652: $150k Renting Out Dresses as a Side Hustle

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1:16What's up? Nicolau for here. Welcome to the side hustle show because your nine to five may make you a living if your five to nine makes you alive. Now here's a side hustle that earned just 160 bucks in its first month. That came from just two customers, but it was enough. It was enough traction to know that she was onto something. Since then, my guest has scaled to over 200 different garments, bringing in$150 ,000 in rental income last year. She is at The Profit Collective on Instagram. Summer Fisher, welcome to The Side Hustle Show. Thank you. Thanks for having me. You bet. Stick around in this one.

1:50We're going to learn how this business and the math behind it works, the delivery and logistics piece behind moving clothing all around the place and some of the marketing best practices that you can follow along if you want to start something similar. Now, you know, I love a fun rental business, but dresses certainly aren't the only thing that you can rent out for a profit, which is why I've put together a list of 25 other unconventional things that you can make money renting out that is yours free to download at the show notes for this episode. Just follow the link in the episode description and it'll get you right over there.

2:24Now, Summer, my understanding is you started as a more traditional reseller, like go to the thrift shop, find the brand name designer type of stuff that you think is undervalued and flip it. Buy low, sell high. Simple. So what inspired the shift to the rental business? Well, I'm actually still reselling and it is actually probably still a bigger part of my business. Oh, okay. Yeah. So I saw an opportunity for the renting. So what happened is I've had a model agency for 15 years that started as another side hustle, which is a story for another day. And I was in my agency one day and a girl came in, one of the models came in and said she was starting a dress rental business.

3:05And I was like, what's that? I didn't understand. I was like, what are you talking about? And she's like, oh yeah, we just put some dresses together, my friend and I, and we're going to rent them online. And I thought, okay. And I just thought they were going to rent them on, I don't know, Facebook Marketplace or Depop or something like that. And I looked into it and I realized there's this whole industry around dress rentals. And I thought, oh, I want to try this. And I was already kind of flipping dresses on the side and had built a whole business around that as well. And so I decided I just put up all the dresses I had.

3:40Actually, first I put up two dresses and And that was in October of 2022. Yeah. And then one day I was just sitting in my car at my daughter's cheer practice and one of them rented and I got a notification that it rented and I was like, oh my God, I just rented a dress. But like, now what do I do? I didn't really understand it. And I just kind of went all in. So I kind of worked it out as I went along. And then I ended up putting all the dresses up then that I had been flipping and it kind of grew from there. and then I started buying dresses specifically to rent. So, yeah. Okay. I love this, you know, side hustles on side hustles, right?

4:19What am I already doing? How could I, you know, add a new revenue stream to this? And this is really interesting. It's like, well, I'll have it listed up for sale. Yeah. And in the meantime, until it sells, hey, maybe I can make some revenue. I can recoup some of that cost on the rental side. I think that's really interesting. Yeah, exactly. It's like a double dip profit strategy is what I call it. So basically, you're making the money from flipping the item, but in between, you're also making the money from renting it. What happens when somebody wants to buy it and you're like, well, I can't ship it out first.

4:50Yeah, I need to wait for it to get back. When it rents, I do take it off from being available for sale. Oh, okay. So those first couple, you get that notification, hey, somebody wanted to rent this thing. There was a marketplace that had some existing demand of renters versus you trying to build an audience, build a following, build a two-sided marketplace where it's like, hey, rent from me. It's like, no, no, no. There's already some existing validation and demand for it. Yes, definitely. Yeah, there's online sites where you can rent dresses, basically. So they're different in every country. So for us in Australia, there's a site called The Vault.

5:26A big one in the US and the UK is By Rotation. So there's several of these type of websites and they're kind of peer-to-peer lending. So basically you can put up your own wardrobe or like I do, run it as a business and rent to other people. There was one like bag borrow or steal. Is that one or was that just like for buying handbags? I don't know if it was a rental service too. I'm trying to think of like the last. You can rent bags on these sites as well. Okay. Do you play around in that space or strictly dresses? No, I don't really because their bags are really expensive to buy. And I just, because I self-insure all my items, I just don't want to play with that.

6:04Right, right, right. Yeah. What's a sweet spot for cost of acquisition, like brand style? And there's a lot of different factors that must go into the purchase side of it to decide, well, what might there be demand for? It's quite nuanced. So it will depend on, it's like the intersection of brand, style, size, all these things that kind of come together to get a dress that's in demand. I would say that as opposed to when I'm reselling, when I'm renting, it does need to be a fairly recent style, like within the last 18 months, but definitely, but usually even within the last six months is that will be like the most popular styles whereas when I'm reselling that's not as relevant okay and then a lot of it will be like did a celebrity wear it is it the color of that season you know is it winter or summer I rent a lot to wedding guests so a lot of yeah people who are going to weddings and just are going to wear that item once so there's a lot of that with the sizing you do have to look at the market so a lot of like girls in their early 20s will get into dress rentals and they will tend to rent those smaller sizes and I've found pretty good success with renting like slightly like mid-sizes I guess it would be called so yeah just slightly larger not the teeny tiny sizes so yeah but it does depend on the brand too because some of those brands do do better in the really small sizes and are you still trying to source this stuff secondhand or Are you now comfortable saying I could buy it off the rack, I could buy it new to rent and then you're kind of like a car rental business.

7:43I'm going to rent it out for a year, then I'm going to resell it. Yeah, I would say that mostly I buy it retail now, but I do use all the strategies to try and get like a percentage off when I buy it so that when I, at the end of the rental, when I go to flip it, I'm actually making money both ways. So I'm getting 20 % off retail. I'm renting it, you know, five, 10 times. And then I'm actually selling it still for more than I paid for it, even though it's pre-loved because it's such a new and hot and in-demand item. And I'm also using things like the currency arbitrage and the geographical arbitrage of being in Australia where I can get, you know, something like a Zimmerman dress a lot cheaper and sell it to someone in the US.

8:25Yeah, you're going to be throwing out brand names that go away. Yeah. like all right I'll take your word for it but if you're in that space like if you know what is what is hot what is in style and yeah you can absolutely play around with that and so for the rental side is I can imagine it's got to be local like you're not going to ship something halfway around the world for a rental are you so the majority of my reselling is actually like I sell a lot to the US and the UK and probably more than Australia but with the renting it is yeah only in Australia. So I do it pretty much all of it is by post.

8:58So I do allow pickups sometimes. I don't love people coming to my house and picking up the items, but sometimes if it's a bit slow, I'll let people come and pick it up. But you get the problem that if they pick it up, they were like, Oh, what else have you got? You know, can I try it on? And all this type of thing. And yeah, I don't like that. No, no, no. This is, this is the one you ordered. Here you go. So inspired to do it, a model at the modeling agency was like, hey, I'm getting into this. You're like, well, you know, there might be something else here. There was some existing, you know, proof of concept, right?

9:31These marketplaces already existed and you had the confidence to say, well, I can add my own listings to this. Was there a point of, you know, market saturation if, you know, 10 providers all have the same thing and like on that busy summer, I guess it's so fluid, like the busy summer wedding season where different people want different styles and different sizes at the time. It's hard to imagine it being so overstocked or overcrowded. Yeah, I think that it's like, even if 20 people have the same dress, there could be easily 20 people that want to rent that dress, especially if it's very in demand.

10:07And you just got to do your research when you're choosing what dresses you want to rent because you don't want to pick Pick a size that like everyone else is renting that size. Usually you can find a size that, you know, only one or two people have and then just go buy a size, that size for yourself. Got it. So it's okay to have the same style that other people have, but maybe try and fill in the gaps on some sizes that you don't find readily available. Or you want to be first to market. Like you want to be the first one to have it, get it listed, then you'll get all the bookings and you'll get bookings months in advance.

10:41So it'll be booked out before anyone can get their item up. Are there any demand tools like, you know, number of customer reviews or do these platforms show you like, oh, this was, you know, rented out eight times in the last two months, like something like that to say, well, okay, clearly I should go buy one of those. Yeah, there is in Australia, there is a site which I don't rent on for other reasons. It does do those little pop-ups that says, oh, this dress was just rented. So you can definitely use that to see what's being rented, but it's not like reselling where on eBay you can like look at recent solds or you can use a product research tool to look up what's selling.

11:19There's nothing like that. Yeah. There's no, you've really, it's quite like laborious. You've got to go through other people's calendars and see what bookings they've got to see how in demand it is. So yeah, at first you've got to do quite a bit of research. Got it. And then you kind of learn the ins and outs. Like any business, once you're in it, you can't see it any other way. Definitely. But from the outside, okay, I like this little trick of like, oh, okay, you know, it's booked up the next three weekends. It must be in demand. Yeah. A friend of ours used to do this for a wedding. And like you said, like mid late twenties, like peak wedding attendance season.

11:53Yeah. We're sick of wearing the same thing over and over again. So she'd try something new. And like, how much does it cost to rent a dress these days? The absolute least amount would be$80, but I have like four dresses that are about two and a half grand retail each. And I rent those for$350 per rental. Like you have to pull my jaw off the floor, like$2 ,500. I've heard of wedding dresses. Yes, costing that much, but just like a regular dress. This shows you how much I know about fashion. It's really beautiful, Nick. It's really a beautiful dress. I'm sure it is. The last article of clothing that I rented was a tuxedo for senior prom.

12:28And it was, I don't even remember how much it was. It was probably 80 bucks. But yeah, okay. So obviously the higher retail price, the more you can command on the rental side. Absolutely. Definitely. And that's helpful to have a range of$80 to$350 per rental. Is there a rule, like a percentage of the retail price or something like that that you go by? Yeah, I think generally you want to get your money back within three to four rentals. But if I had have paid full price for that dress that's worth$2 ,500, thousand dollars obviously I wouldn't have made that back in four rentals but there's a way to find usually 10-20 % off at least on full retail when you're buying something so once you've done that or you buy it secondhand then usually you can get your money back sometimes I'll get my money back with one rental if I'm buying it pre-love you know I might see it pop up on eBay or Depop and I'll get my money back in one rental.

13:21Gotcha do you have like brand name alerts that that ping you when oh such and such inventory just got listed I need to go and check it out. Well, because I'm already reselling as well, and that's quite a big income stream for me. I'm sourcing every day. Constantly on the lookout. I'm there. When it comes up, I'm ready. So yeah, for sure. But I do have saved searches that I look through. And I suppose you could just start with, if you have some existing dress inventory, I'm thinking of my wife's class, she's got dresses in there she hadn't worn in years. Yeah. I don't know. know, it's like, I don't know.

13:55I have no concept of what the brands are, but maybe it's a timeless style that people would be searching for. Like, is that branded keyword type of search? Like, how important is that in your listing on the marketplaces? Like, are people looking specifically for that brand? Or could you describe it more as like a, you know, a green A-line something, something strapless? I don't know. This is a keyword, keyword, keyword. Yeah, it's heavily brand dependent. People go on, they know what they want. They know what dress they want probably 80 % of the time, maybe 90 % of the time. Okay. You know, they've seen it come up in the campaign photos or whatever.

14:31Some celebrities want it and influencers put it on their Instagram. They're like, I want to wear that dress and they go looking for it. So, yeah. What brands do you like? For us in Australia, and actually a lot of these brands kind of are the same ones as in the US or UK, but like the Australian kind of based brands like Zimmerman, Age or Arge, if you like to be fancy and set that way. Orishen is a big one for me. Alame. Alame is probably the biggest brand that I rent. It's only been around a couple of years, but it's kind of in that style of Zimmerman as well. So yeah, they're the kind of brands, I guess.

15:08All right. It's all foreign to me, but it's helpful to know. I mean, you could go on, I imagine, any of these marketplaces and see where the demand seems to be. So that makes sense. More with Summer in just a moment, including her rental marketplace listing best practices, plus some of the logistical considerations and things that can go wrong when you've got this type of physical inventory business right after this. A lot of side hustlers suffer from what if-itis. What if it doesn't work? What if I don't have the skills? What if I pick the wrong path? But one thing 100 % of our amazing guests have in common is they took their shot.

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18:13And with renting, it's really no one uses their own photos. They just use stock photos. So it's literally just screenshotting three stock photos from the company's website and putting it up. There's no modeling involved. My modeling day is a long gone. I had three kids. So yeah, I'm not going to be modeling any of the clothes. Fair enough. You could probably get like customer pictures back at some point. I don't know, but like, that's not important. If you're using Instagram as a rental platform, which a lot, a lot of people do. So a lot of people will just rent straight off people's Instagram profiles, then they will use a lot of like customer photos and things like that for sure.

18:51So this would be trying to create your own demand, like build up an influencer profile and, you know, Hey, if you like my style, you can actually rent this thing. If you're, if you happen to be the same size as me, you can rent it. No, they're just rental companies. So they just say like, you know, XYZ rentals, and then they'll go into maybe the Facebook groups online and say, I'm, I'm renting these dresses. If anyone wants to come to my Instagram and then the customers will just message them. And then they just facilitate the transaction that way. And so they're not paying the rental platforms a commission.

19:20What's a typical commission fee? I think it's like 16.5 % is what we pay on the vault. I assume it's similar on the other ones internationally. Yeah. It's not much for the level of demand that they had to create, the marketing that they're doing for you, the transaction they're facilitating. Yeah, they actually do the majority of the customer service too. So yeah, they have customer service people. Everything goes through customer service. So it does take the burden off a little bit that way. Is there a strategy in syndicating the listing? think like if there are multiple platforms like well I might as well put it on Facebook marketplace and offer up and you know I might we had eBay like I'm gonna syndicate it or is it like no no I want to be I want to focus all my energy onto this one like vault platform for example yeah I was using a second platform a lot when I first started and I did get to like 350 dresses and I had them on two platforms and things I was trying to like not have crossover but there definitely was crossover.

20:17And then so people were getting unhappy because the dress wasn't coming back in time from one platform and it was just like getting really messy. So I decided to ultimately just rent on one platform. But if I think if you had a small inventory, you know, 50 dresses or something, you could definitely probably manage that a lot more easily. It was just I had too many dresses to kind of keep track of everything. Yeah. Well, there's your next side hustle is the inventory management software for dress rental business. It's like a very niche software, like to manage the listings. Oh, it got rented out.

20:50I better take it down off of this other platform. Yeah. I did create like a Notion, you know, database type thing. I did have that going, but I think there's so much like human element involved. It's really hard. Like if someone's just like, oh, I just forgot to post the dress back. And then you're just like, there's like nothing you can really do about it. You could charge them late fees, but you know, you still don't have the dress and you need the dress. Yeah, yeah. I promised that to the next customer. Yeah. And so there's an element of logistical challenges anytime you're moving physical inventory around.

21:21But what have you found here in terms of sticking it in the mail and making sure it doesn't get damaged in transit? And you said self-insured. So like if it shows up, somebody makes a claim like, oh, it was torn or it smelled bad or it didn't fit. Like there's all sorts of things that could go wrong. Yeah, there is a lot of things that can go wrong, especially I've noticed a lot more than reselling. There's more things that go wrong with the renting. I've been pretty lucky with the post. I think I've maybe had one thing go missing ever. So that's been good. A lot of these platforms do offer insurance and you pay$5,$10 per order to have that insurance.

22:00And I did do that early on, but I found that self-insuring was the way to go because they make you jump through so many hoops to claim on that insurance. They want you to go to two separate dry cleaners and get stat decks from those two, you know, separate dry cleaners. And then they want you to go to a seamstress and say, get the stat deck from them to say that it can't be fixed. And then you just got to, it's like providing all this evidence and it just is very time consuming and it just wasn't worth it in the end for me. So I decide to just self-insure. you get a lot of people who yeah just don't want to send it back they go oh but i'll buy it from you and i'm like no it's actually not for sale i've got like 10 rentals coming up on it so you can't have it so you get a little bit of that so what happens in that case or what do you do like do you i mean eventually it's like the late fees at the library where you know i i can't afford to return this book because i can't afford to pay the late fee or is it like yeah but at a certain point you just need it back yeah well I guess a lot of girls if they really really want the dress they'll just take the late fees up to the maximum amount and then they get to keep the dress for like because a lot of these dresses that people want are like completely sold out and I think that's one of the biggest drivers is that they they would buy it but they can't so they have to rent it I did have one case it was crazy I had this girl it was and this was like in the first couple of months when I started, she rented a dress from me and she came and picked it up from my house.

23:27And I just like have a hook on my front door. So I put the dress in a garment bag and they can just come pick it up. And she came, picked it up. And then four days later, it was time to bring it back. And the dress didn't come back. And like the next day, I sent her a message, can you bring it back? And she goes to me a bit and then I text her and I'm like, can you bring the dress back and she said oh you know oh yeah I'm bringing it back and then all these excuses started and then I got my dad's terminally ill and my car broke down and like all these excuses day after day and then I was on a Facebook group one day for one of the brands and someone was saying does anyone know this girl and it turns out it was like this whole scam that she was doing to lots of renters and we all got together and tried to take it to the police and eventually this took like six months of going to the police, she did get charged because she'd done it to so many people, like more than 20 people.

24:23But yeah, she said, I'll meet you at the police station and give everyone their dresses back. And then of course she never showed up. It was like a whole thing. So yeah. Wow. There's some crazies out there. I can tell you that. Yeah. Anytime you're dealing with the public, you open yourself up to just, you know, random stuff you never probably would have considered a couple of years ago in getting started. But you're like, why can't people just be decent to each other? I don't know, it bothers me. But for the most part, send it off in the mail. They send it back. Is the customer responsible for cleaning?

24:57I'm not going to introduce that wildcard. I'm going to go clean it myself when it gets back. So the platforms like to say that you have to dry clean everything, but I learned pretty fast that that was going to eat a lot into my profit margin. So I probably dry clean about 20 % of the clothes because they can only be dry cleaned. And that's not by what's on the tag because most clothes will say that they can only be dry cleaned. But really there's probably not that many that actually have to be dry cleaned. But that has come into my sourcing more and more now is that I try to source items that can just be put in the washing machine and hung out to dry.

25:30I don't like to get things that need, you know, very specific dry cleaning anymore. No matter how much, you know, I could make, it's just not worth the effort. Yeah. Do they have to be ironed afterwards? You have a team member who comes over and like irons this stuff. It's like my least favorite activity. I iron it. It's not too bad. It's like I said, like some of the stuff that's dry cleaned obviously comes all ready to go. And then, yeah, it's more just like the linen pieces and I'll just give them a quick iron. But what I don't, I'm not like pedantic about it because ultimately you're putting it in the post and it's going to get crushed on the way anyway sure sure so you're just giving it a quick you know just so it looks nice but the customer's going to iron or steam it when it gets to them anyway so yeah fair okay now with a couple hundred of these garments coming in and going out at any given time and i imagine there's some seasonality to it but like any tools or tech or inventory management system complex spreadsheet or account like you mentioned the notion template like what's what's going on on the trying to figure out in my mind it might be weeks before i even notice that something hasn't gotten returned.

26:31It seems like you got to be on top of it because like, oh shoot, I owe this to another customer next week. Yeah, definitely. When I had 350 dresses, I did employ someone. I just had an assistant and she was ticking off dresses as they come in. We tried Notion, we tried spreadsheets. It's really, really hard when the inventory gets big. It's really hard to keep track of. But now that I have around 200 dresses, it's actually not too difficult to keep track of. I think you just, it's like, I guess if you're a teacher and you know your students, it's like, I know my dresses. I know what's missing.

27:04I'm like, Hey, that dress is missing. Where is that dress? I'm not super like rigid in like ticking things off and that I probably should be. But usually you find out you don't have it if it needs to go back out again too. And you're like, Oh, where is that dress? And I see some of them stored behind you in, in the video closet space, spare bedroom space that where they're being stored. Yeah, this is a converted double garage that I converted. This was my office for the model agency. And now it's my reselling rental room, I guess. So I have a wall to take my photos for the reselling. And then, yeah, just keep everything in here on racks.