David Pitlyuk

There are a ton of people that are celebrity obsessed. That’s why sites like TMZ and PerezHilton are so popular. Celebrities are usually the forefront of the latest fashion trends, and companies can sometimes launch a product with huge success just by having celebrity backing. It’s the reason why gift bags at big events are worth tens of thousands of dollars…companies want to get their products in the hands of celebrities.

So where am I going with this? I’m sure you’ve seen the major trend lately with higher end purses. From Coach to Louis Vitton, women everywhere are eating these bags up…and it doesn’t come at a cheap price. These bags range from hundreds of dollars to thousands, and you see them everywhere (many times they are knockoffs).

With such a huge market of women wanting these high-end bags, what can you do to monetize on that? A couple of internet companies have thought of a great way, and it looks like they are raking in the big bucks for doing so. They are renting out these bags to women using various payment models. The concept is why buy a $2,000 bag just to have it sit in the closet a month later because you wanted to get the next best thing. You can simply rent the bag for a fraction of the cost, and when you’re done, return it for a new one. This way you don’t have a ton of bags taking up closet space and being a waste of money.

Two companies that were profiled in a USA Today article are doing this, Bag Borrow or Steal, and From Bags To Riches.

Bag Borrow or Steal

BBOS was launched in 2004, carrys over 3,000 bag styles, has 450,000 members, and rents out tens of thousands of bags per month. Their payment model is based on a membership fee which ranges from $5-$10/month. Members pay less for a bag, which ranges from $6/week-$275/month + $10 for insurance and $10 for shippping. I’m assuming the 450,000 members aren’t 100% active, but lets say half of them are, and those half are paying the bottom line $5/month membership fee. This means BBOS is pulling in $1,125,000/month or $13.5M/year in membership alone at a very conservative lowball estimate. If they are also renting “tens of thousands” of bags per month, lets estimate the minimum at 20,000 at a very conservative $40/month. That’s $800,000/month or $9.6M/year. Add $10 for insurance to get another $200k/month or $2.4M/year to the bottom line. Add the same number for shipping as well.

All of this put together equals out to a conservative estimate of gross sales being $2,325,000/month or $27.9M/year. I would say that’s not too shabby at all. I’m sure that they also reduce their expenses a ton by reselling the bags after they are completely outdated, or too worn out to keep renting.

One thing to keep in mind is that BBOS also rents out other high-end products such as jewelry, so this may skew the numbers somewhat (which is why I tried to do a conservative estimate).

From Bags To Riches

FBTR was launched in 2005, and is quite a bit smaller than BBOS. They use a different model where you just pay a monthly fee to rent a bag, from $35-$300/month. Standard shipping and insurance up to $100 is free. Of course, they recommend paying the $40 for full insurance coverage. They carry 350-500 different bag styles, and rent out “thousands” a month. Lets work the numbers. We’ll say 2,000 renters a month paying 25% of the $35-$300/month fee ($101), which equals out to $202,000/month or $2,424,000/year. We’ll say that 15% of the 2,000 convert for the insurance for $12,000/month or $144,000/year. Obviously much smaller then BBOS, but still a lot of money, and growing I’m sure.

I think these are great examples of ways to monetize on a trend.