110: How to Grow an Online Clothing Rental Company for Kids with Erica Richards of Rainey's Closet

People will pay for convenience. If you add saving money to that convenience equation, then you've struck gold in your business! Erica offers both convenience and savings to customers of Rainey's Closet - an online rental company for kids' clothing.

Not every family will splurge for a full photo shoot complete with fancy outfits, but the ones who do know that pairing the right dresses and accessories can be a challenge. Add to that the incredible cost of those dresses and accessories, and Rainey's Closet is there to fill in the gaps.

Erica has such a unique business model - complete with its own challenges. But I know you'll find inspiration when you listen to her story. Whether you're reminded to head back to the trenches and spend more time with your target market, or you discover a brand new way to solve someone's problem, you won't want to miss hearing from Erica and what she's doing at Rainey's Closet.

On the Podcast

01:41 - How the Quest for Perfect Photos Led to the Perfect Business!
05:33 - First Steps to Building a Business and a Website
08: 52 - Partnerships with Vendors
10: 44 - The Initial Investment
13:13 - The Rental Process
16:00 - The Best Part of Erica's Job!
17:26 - Getting Great Photos
18:52 - How to Determine a Price
22:37 - Where do Customers Come from?
24:39 - Knowing your Target Market
28:00 - Changing Strategy
33:25 - Making Smart Business Decisions
34:46 - Erica’s “Secret Weapon”
38:53 - Erica's Funny Mom Moment

Press Play on the Podcast Player Below to Hear from Mamapreneur Erica Richards

How the Quest for Perfect Photos Led to the Perfect Business!

Erica Richards worked in marketing and public relations before deciding to be a stay at home mom once her daughter was born.

When Rainey was about 3 years old, Erica began receiving offers for various jobs but nothing seemed worth going back to work. She began looking for a creative outlet and way to use her talents.

Erica's light bulb moment came after a frustrating experience of spending a lot of time and money preparing her family for a photo session. She wanted gorgeous photos, and she searched and searched for the perfect outfits for her daughter. She ended up spending a lot of money on that outfit and accessories, and of course, after the shoot it just sat in Rainey's closet. It felt a bit wasteful.

Erica realized that finding and coordinating great outfits for children - particularly for their family photos - was a problem lots of moms were having. She came up with the solution of Rainey’s Closet. Erica had used “Rent the Runway” in the past for special occasions for herself, and she thought, "why couldn't this model work for kids' clothing as well?"

Rainey’s Closet started as a part-time side hustle and quickly grew to a successful full time business.

First Steps to Building a Business and a Website

In October of 2014, Erica began buying her inventory. She found that fall was a perfect time to start buying clothing and accessories for her business as there were many sales, and many moms were selling their clothing after completing their own photo shoots.

Erica then created a Facebook page, bought her domain name and set up her website. Intially, Erica got quotes for a custom website, but discovered that that option would be extremely expensive. So she and her web developer got creative. They found a great program to use as the base for their site. It was designed for clothing rental companies, so it had the right tools for inventory management and scheduling an order built right in. From there they customized the overall look, and Erica began adding inventory.

Erica admits that it took weeks and weeks of late nights getting photographs of all her inventory and adding it to the site. This has been the most time consuming and labor intensive part of her business, but it has certainly been worth it!

Partnerships with Vendors

Erica buys a lot of kids' clothing and accessories from Etsy shops and small boutiques. For this reason, she purchases the majority of her items at full price and pays up front for them.

For many handmade items, there's simply no discount on the amount of time it takes a Mamapreneur to make the item. And because the items are handmade, Erica also needs to give the vendors a month or more of lead time for an order of, let's say, 15 flower crowns, for example.

However, there are a few companies that offer wholesale prices to Erica, such as Tutu du Monde.

How to Find the Best Items

Erica finds her vendors by looking at trends in kids' photography and fashion and watching what other photographers are using. Pinterest, Instagram, and Facebook are all great places to find out what's trending, what moms are talking about and seeking out when it comes to fashion, and what everyone is drooling over!

Just one example of the gorgeous photo shoots that happen with dresses from Rainey's Closet. Photo by Daria Kielek Photography. Dress by Dollcake Vintage

The Initial Investment

Erica has invested tens of thousands of dollars into her inventory over the past year and far underestimated the investment that would be required! But once she and her husband realized that the business would work and there was enough demand for their service, they felt confident enough to keep buying more items in order to keep growing.

As long as Erica purchases at a rate that stays consistent with demand, her business remains profitable. Since so much of her money is tied up with physical inventory, she feels confident that if necessary, she would be able to recover her money and liquidate easily. Thankfully, this isn't necessary and the business is doing great!

Having a large inventory in the clothing rental business is essential to attracting and keeping customers on her site. It is important that a customer is able to find the size, style, and availability they need.

The Rental Process

Clothing rental might seem like a foreign concept to some customers! We asked Erica to explain how the process works.

Customers browse the site to find what they want then choose the appropriate size and the dates needed. Rentals are available for either 4 or 8 days. Customers pay the rental price and a $6 flat shipping fee that includes a prepaid return shipping label for convenience. The shipping stays at $6 no matter how many items the customer orders.

For example, if you have an event or a photoshoot planned for October 10th, you would choose October 8th for your delivery date. So then you'll have two days to try on outfits and pair accessories, use it on the 3rd day, and return your items on the 4th day.

Erica does not charge customers for normal wear and tear, such as a bit of sand or one sequin falling off. But she does have a detailed terms and conditions page that outlines a 200% charge for an item that is not returned or is damaged beyond repair.

The Best Part of Erica's Job!

In addition to being a brilliant business woman, Erica has the added benefit of being a stylist in her job as well. She often gets questions from customers on which accessories will pair well with certain dresses or outfits. She gets to offer exceptional customer service by providing great recommendations, and, let's be honest, it's pretty fun to play stylist too!

Erica also gets to style items for her own photo shoots and social media as well.

Getting Great Photos

Erica has dozens of gorgeous photos on her site that really showcase how her clothing can be used. So.... does Erica have to schedule her own photo shoots each month to get all of these incredible photos?

Nope, they're actually a mix! Erica takes some of the product photos herself or with a photographer she hires, but some of her larger vendors like TuTu du Monde and Nelly Stella create campaigns specifically for their sellers to use.

At the same time, customers tend to prefer the less “styled” photos so they can see the items on a “real” child and see how the item will fit and get a sense of its true colors.

How to Determine a Price

For her clothing, Erica has a general pricing formula that she uses for her rentals. She takes into account how many times she will be able to rent each item before it is no longer usable. She needs to make her investment back on the product after "X" number of rentals - a number she's comfortable with that allows for a reasonable customer price, and a reasonable profit for her.
Pricing for accessories is more based on intuition and thinking about how much she herself would be willing to pay to rent the items. Some of the capes and shrugs can be almost as expensive as a dress, but she knows a parent wouldn't be willing to pay quite as much for this "accessory" as they would for a dress.

Overall, renting from the site costs a mom about 25% of what a full outfit would cost if purchased outright. Renting also prevents a lot of waste and buying items that will only be worn once.

For example, a Tutu du Monde dress can cost $160-$230, add a cape for $100, a flower crown for $50, that adds up to a minimum of $310. But you can rent all of this from Rainey's Closet for about $60. So you've just saved yourself $250, or just 19% of what you would pay at full retail price.

This dress, shrug, and headdress would cost close to $400 at retail.  Or you can rent all three from Rainey's Closet for $52.  That's an 87% discount. Photo by B Couture Photography.

Where do Customers Come from?

A lot of Erica’s customers come from either photographers referring moms or photographers themselves. Photographers don't want to shoot the same-old, same-old. They know that a styled shoot will turn out better and showcase their work. On the other hand, they don't want to tell a parent that they need to spend hundreds of dollars in addition to their photography fees! Rainey's Closet offers the perfect solution.

About 50% of Erica's business comes directly from photographers who rent out the items for families to offer them exceptional customer service and guarantee great photos. The rest of her customers are moms. Customers find Erica on Facebook, Instagram, Pinterest, and also when searching for specific brands. Erica has some styles that are hard to find because they're from last year and the brand no longer sells them. Moms who are looking for that "one perfect dress" can often find it on Erica's site.

Knowing your Target Market

When Rainey was about 2 Erica began getting involved with the “closet mom” world. She finds popular brands by watching what moms are talking about on social media. Moms also start Buy, Sell, Trade Facebook groups around certain popular brands. There are so many boutique brands who only make a limited quantity of each item, so moms go hunting all over the place looking for them or offering to buy them from other moms for hundreds of dollars!

Erica also looks at what photographers are using in their photo shoots. She has done a great job of immersing herself in the world of her target market as a way of staying current with what they are looking for.

Changing Strategy

Erica began joining Facebook groups and interacting on brand pages so that when moms were looking for something that was hard to find she could send them to her page. She quickly realized that this is not allowed in most Facebook groups, so she has had to change her strategy.

Now, Erica has her own private Facebook group for marketing and selling her “older” items. It's a great way to get rid of inventory she doesn't need and attract her ideal customers who are able to use her group to buy and sell items as well. Erica's group has over 1,000 members, and she knows it will continue to grow.

I love that Erica didn't let one marketing set-back get her down. She just decided to create the perfect marketing tool for herself instead!

Erica also counts on word of mouth marketing from her customers. They'll often comment on her Facebook posts and tag their friends saying, "this is the business I was telling you about!" Erica always goes the extra mile for her customers. For example, if an item suddenly becomes unavailable because it was damaged, she'll quickly go pay full retail price for that item to keep her customer happy and give them what they want.

Making Smart Business Decisions

Since Erica orders in the spring for her fall season, she has found that predicting what will be popular is quite difficult. Because of this, Erica often tests the market first by ordering just one item. If that dress or accessory becomes popular, she then goes back and orders more.

There's no better way to figure out what your target customer wants than to simply put something out there and see how they respond! Armed with information and sales, Erica can make smart business decisions.

Erica’s “Secret Weapon”

Three times in the past year Erica has run into an issue with a customer not returning an item. While this can be extremely detrimental and devastating to small business owners Erica’s husband is a lawyer. When an issue comes up with a customer Erica is able to have him send a legal letter out and begin the legal process with no high costs and hassle. So far she has recovered the items thanks to her “secret weapon”.

Erica's Funny Mom Moment

You'll have to tune in to hear how Erica's strong-willed little girl Rainey has leveraged that will into a way to make an income at just four years old. We were cracking up!

Find Erica Online!

RaineysCloset.com

You can also find gorgeous photo shoot inspiration on Erica's social media channels. She's Rainey's closet on Instagram, Facebook, and Pinterest.