Covetella: Expanding An Online Dress Rental Business Essay.

Focusing on the online rental space

Carol Chen had started off in 2015 with 60 dresses from her own closet and had the plans of expanding her business of rental dresses into international spheres. She had put her focus on Singapore as it is considered to be the 10th largest country with opportunities of growth in the business segment (Antikainen et al., 2020). The rental space is quite high in Singapore and therefore Covetella had come up with the idea of expanding the business online, which helped in attracting a wide base of customers. In order to attain a greater competitive edge over their competitors Covetella has decided to focus on a model of subscription. Their idea of focusing on the provision of weather-based clothing and accessories to their customers has also drawn a lot of attention. Covetella has majorly focused on the middle class and affluent millennials. Therefore, a focus on high end fashion has been made by the company in order to attract the attention of a wide segment of customers. Covetella has also been focusing on the inclusion of customers from ASEAN that includes countries like Thailand, Indonesia, Vietnam, Myanmar, Cambodia and few other countries (Carter & Carter, 2020). These countries have been targeted as they have the greatest possibility to have economic ability to be able to invest in various products. It has been estimated that by the year 2030 the groups of people with higher income margins would be included in the ASEAN group. Covetella has focused on the aspects of creating personal networks with their customers, knowing the local culture and their languages in order to provide their customers with the expected products, knowing of the market size so that they can better understand the amount that has to be invested in the business. The greatest resource that Covetella had put to use is their brand recognition. The company owns about 70% of their dresses and only 30% of the dresses belong to others (Chon, Natashab & Limc, 2021). All the accessories are an in-house collection which provides the company with an opportunity to ensure that they do not have to pay a huge sum of rent to third parties. The brand had put all of their resources to full usage in order to attain a great hold over the competitive international market.

Covetella is considered to be one of the most successful rental fashion brands as they can predict market trends accurately and develop their strategies accordingly. They have the capacity to provide for the resources that are required to develop services and products in such a manner that they can counter the threats imposed by their competitors and meet the value propositions of their customers. Covetella has a successful track record of adhering to the needs of the customers which makes it easier for the customers to keep coming back. Covetella has adhered to intellectual property rights (Lang, Li & Zhao, 2020). Covetella has garnered several copyrights and patents from the creators to avoid any future conflicts. Covetella maintains good relationships with their suppliers and charges lesser than that of their competitors such as Style Theory, Runway Rent and Style Lease (Feng et al., 2020). The company is focused not only on thwarting their other competitors by developing sustainable fashion trends. It is also creating developmental plans and implementing them within the company in order to ensure that there is an increase in the number of customers. The company deals with a lot of governmental policies and rules in order to function smoothly in a lot of global segments. Covetella has a wide scope of development in the inventory management in order to ensure that their customers are retained. Covetella plans for growth by focusing on the assessment of viability, stability and profit margins of the sub-businesses. The maintenance of a balance sheet helps Covetella to keep a track of the areas that need greater focus (Ibarra, Ganzarain & Igartua 2018). This aspect results in a wider range of customers being attracted to the brand and not switching to other alternative brands.

Subscription-Based Model

Covetella has focused on attaining a good brand image with the inclusion of 60/40 share of revenue in favor of Covetella. This plan includes the costs associated with delivery, cleaning and storage of the dresses and the provision of 40% of the profit margins (Lee & Chow, 2020). The inclusion of 70/30 shares of revenue in favor of the dress owners have been done. This model is used for the dress owners who take responsibility for the cleaning, storage and delivery of the dresses. 30% of the profit margins are kept by the organization in this scenario and 70% of the profit is given to the dress owners (MacPharlain, 2018). Covetella focuses on attaining the south-asian group of countries as they are considered to have a high-income rate. This aspect will help them to attain greater revenues and have a greater competitive edge over their competitors.

Covetella focuses on the aspect of partnerships in order to ensure that the cost of operations is reduced to a great extent. Therefore, the retainment of relationships is focussed upon by the brand so that it can ensure a great profit margin by reducing the costs significantly. Therefore, Chen focuses on attaining a wide range of followers on social media platforms. Covetella currently has a follower base of 24.6 thousand followers on Instagram. A cost-effective measure that Covetella has impacted upon is the cutting down of the rental places in Singapore as they have a high rate of rent. Therefore, she has focussed on the growth of an online platform where the dresses can be rented out (Perlacia, Duml & Saebi, 2017). This measure is a cost-effective measure that Covetella has undertaken. The cost of renting clothes in Indonesia is relatively lower than in Singapore as the business has taken into consideration the fact that they have about 20-50% lower income rates than in Singapore. They had taken into consideration the fact that the cost of renting clothes in Indonesia needs to be less than 100 dollars in Indonesia in order to expand there.Therefore, Covetella makes a thorough research on the economy of a particular country before expanding their business. This has helped Coveralls over the years in expanding their business overseas. Covetella attempts to maintain a balance between the revenues and the cost related factors in order to attain a greater profit margin and customer base.

Osterwalder’s Business Model is a management template that helps in strategically describing, analyzing and describing various business models. This model is usually presented in a tabular form that coordinates various elements of a business in order to align them in order to create value in the business (Retamal, 2017).

Figure 1: Osterwalder’s Business Model Canvas

(Source: Retamal, 2017)

Reference List

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