The sharing economy is on the rise in China where customers are now able to rent high-priced handbags on WeChat or via mobile apps. After sharing taxis, bikes and many other products, the world's second-largest economy has started to share luxury goods, according to a July 5 report.
According to the article in the Global Times, which is a nationalist newspaper owned by the Chinese Communist Party, the current founders of many sharing platforms think "it is more economical and environmentally friendly to rent a luxury bag as fashion accessories are replaced frequently."
In order to borrow a luxury handbag, interested customers typically need to place a deposit of around RMB 19,000 (USD2,794), while the cost of rentals generally ranges from RMB 99 (USD15) to over RMB 1,000 (USD147) depending on what type of bag is being sought.
China's sharing economy is expected to grow rapidly in the next couple of years and is projected to contribute to over 10 percent of the country's GDP by 2020, according to the National Information Center. Many business professionals thus see great potential in the share economy.
The Beijing-based startup company Dou Bao Bao (抖包包) is one of the companies attempting to take advantage of it. According to information on its official WeChat account, Dou Bao Bao specializes in renting high-end handbags from top-tier luxury brands including Hermes, Louis Vuitton, Chanel, Christian Dior and Celine.
Dou Bao Bao has a WeChat account, which currently serves as the main platform for borrowers. It will also soon be launching an official mobile app. On WeChat, followers can view a list of products currently being offered by the company. By clicking on the picture of the handbag, viewers can see detailed information on the product, such as the price, the deposit amount and shipping details (they're usually sent via SF Express, one of the best private shipping services in China).
The company requires consumers to place a deposit of about ten times the monthly rental fee of the selected bag (which is repaid within seven business days after the bag is returned undamaged). It also pledges that the items are authentic, knowing that a major concern for Chinese consumers is that they might be loaned fake products.
Showing that there is support for the concept, in June, the company received more than 10 million yuan (USD1,470,560) in funding from Chinese domestic investors.
Another startup firm, Y-Closet, or "Yi Er San" in Mandarin, is copying the business model of the New York-based designer dress rental platform Rent the Runway but adapts it to consumption habits of Chinese clients.
“Y-Closet only charges RMB 499 (USD73) per month and you can take out three items of clothing at a time and swap them out as many times as you want,” said Doris Ke, the founder of Y-Closet about the difference between her company and Rent the Runway. “Plus someone will pick up and deliver to you. You don't have to mail the product at all.”
Another innovative approach taken by Y-Closet is that it works with Zhima Credit, the credit rating service under Alibaba's Alipay, which assesses the credit quality of a potential customer. If their credit score on the platform meets the minimum requirements, the deposit is waived for them.