FJONG | Knowledge Hub | Circle Economy Foundation
imageimage
image

Approved by curator

Business case
FJONG
0
0

FJONG is a fast-growing start-up that has put the idea of a sharing economy and an access-over-ownership business model into a practical solution that makes it easy and cheap for customers to rent clothes via their subscription system. Since being founded in 2017 the company has grown to 30+ employees and recently set the double Norwegian record in crowdfunding (highest amount raised and highest female investor share). The company is now expanding to Europe, by first taking upon Denmark. 

Problem

The fashion industry is one of the most polluting industries in the world, dominated by a “fast-fashion” mentality. This means that people are accommodated to a certain level of “luxury” in terms of keeping up with new trends and changing out their wardrobe frequently. According to the EMF, Between 2000 and 2015, clothing production doubled, while over the same period utilisation – the number of times an item of clothing is worn before it is thrown away – decreased by 36% (2021). With a growing world population this problem is only going to stagnate. On top of this, due to ever lower prices and lost revenues profit margins of the world’s leading apparel retailers decreased by an average of 40% from 2016 to 2019 (ibid) and in the light of the Covid-19 pandemic have shown to be extremely sensitive to changes in the global supply chains. The current fashion industry is in other words bad for the environment, struggles with severe human rights issues for factory workers and is showing to be less and less profitable. There is a need for solutions in fashion and retail that are realistic about the global clothing spending habits but yet push an attitude change in how we buy and use clothing for those who wish to keep up with the latest trends. 

Solution

FJONG is reinventing the way people consume by introducing clothing rental and subscription from a shared wardrobe. By renting clothes from 300+ brands, FJONG allows their customers to reinvent their wardrobe monthly. The customer choses new items from the ever-growing digital closet and FJONG ships their order with a return label for the customer to post back to the dry cleaning where all the items are stored. Currently one can rent an item for a one-time occasion (e.g. a dress for a wedding) or sign up to one of the following subscriptions: 2 items per month for 590 NOK / 3 items per month for 890 NOK / 5 items per month for 1350 NOK. It is expected that the subscriptions will be cheaper in Denmark due to lower costs of expenditure for the company. This solution is the perfect example of the access-over-ownership business model,  which includes repair (the company has an internal repair station) and rental. The FJONG solution allows for more use per user and more users per product – which is a circular solution if the clothes are designed to be durable and last for a long time. 

Outcome

Rental platforms can provide multiple revenue streams by enabling businesses to offer new services that as in the case of FJONG allows for revenue to be decoupled from production and resource use – as the clothes rented out are excess items/stock from other (local) brands.  Revenue benefits here can for example include increased loyalty, access to customer and product use data and increased customer base – amplified by the easy connection between an increase in followers in social media platforms (e.g. Instagram) = probability of more customers signing up from home. At the same time, costs can be reduced due to savings from better resource productivity and risk reduction (e.g. improved inventory management that is not so dependent on global supply chains). According to the EMF seven similar resale and rental platforms – Depop, Rent the Runway, The Real Real, Vinted, Poshmark, Vestiaire Collective, and ThredUP – have reached billion-dollar valuations. These business models have the potential to grow from 3.5% of the global fashion market today to 23% by 2030, becoming a USD 700 billion opportunity, while providing significant environmental savings from increased use and reduced production (EMF, 2021). 

Additional information

It is lastly important to underline that clothing items are not always designed to withstand the level of use circular business models require. It is therefore important that items are designed for durability and repairability, and that more research is done on which items are more environmentally friendly to own vs. rent. For example, an occasion dress offered via a rental model that looks faded or out of shape after it is cleaned twice will not provide a viable option, economically or environmentally. It also is more circular to both reuse and prolong an items lifetime: it makes more sense to rent a dress for a special occasion, rather than for example a coat that you’d buy once and then wear over and over again for years to come. Of course, wearing what already exists in your closet is ultimately the most sustainable choice, but rental is a good way to address the fast-fashion mentality that dominates the apparel industry today.

Relevant links