Peer-to-peer fashion rental marketplace Pickle picks up $8 million
Reading Time: 4 minutesNew York-based peer-to-peer fashion rental marketplace Pickle, which lets users earn passive income from their closets, is readying an expansion with the close of an $8 million seed round. The company, which was run by just its two co-founders, CEO Brian McMahon and COO Julia O’Mara, up until June, is now planning to expand into new categories, new U.S. markets and even into brick-and-mortar retail in New York.
Founded in 2021, Pickle’s original concept was to serve as a social polling platform that allowed people to make better purchase decisions. However, the team discovered that users were often recommending the purchase of items they already owned. That triggered a lightbulb moment for the founders, who then decided to pivot the service into a platform that let people rent items they already owned.
That data-driven thinking still influences how Pickle has evolved, allowing the service to achieve 55% month-over-month revenue growth and a 90% customer retention rate after 12 months of joining. Some of its users have even turned their side hustle in rentals into income of up to five figures, the company says.
‘There’s a lot of research on marketplaces and the competitive landscape and we just really fell in love with the market business model,’ explains McMahon, who previously worked alongside O’Mara at The Blackstone Group, where they had also focused on data-driven decisions from an asset management perspective.
With its 2022 pivot to rentals, Pickle’s current value proposition is similar to other fashion marketplaces in that it offers an easy way for users to list items from their closets — except instead of listing items for sale, as on Poshmark or The RealReal, they’re being listed as rentals. This puts the service into closer competition with rental outfits like Rent the Runway, Nuuly, Armoire and others, but without the subscription requirement.
Pickle’s sweet spot is below luxury fashion as most of its items have an average retail price of around $400. That’s just high enough that people may hesitate to make the purchase, particularly if it’s for a one-time wear like a party or wedding — but expensive enough that they’re gaining access to quality items.
‘Those types of brands that are kind of middle- to upper-tier towards designer do really well,’ notes O’Mara. ‘And the pieces that are most popular on the platform are incredibly new and trendy right now.’ She adds that the rental prices are around 10% to 20% of the retail value. ‘So a much more attainable price for that one-time wear,’ she says.
At present, there are more than 2,000 unique brands and designers on its platform, and over 50,000 items for rent.
Plus, a lot of the items on Pickle are those that became popular due to social media trends and then sold out online. Rentals give users another option to find these coveted items and wear them. Its ties to social media also give Pickle a way to collaborate with online creators who often have larger collections, perhaps through their sponsorship deals or gifting. Pickle works with creators on a non-paid basis to help them optimize their Pickle closet and gain a following on the platform, in addition to other user acquisition strategies, like paid influencer marketing and word-of-mouth.
To use Pickle’s service, owners upload a photograph and description of their item, set the price and availability, and then choose their preferred shipping method, like courier service, self-delivery or standard shipping for any non-local rentals. As a renter, you can submit an offer up to 90 days in advance or even same-day, and specify how long you want to rent the item.
Users can also subscribe to closets to follow favorite renters and discover new items through editorial collections. In the future, Pickle wants to implement AI to help people get matched with items they love, but the company isn’t leveraging that technology today.
Because of its home base, Pickle is most popular in New York, followed by other larger markets like LA, Chicago and Miami. Its network now spans thousands of renters, where last-minute rentals — same day or next day — make up around 65%-70% of its business. The service attracts a younger, 22- to 35-year-old user base, including Fashion Institute of Technology students, micro and nano influencers, and others interested in a more sustainable way to access fashion items.
Now, Pickle is looking toward expansion following the close of its $8 million seed round co-led by FirstMark Capital and Craft Ventures, with participation from Burst Capital. The team aims to use the additional funds to accelerate growth, expand headcount, enter additional U.S. markets and even expand into new categories of rentals. In terms of the latter, Pickle wants to make it possible for users to rent high-quality, but underutilized goods in their homes, not just their apparel.
This could include things like cameras, suitcases, sporting goods and equipment, kitchen gadgets and other household items. These are things users were already renting out through Pickle, and the team plans to follow its users’ direction.
‘One of the things that’s really helped us get to where we are today is that we let our users make decisions, and then we just listen and refine,’ says McMahon. ‘What we’re trying to do is essentially create these micro-warehouses on every corner of every community where we redistribute goods within a community very easily and efficiently,’ he adds.
The startup is also exploring opening its first NYC retail space and is doubling down on other U.S. markets where it’s been gaining traction, like LA. And it’s preparing to relaunch a redesigned app with an improved user experience.
‘Pickle’s early traction was particularly impressive for a company that had previously raised less than $400,000 of outside capital,’ notes StubHub founder and Crafter partner Jeff Fluhr, about the new investment. ‘We saw growing volumes, loyal customers and lots of social media buzz,’ he continues. ‘We were even more impressed to learn that the product, engineering, marketing, customer acquisition, supply acquisition, and customer support were entirely built and managed by only two people: co-founders Brian and Julia. This dynamic duo clearly understands their target users, knows how to build fast and appreciates the importance of being scrappy,’ he says.
FirstMark co-founder Rick Heitzmann will join Pickle‘s board of directors, alongside the founders, with the additional funding. Fluhr, meanwhile, along with FirstMark principal Derek Chu, will serve as board observers.
Ref: techcrunch
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