Did you know that you can actually make a profit just by renting out dresses? And did you know that you can do that on your own with your own wardrobe? Designerex is the platform to do it. It’s a technology platform that enables women to earn rental income from their designer outfits, as well as transform fashion into a more sustainable and ethical industry. Join your host Victoria Wieck and her guest Costa Koulis, the co-founder and co-creator of Designerex. Learn how the platform was built and how easy it is to rent a dress. Make the fashion industry a more secure and environmentally friendly industry today.
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An Interview With Costa Koulis – The Co-Creator Of Designerex – A Platform For Fashionistas
How To Make Money With Your Favorite Clothes In Your Closet
Welcome to another episode of the show. What we do here is bring you amazing guests with incredible stories. Many of them are transformation stories and unusual businesses. It’s called the Million Dollar Hobbies for a reason. It’s not like a lot of businesses that we bring are non-traditional businesses and this episode is no exception. I have an amazing guest and a good friend, Costa Koulis.
This man has done something that I would never ever be able to do. Somehow he makes it simple but more than anything, he’s transformed a lot of lives that you may not even know about. He’s about to change from my personal life as well. He is the finalist for the Online Retail Industry Award for 2020 and 2021 and the winner of the StartCon Australasian Startup Award and it goes on and on. I’m not going to bore you with that but without further ado, I would like to welcome Costa. Costa, welcome to the show.
Thank you so much for having me.
Thank you so much for taking the time to come to the show. I know you’re in Australia where it’s bright and early. It is exciting and interesting what you’ve done. A lot of people know companies like Rent the Runway, Airbnb and a lot of businesses even cars. They’re all being rented. You’ve got the same kind of a concept where you’re taking the middleman out of the picture here so you can go directly to your target market where people can make free money.
Our readers are not used to me hyping or using the word free very often. In fact, I think it’s probably the only time I’ve ever used the word free in my whole career because I don’t believe anything is free but this one is truly free. Costa, tell our readers what Designerex does. How is that different from Rent the Runway, which is your main competition?
Designerex is the world’s largest P2P design-a-dress sharing platform. We’ve got over 25,000 dresses and the big difference between us and Rent the Runway is we have built a technology platform that provides tools to many thousands of women all across the country to become their own mini Rent the Runways and untap the value out of their own fashion that they have in the wardrobes. That’s a big difference between us and Rent the Runway. You can become your own Rent the Runway.
Jennifer Hyman did a fantastic job with Rent the Runway. She had discovered something and that is fashion can earn you rental income. It’s vastly different from selling it. If you buy a dress after you’ve worn and got your value out of it, these days you typically don’t want to be seen in it again especially if it’s an event-type dress. You’ve got three options. It’s either going to stay in your wardrobe and do nothing. What a waste. You’re either going to sell it. If you sell it, you can maybe get up to 40% or 50% of the value of the dress if you’re lucky. Some dresses can rent out up to 30 times. You can rent it out. It’s all about economics and taking advantage of that gap of that sweet spot as we call it. You can make $1,200 or $2,000 from that $600 dress. That’s the big difference and benefit of renting dresses. We’ve built the tools that women are taking advantage of.
What’s interesting as you’re saying this is my husband is in real estate development. If you ever played the game Monopoly, all the people who win are the people who own those resorts or buildings so they keep getting that passive rental income. A lot of times in entrepreneurship journey, I interview people quite a lot with my show and when I ask them, “How did you get started?”
Fashion can actually earn you rental income.
Sometimes, it’s not like you plan something but you stumbled forward and you end up with something. If you start renting out and you get some passive income, you’re like, “This is pretty cool. Maybe I can get my neighbors, daughters or whoever and put them up there.” You then have a small side hustle business that is costing you no money. You’re not paying rent or anything. Everything is free on this thing. You end up with a little entrepreneurial spirit and you’re like, “I got extra money and the entrepreneurial spirit.” That’s cool.
The other thing is I come from the fashion industry and I can tell you why I would be doing something like this. This is one of the main reasons why I personally do not use the Rent the Runway because of the way the retail market is and it’s true in Australia, New Zealand and everywhere else. All the buyers and the designers do the same thing. If somebody says, “Burgundy’s the new black,” all the designers are making burgundy. They say the six key pieces, one’s a pants suit and the other one’s a scarf. All the designers are doing burgundy of those same six key pieces.
What happens is when you go to Rent the Runway, you’re going to get the same thing, essentially. If you want to stand out uniquely, you’re going to have to go to these places that are either custom made or go to a boutique that doesn’t go to a lot of these shows. For all of you who are reading, what Costa is saying is that in Designerex, you can go to your closet, pick out the things that don’t fit you anymore.
Pick out the things you were thinking, “I can never wear this,” or, “I thought I was going to go to such an event last 2020 and the event got canceled and out of 30 days money-back guarantee period. What do I do with this?” Typically speaking, if it’s an event dress or even if it’s a corporate event like going to work, you’re getting 2 to 3 wears out of it. You’re not getting a lot. Being able to recoup your costs and rent it out a few times is a huge benefit. When you’re done with that, you can still give it away for charity.
You can still get rent for charity if you like and you can still sell it if you really want to.
Let me ask you. Out of curiosity, did you wake up one day and dreamt of this? Is this something you planned for a long time? How did you come about doing this?
There are two cofounders. I’m one of the Cofounders and our other Cofounder is Kirsten is a female. She had an event to go to. It was a work event. It was an awards night and she couldn’t justify spending $1,000 for a dress knowing that she’s only going to wear it once. The whole rental proposition works. Leading on from then, she ended up finding a dress from a small business and ended up renting it. One thing that we’ve discovered at that point with that transaction is there’s no secure sharing platform where you can access not just that sensitive things with Rent the Runway.
If you go on Rent the Runway, all you can see is Rent the Runway. You’re not like Expedia. You’re not comparing what else is out there. Rent the Runway is limited by what they can offer consumers because generally, they’ll have a wholesale agreement because they’re in it to make money, which is fine for them. That’s great. The issue is they look for wholesale prices so the range of dresses is often only with designers that they’ve got agreements that they can buy wholesale and then it becomes profitable.
The big difference with Designerex is anything that’s available in the shops that women want to buy or wear becomes available on Designerex. We’re not limited with brands. That is a massive difference and it opens up a whole new door for consumers. It started along those lines where it was an event coming up. People had tried it but there was no secure and easy way of doing it. It’s a very long journey. One of the first things we looked at is security, “How do we make the sharing experience secure?”
Everything was built from scratch. We integrated real-time ID verification. If you get a booking from someone that wants to rent from LA to New York for example and it gets all over the country in the USA, you can request that you verify their ID prior to using the app. We sat down at that time, we thought, “What does this market need? What are the tools that will make it easy for women to be able to earn income from the dresses and on the other side, enable women to access thousands and unlimited range of dresses to service both sides of the marketplace?” We built everything from scratch and that’s how it started.
That’s quite interesting to see. When Costa talks about security, for clarification, you want to make sure that whoever is ending up with your dress or your outfit is going to pay you, keep it in a good condition and bring it back to you with care. It’s almost like a lot of other design platforms like Fiverr or Upwork. It’s almost like an Airbnb where somebody is making sure that the payment that they’re paying you is going to clear.
You’ve taken out a lot of the friction points of doing this individually. The other thing is if you’ve got 25,000 dresses, you’re offering a variety that is unparalleled. One thing I miss before and I used to hate it and now I miss it is I used to travel millions of miles a year all around the world. My products are sold in 35 different countries. Often, I would find something in London, Paris or Dubai and people would ask me, “Where’d you get all that?” When you go to Rent the Runway, not to trash them but they don’t have the collection.
Here, if I were to go ahead and rent them all out, you have shops in Tokyo, Spain and all these places that I’ve been to because I’m a very active shopper. I end up with a lot of stuff that’s beautiful that we’ll never have access to here. The variety is a huge thing. Secondly, the cost is a little bit lower. Do you ask them to be a member? Is there a membership fee? How do you work in terms of the charges?
You don’t need to be a member. We’re trying to make it as seamless as possible. We want you to be able to jump on Designerex.com, go on with your life and book whatever you want. You don’t need to be a member. After you book a dress, you sign up. You create a login to that extent but it’s free to access and browse. You simply log in to undertake a booking. We keep it as frictionless as possible.
It’s interesting because a lot of people will watch the awards shows every award season, the Oscars, Golden Globes and all this. People don’t realize how many of those dresses are rented. 80% to 90% of the outfits that a lot of the stars wear, some of them are designers who want to be discovered or whatever and they are truly custom made. I know on the jewelry side as well as a clothing side, quite a few and a significant percentage of that are rented.
This whole idea of renting or something for one event where you’re going to be seen and photographed and then you don’t ever see it again is very real. I love that. I don’t have a lot of tech junkies but what does it take to build a platform? You didn’t have a template or anything going on. You’re up pretty early so I’m not sure what happened.
80-90% of the dresses you see in televised events like the Oscars are rented.
Building a platform, where do you start? The thing is I’m not a programmer myself. I ended up being the product manager as one of my hats as being Co-CEO of Designerex. When we first started, we built and launched in 2016, we weren’t too sure what to build it on. We were looking at possibilities of Shopify for example. For a lot of your readers, that’s one way to quickly get into an online business is to use Shopify, Wix or one of those. In our case, we were building a unique and secure dress-sharing platform that doesn’t exist.
We set about looking for a team to build it. Through a contact in Australia, we ended up finding a team in Kathmandu in Nepal. We looked at Airbnb. We’ve had a big vision from the very start, what are they doing? We had to look and the site that your users can go on is a site called BuiltWith.com. We typed in Airbnb because we thought, “What are they built on?” We had this grand global vision that we’re going to need that technology. We saw that they are built on Ruby. We set about finding a team that was proficient in Ruby. That’s how we ended up through a contact finding a team in Nepal.
We were fortunate. We ended up with a good team and the product that we wanted because it’s not just about building your initial version. Ever since then, every day, we’ve been constantly improving and that’s been one of the reasons behind our success. We look at what behaviors and what the customers want. It’s all about the customer for us. What do they want? Dress rental return reminders, syncing the shipping so the dress lender and the dress renter are in sync. They both know where the dress is. All of these different real-time ID verification that I mentioned earlier and payments. All that is custom-built. Originally, it was built by our own Nepal team.
One of the most often asked questions about Rent the Runway and I checked it in their FAQ is how are these dresses cleaned and is that safe for me? Do you want to answer that question for the Designerex customers?
In Rent the Runway’s case because their business model is such that they buy dresses and they all come back to a centralized warehouse. They ended up in and I think t gets promoted as the largest laundry. In our case, we thought that the most efficient way for the market and to deliver the highest range of dress at the lowest possible price is to use the resources that currently are in the marketplace, which is your local dry cleaner. To cut a long story short, when you list your dress, which is risk-free and absolutely free, you also add your price for dry cleaning. That will be your local dry cleaner. That gets paid for through the booking and when you get your dress back from your booking, you simply take it to your local dry cleaner.
If you were to re-rent it, does the person who’s listing it show that that’s been dry cleaned? How does that work?
Generally, the dry cleaners will leave a tag on this. We say if possible, leave it on there but yes, it’s always dry cleaned and we ask that you always dry clean it. We expect that it’s always dry cleaned when you send it out.
In terms of other ways that you differentiate yourself from the Rent the Runway in the minds of the consumer as well as who’s renting it, what are some of the key differences other than the variety and the price?
Apart from the variety and the price, you can often find dresses that are right near you so you don’t have to look around for a Rent the Runway store geographically. Rent the Runway is not everywhere but consumers and people that buy dresses are. That’s the other big benefit.
If somebody wants to rent it 2 or 3 times. Maybe I rented it, I loved it and want to buy it. Is there a sale portion of this too or are you leaving it only to the renter?
One of the big reasons behind our massive growth is because we purely focus on renting. If you want to buy something, feel free. All the tools that we’ve built are to make the rental experience as seamless as possible. In answer to your question, we’re not the platform for buying but in terms of renting, we lead the way.
I love what you’re doing here because when you do the Rent the Runway, they buy the stuff at wholesale and their range is very limited. The other thing too is I came from the retail where manufacturing makes something and the buyer at a department store, TV station or whoever buys what she thinks that her customers might like. A lot of times, there’s a disconnect.
In my particular case, I’m not going to name any particular buyer but I fought this my whole life because I know what the end-user wants. I do a show on TV and immediately I get a flurry of responses, “I love this item. I love that item. I like this one too but I didn’t buy it because.” When they tell you all that because it gives you a pretty good reading as to why. Sometimes, they’ll say, “That piece is way too big for me. It’s too ostentatious.” I get the information that the season, they want something more dainty. They don’t want something big.
I tell that to my buyer, my buyer is like, “No.” The big stuff is still selling because you’re sounding in all other brands and they don’t listen to me. What happens is a lot of times and because the vendors have to make money, they’ll usually give in. The buyer ends up with all this stuff that a lot of people don’t want from your brand. They may want that from other brands or they don’t want it from it. In Rent the Runway’s case, their buyers came up with stuff that they think will rent well.
A lot of times, you get much more of a direct interaction with because you don’t have huge risks. You got 25,000 dresses to choose from and that’s great. The other thing too is I give away so much clothes. I have these giant trash bags and I go through 4 or 5 every season. I give them away to Military Wives, the Dress For Success people or the battered women. I give them away like crazy but there are some that I’m like, “I paid $3,000 for this and it’s way too good to give it away to The Salvation Army or to anybody,” so it just sits there.
Many of us have dresses that sit there. Either they never fit, they fit or you wore once. I have shoes and all this stuff that I haven’t worn yet and I have a difficult time letting go of some things. If you can rent it, you’re giving somebody else an opportunity to experience that moment. Secondly, if I put on ten dresses, I could probably pick up a few hundred dollars and that’s not bad.
Fashion is the world’s second-largest polluter. Fashion should not be worn once and wasted.
It’s a sitting asset that’s untapped. What our technology does at Designerex is it enables you to untap in a rental income. You touched on a very interesting point and that is having wasteful fashion. We want to remind your readers that fashion is the world’s second-largest polluter. What platforms like Designerex are now enabling is the repurposing of fashion. If you rent one dress for about $100 or $150, you’re alternative to that if you’re buying retail is something fast fashion.
The benefit of renting for $100 or $150 is you can wear designer. You can wear something nice instead of wearing a Zara outfit. One dress can be rented up to 30 times. One designer dress can save 30 fast-fashion dresses from going into a landfill. The consumer on one side is earning rental income. On the other side, she has gone to her event wearing an actual dress from a designer that should look and feel amazing. The repurposing industry is booming and Millennials are leading the way.
I have been to many factories. I started out as a fashion designer first. The fashion, a lot of the beautiful prints and things that we love some of them go through very toxic chemical dyes. They may say that, “Our cotton is grown organically,” but the minute they start to dye it unless if it’s going to bleed all over if it’s permanent print on them, it has gone through several layers. In some of those factories, if you don’t wear gloves, your fingers come out green or whatever color it is and it doesn’t go away for weeks so you know it’s not organic. The word organic is quite liberally used when it comes to fashion.
When Costa talked about fast fashion, I want to clarify that because a lot of people who are not in the industry don’t understand what that word means. In the old days where people used to go to their own tailor or dressmaker, would order something and they would order the fabric and custom make something for you. That would be old.
Many of your high-end designers like Gucci, Prada or whoever will come up with something that’s well thought out at 1 or 2 years then fast fashion people come in, they knock those things off and they’re in and out sheep. They’ll use something for $5 or $6 and sell it to you at the store level for $12 to $24 but they do massive numbers of them, millions of pieces like shiploads. You would wear them and a lot of customers since they didn’t pay a whole lot of money, they’ll throw it out after a season and they do that all over again. You can see the multiplication factor of the environmental damage that it does to our planet.
That also has a side benefit of that as well so you can feel good about doing your part social justice-wise and making money. You can make some good money. I haven’t asked you this question before but I wish that you could have a vintage section, almost like the Etsy section where it has to be above many years old because there’s beauty. Clothes from that era are beautifully made. They’re all lined with silk, linen and everything. They probably wore them once or twice in their whole lives. I wish that somebody would do it. I bet it’ll hit it well. I’m not talking fast fashion way back. I’m talking about beautiful gowns and things like that.
There’s always a possibility down the track but we don’t have that section at the moment. What we find is very popular and is selling at the shop is the current season but sometimes down because I agree in a quality fashion. People do prefer it without a doubt but it all comes down to cost. That’s what technology is now doing is providing access so you can have that designer dress at a fraction of the cost. The game’s changed now. Even when you’re buying a dress, it’s no longer a question of how much is this dress going to cost me.
This is why we feel that Designerex is working side-by-side with retailers because we’re incentivizing people to buy dresses knowing that they can earn income and in many cases become profitable. It’s no longer a question of how much is this dress going to cost me. It’s more like, “Let me check out Instagram. What can I possibly make out of this dress? Let me hop on Designerex. What are these dresses renting out for?” It’s changed the ball game at the retail and it’s incentivized women to buy more designer dresses and more upmarket dresses as opposed to having to rely on that on fast fashion, which is also detrimental to the planet.
Out of curiosity from the business end of this, how are you educating your clients both the renters and the rentee about that very benefit? Because a lot of times, people will calculate in their mind the cost per wear, “I’m going to wear it three times. I love this but it’s $1,000 to buy. Do I really need it?” If you think about it, you go, “I can rent it 4 to 5 times and I can recoup my costs. I rather have this than none.” Do you do anything to educate them on that incentive?
We do. We have what’s called a Rental Estimate Calculator on the platform. You can see what it can possibly rent out for. I’ll give you an example. A Zimmermann Lovestruck Pleated Gown was bought for a $1,200 rental price. You can rent it out for about $210. This is a real-life example. In this particular case, this Zimmermann dress was rented out ten different times. I’m getting back $2,400 with the owner receiving $2,000 in payouts from a dress that cost $1,200 at the shops.
Prior to Designerex, you would’ve bought that and that’s it. If you’re lucky, you can go to the resale market and get half your cost back but in this case, a $1,200 dress generated $2,000. It’s about being smart with how you monetize your clothes. Why go straight to the resale market when you know it’s current season? It’s not just you wanting that dress. There’s a demand for that dress and they’ve got an event coming up on Saturday and our platform connects that renter to rent your dress. You’ve got a window where you can get more of a monetary return.
That’s interesting too because when you’re trying to buy something and you’re looking at the cost per wear. In that particular case, she’s made money. It’s almost like she got the $2,000 plus it’s a $1,200 dress that she would have bought anyway. Basically, it’s the $3,200 swing. She still has a dress and hasn’t given it to somebody. When you sell something to resale stores, I don’t do that because, at my tax bracket, it’s more money to take a tax deduction. If you’re in California, depending on what county you live in, you’re out about a 62% tax bracket.
You’ve got the federal plus the state income taxes at 13.5%. Some of the city’s charged city tax, the county and all that stuff. I’m better off taking a tax deduction because you don’t get a whole lot. I agree with you. I found your platform, business, the business model very fascinating because this is something I can relate to. I go to a lot of events. I have a home in Los Angeles where there is a black-tie event. Before COVID, there was a black-tie event about 360 days a year. You don’t want to be seen with the same thing. It was also exhausting looking for dresses so that’s another thing. It’s the convenience of having something from your own home.
I know that we did touch on this a little bit. You are constantly improving, elevating and innovating to try to eliminate all the friction points for both the people who are renting it out as well as people receiving this stuff. I commend you for doing this and making our lives a little bit easier. He did bring a way to make free money from all the things that you already own and spent money on. My last question is what keeps you up at night now with this business?
Especially being a technology platform, technology is super important to us so anything from the way the servers are operating. Business is one big puzzle. It’s not just the technology. You got to get, in most cases, everything right for it to be successful and grow. Everything from, “How’s the bank balance going? How are our bookings going and how are your payment systems going?” Our biggest focus is technology. Having a connection with our tech team and any issues addressed. Also, being at the forefront of what’s new in eCommerce. You got to be at the forefront. Those are the things that we’re constantly innovating.
When Airbnb first came on the market, I can’t tell you how many people laughed at it. They thought it was going to be like, “Who is going to do what? It’s never going to go high-end.” The only time I use Airbnb is what I want to rent like a 10,000 square foot house somewhere that I can’t get in a hotel room. You’re getting to the higher-end people and they found a way to make this very safe.
One dress can be rented out up to 30 times, so one designer dress can save 30 fast-fashion dresses from going into landfills.
Now, people are renting out their cars the same way instead of going to Hertz and Avis and all that. I think the big tide is going all your direction. I hope that millions of women discover Designerex because you are adding value to other people’s lives. The individual people who are listing in it are helping save the planet, save time, money and get a better selection. All the way around, it’s a great platform you have. Thank you so much for coming. If people want to find more about this, they can go to Designerex.com.
I would like all of you to follow the 50,000 dresses. Some of them might be repeated but there are over 20,000 women who can’t be all that wrong that are enjoying free money every day from your own closet and you never lose it. According to his business model, you can then sell it to a resale store or give it away to charity, which is a neat thing. As I always say, until next time, please stay safe, healthy and happy. Remember, happiness is a choice and I hope you make great choices. I’ll see you on the other side.
About Costa Koulis
Costa Koulis is the Co-Founder of Designerex (https://designerex.com), the world’s largest peer-to-peer designer dress sharing platform with over 50,000 dresses listed since its inception. Designerex is a technology platform that has changed the way fashion is consumed, enabling women to earn rental income from their designer outfits, as well as transforming fashion into a more sustainable and ethical industry, having already re-purposed over $30 million in fashion retail value to-date. Designerex is a win for both consumers & retailers.