UPDATE: October 9, 2019: Rent the Runway announced that fulfillment operations are back to normal and that it is once again accepting new subscribers and orders, according to a company statement. The retailer said that system upgrades, which were initially expected to be finished by Oct. 15, were completed ahead of schedule. The initial disruption was caused by "unforeseen issues associated with a significant transformation that we are executing in our fulfillment operation," according to the company.

Dive Brief:

• Designer fashion retailer Rent the Runway continues to face angry customers as special event and/or monthly subscription orders are failing to arrive on time or have been canceled due to fulfillment problems.
• According to Rent the Runway's corporate blog The Shift, its fulfillment operations began experiencing delays Sept. 13 while in the process of upgrading its warehouse system. In an email to customers dated Sept. 20, Rent the Runway's CEO Jennifer Hyman said the retailer's "operational transformations" would ultimately improve the overall customer experience, inventory availability and access to its unlimited subscription service offering, once the current mistakes were worked out.
• In the midst of mounting delayed and canceled orders, the company's Chief Supply Officer, Marv Cunningham, announced he will step down at the end of the month after one year in the role, The Business of Fashion reported. Neither he nor the company have said whether his decision was motivated by the current operational issues.

Dive Insight:

Rent the Runway informed customers that, out of "an abundance of caution," orders scheduled to arrive between Sept. 30 and Oct. 6 will be canceled, "because we are not confident we will be able to fulfill it." The company will issue full refunds and $200 to customers whose orders were canceled due to the issue.

Rent the Runway's value proposition to deliver high-quality designer wear for time-sensitive special events requires a fast and efficient supply chain. 

Recognizing this, the company teamed up with FedEx in February to run an "extra hours" delivery for same or next-day shipping to customers. Delayed or canceled orders, as the retailer is experiencing now, can permanently damage customers' trust. Managing the rapid expansion of its customer base and supply chain operations, particularly after Cunningham's departure, will be a necessary growing pain for the retailer.

On-time and fast delivery options are important differentiators in the retail space, for e-commerce and brick-and-mortar players alike. In the race to improve e-commerce fulfillment and logistics, however, companies can fall prey to technological difficulties. As Hyman admitted in her email to customers, it's difficult to maintain full-speed operations during a back-end overhaul.

For this reason, managing technology or process changes well is key, Kevin Beasley, CIO of Vormittag Associates (VAI), told Supply Chain Dive via email. "Especially considering the amount of returns that brands like Rent the Runway have to process, having an ERP solution that can ensure visibility into the product’s entire journey to the consumer can be crucial for [direct-to-consumer] brands," he wrote. "Technology is meant to streamline and aid companies in their operations, not create a costly headache."

This isn't the first time Rent the Runway has faced supply chain issues.

According to The Wall Street Journal, in July the company experienced technological, customer service and clothing availability issues for which it also had to issue an apology to customers. In the apology, the company said it planned to double its customer service staff and improve delivery.

The retailer also announced it will not accept new orders or sign on new customers to its unlimited subscription service until after Oct. 15. According to a Vox report, while the company started out specializing in one-off special event rentals, its subscription-based offering of high-end, everyday clothing now represents more than 70% of its business. As a result, the potential for canceled subscriptions, and an inability to register new ones, could be a revenue hit for the company as it looks to get operations back on track.