Deck 12: Rent the Runway: Entrepreneurs Expanding an Industry by Blending Tech With Fashion, John Gallaugher - Information Systems: a Managers Guide to Harnessing Technology, Version 6.0

Question 1

The term ________________________ refers to the current value of future profits that will accrue from acquired customers.

Answer 1

Customer Lifetime Value or CLV (sometimes also abbreviated as CLTV or LTV

Question 2

Describe the experiments Rent the Runway's founders conducted to verify their idea even before building out their website and operations model.

Answer 2

One test involved purchasing 100 dresses and setting up a popup rental shop for college students. Later tests investigated how much customers were willing to pay, and verified that women were willing to rent from a photo even if they couldn't try the product on, first (in True MVP style, tests were conducted with PDF photos rather than building a full-blown website). All this helped provide confidence in their concept and armed the founders for making a persuading pitch to investors.

Question 3

The halo-effect from a positive experience renting a designer's more daring dresses may prompt a woman to purchase more frequently-worn staples like a little black cocktail dress, leather leggings, or accessories.

Answer 3

True

Question 4

Time Magazine has called Rent the Runway one of the country's 25 Best Websites

Question 5

The term __________________ refers to the rate at which consumers leave a product or service.

Question 6

Rent the Runway rentals are often only 25 percent of a dress's retail price.

Question 7

Several have wondered how big sharing firms can get. Airbnb has more beds than any hotel chain and Uber dwarfs any taxi or car service firm, but ZipCar never grew as large as major car rental firms. To get a sense of the size of the firm, Rent the Runway has had over 5.5 million women as customers of their service.

Question 8

Most e-commerce shoppers buy brands they are already familiar; however, ____percent of Rent the Runway customers rent brands they've never bought before.

A) 75
B) 78
C) 98
D) 50
E) none of the above

Question 9

Determining product/market fit is often very expensive for entrepreneurs, since it amounts, essentially, to fully building out a firm's website and operational model.

Question 10

________________________ refers to the value of future cash flows discounted into today's dollars (it is discounted because a dollar today should be worth more in the future assuming inflation or the potential to earn money on the dollar if it is invested).

Question 11

According to CEO, Jenn Hyman, Rent the Runway is a "fashion company with______________"

Question 12

The term ______________________ conveys the degree to which a product satisfies market demand. Successful efforts should be desired by customers, and scale into large, profitable businesses.

Question 13

Essay: How does the Rent the Runway model compare with firms like Uber and Spotify?

Question 14

Circle the equation that is true most firms with a profitable customer base:

A) Customer Acquisition Costs < CLV = NPV (future customer profits)
B) CLV < Customer Acquisition Costs = NPV (future customer profits)
C) NPV (future customer profits) < CLV = Customer Acquisition Costs
D) Customer Acquisition Costs < MVP = Product/Market Fit

Question 15

____________________ refers to the amount of money a firm spends to convince a customer to buy (or in the case of free products, try or use) a product or service.

Question 16

The term ____________________ refers to when founders of a company alter their product offering, business model, or target market in hopes of crafting a more viable business.

Question 17

The term _______________________ is often used in entrepreneurship and new product development and refers to a bare-bones offering that allows entrepreneurs and product developers to collect customer feedback and to validate concepts and assumptions that underlie a business idea.

Question 18

Which of the following did not help create demand for Rent the Runway?
A) Designers struggled to expand their market to reach younger consumers

A) Many customers were interested in high-end fashion but couldn't afford it
B) Flash sales sites were on the rise, creating tremendous interest in the flash-sales model of Rent the Runway
C) Social media was increasing pressure on women to wear something new

Question 19

Which of the following is not a reason why Rent the Runway appeals to designers?

A) The firm introduces high-end designer brands to new customers.
B) The firm brings in younger customers, averaging about a decade younger than department store customers.
C) Most Rent the Runway customers rent brands they've never bought before.
D) Some designers have used Rent the Runway to test new looks.
E) None of the above - all convey the site's appeal to designers

Question 20

Customers who are on the fence about a choice can choose a second style as a backup for an additional fee.

Question 21

Describe why CLV is especially difficult for new firms with new models to calculate.

Question 22

The concept of ____________________ refers to positive influence created when someone finds out that others are doing something.

Question 23

Rent the Runway's mobile app provides over 40 percent of firm traffic, and continues to rise.

Question 24

______________________ is a systems development method in which requirements and solutions rapidly and iteratively evolve through collaboration between self-organizing, cross-functional teams, rather than a top-down, centrally-managed, schedule-driven approach.

Question 25

Providers of ________________, may need to spend more effort convincing customers to try their offerings.

A) experience goods
B) commodity products
C) digital goods
D) minimum viable products

Question 26

Like Uber, the airline industry, hotels, and other service providers with limited inventory and varying demand, Rent the Runway also leverages analytics for ___________________.

Question 27

How can data analytics inform operations at Rent the Runway?

Question 28

Stores can also function as _________ with same-day rental of certain styles.

Question 29

Describe why Rent the Runway's customers have an especially strong lifetime customer value?

Question 30

_________________ is a software development approach where an organization's developers release products, features, and updates in shorter cycles, when ready, rather than wait for centrally-managed delivery schedules.

Question 31

Which of the following is NOT true about mobile app development:

A) Many experimental features and A/B tests are more easily conducted on the Web than on mobile.
B) Updates and bug fixes can take longer to reach mobile users than users of a firm's web product.
C) Mobile apps are considered far easier to develop than websites, in fact, most managers can create robust apps using drag-and-drop tools.
D) A well designed app can increase an e-commerce site's customer engagement since customers always have the 'store' in their pocket.

Question 32

Describe the advantages that Rent the Runway's physical stores offer the firm:

Question 33

Rent the Runway's primary warehouse; is the largest single dry cleaning operation in the United States.

Question 34

At Rent the Runway, customers arriving at the site via ________________ media have a much higher (reported as high as 200 percent) conversion rate than customers arriving via _____________ media.

A) search, social
B) advertising, social
C) referral, social
D) earned, paid

Question 35

Rent the Runway shut down its Facebook presence because photos showing a dress on another (non-model) customer resulted in a dramatically lower than average rental percentage.

Question 36

Rent the Runway sees a much higher (75 percent) conversion rate from friend referrals than from other marketing methods

Question 37

Rent the Runway's only hires newly minted college graduates for it Data Analytics Team, choosing to home grow talent.

Question 38

Explain how Rent the Runway Unlimited subscription service works.

Question 39

Creating a business often involves convincing suppliers to participate in your new offering. While Rent the Runway had proven customer interesting, some designers had initial concerns about Jenn Hyman and Jenny Fleiss's firm. Briefly describe supplier concern.

Question 40

Linking envelope return codes to inventory systems allows Rent the Runway to do all but which of the following:

A) prioritize items that need to be sent out for immediate inspection, cleaning, and repair
B) prioritize items for optimized shipping - getting an item prepped early if it allows for less expensive but slightly slower shipping.
C) print more expensive, but faster shipping return envelopes for garments that will be urgently needed for a scheduled rental.
D) queing garments for robotic repair by custom machines that can mend zippers, replace buttons, and dye tarnished clothing to exact specifications

Question 41

Why does 'overbuilding' warehouse capacity make sense for Rent the Runway?

Question 42

What product types did Rent the Runway Unlimited start with? Why?

Question 43

Project Entrepreneur, created by Facebook, aims to help female entrepreneurs build high-growth, high-impact businesses.

Question 44

Since product focus is so important for a startup, Rent the Runway has resisted the urge to offer anything other than high-end dress rental.

Question 45

Describe how technology related to return envelope scanning and order scheduling operates to keep Rent the Runway satisfying customers while minimizing costs.

Question 46

The term _________________________ is used in the business press to refer to startups valued at $1 billion or more.

Question 47

Rent the Runway's leadership elected to expand its _______ and ________rather than harvest early profits.

Question 48

How is Rent the Runway working to encourage entrepreneurship among women?

Question 49

What is Rent the Runway Unlimited?

Question 50

One of the challenges of Rent the Runway Unlimited is that it will require women to further rethink their relationship with fashion and ownership.