europe, it isn’t new to Haitian farmers.

“When it’s introduced to smallholder farmers, we don’t really say, ‘Oh, here’s a new thing called regenerative’ because they recognize each of the practices of regenerative agriculture as things they’ve done in the past, things their parents did,” said Hugh Locke, senior editor president and co-founder of Smallholder Farmers Alliance and Smallholder Data Services.

VF Corp. was introduced to Haiti through Timberland, which started its efforts in the country in 2010 when the footwear company became the founding corporate sponsor for the Smallholder Farmers Alliance. Originally, Timberland and the Smallholder Farmers Alliance worked together on a tree planting operation under which smallholders were rewarded with credits for helping to reach the goal of planting 5 million trees, and they could then use those credits in exchange for seed, tools, training and other agricultural services.

McIlwraith says that Timberland and the Smallholder Farmers Alliance saw unexpected benefits from that program back on the farm, producing a 40% increase in smallholder farmers’ organic crop yields and 50% to 100% increases in farmers’ incomes.

“Haiti is so degraded, environmentally talking, and because of that any other project cannot be sustainable. So, we tackle the problem from its roots, which is environmental degradation in the country,” said Timote Georges, executive director and co-founder of Smallholder Farmers Alliance.

Tracking and verifying this data has encouraged more farmers to switch to regenerative cotton farming.

“There is a positive community kind of peer pressure that emerges and encourages farms to participate in this data network. … And which then by osmosis gets more and more farms to adopt regenerative practices because the ROI loop is very clear,” Ray said.

As brands create stricter goals tied to production practices, they will need to be able to demonstrate that they’re meeting them. “So I think all of that together, it will continue to incentivize this type of data tracking traceability,” Jurewicz said.

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