YCloset, a leading Chinese garment sharing platform, has completed an undisclosed strategic fundraising round from e-commerce giant Alibaba Group Holding Ltd, to better cater to female users' beauty and fashion requirements.
Proceeds from the new funding will be used to tap into more consumption trends, expand its algorithm system and continue to build more warehouse and cleaning operation centers across the country.
The move also marks Alibaba's latest attempt to promote the diversified development of its business.
YCloset's CEO Liu Mengyuan said the company will further cooperate with Alibaba's flea market platform Xianyu, e-commerce platforms Taobao and Tmall, Alipay payments and other relevant platforms.
"The market is huge," said Liu. "Wearing fashionable clothes will always top the agenda of almost every woman. Compared with buying items in a store, clothes rental services will allow women to update their looks more frequently and wear more dresses that they could not afford to buy."
Liu, who worked in the fashion industry for more than 10 years, aims to meet demand from China's aspiring white-collar workers for everyday wear.
Founded in 2015, Beijing-based YCloset, charges subscription fees, allowing users to rent clothes and accessories. The platform targets females users, especially those aged between 22 to 30 living in first and second-tier cities in China, including Beijing, Shanghai and Hangzhou in Zhejiang province, meeting demand for office, party, dating and travel clothing.
According to the platform, it has more than 15 million registered users and provides a wide range of subscription plans. For instance, it charges a monthly membership fee of 499 yuan ($73), and users are able to rent an unlimited number of items during that period. It does not charge additional fees for delivery and cleaning, and users also can purchase garments they like via the platform.
Investors have shown enthusiasm for the latest addition to the sharing economy, pouring tens of millions of dollars into it. Last year, YCloset received $50 million in a series C fundraising round led by Alibaba Innovation Ventures, Softbank China and Sequoia China.
Li Hao, an analyst at iResearch Consulting Group, said with the upgrading consumption trend, garment sharing will meet consumers' specific needs.
"However, there are also challenges ahead. Users will have concerns about hygiene. Other challenges include costs and how to keep sufficient inventory to offer better user experiences," Li added.