This year, Vinod Gupta moved to Pune for a PG diploma course in management. This was a temporary stay in the city, at the end of which he planned to go back home to Surat and assist his father in the family business.
Vinod rented a house, which meant he needed some basic household items. Since he didn’t want to spend unnecessarily on buying items he would need only for a few months, he thought of taking them on rent. He is a consumer of rentOne, a Pune-based renting platform.
The rental economy has caught the consumers’ fancy, and with good reason — buying is expensive, and also brings with it the disadvantage of having to lug things around. Why buy when you can rent properties cars, bikes, gadgets, clothes, and furniture with just one click?
Gaurav Babel has lived in more than seven cities in the last 10 years for education and jobs. Whenever he used to move to a different city, he would either take a furnished house or buy household items that he would sell when moving out. Both situations were problematic; renting furnished houses was expensive, whereas the buying and selling involved too much hassle.
Gaurav’s friend Lovesh Soni had faced similar issues.
So, the two friends decided to build a platform that could cater to the customer need for short-term, one-time or infrequently used products.
In October 2015, the duo launched rentOne, a classified rental platform which graduated into a booking platform in mid-February 2016. rentOne is an online marketplace which provides furniture, appliances, bikes, clothing, and many other products on a rental basis.
“With people opening up to the shared economy, more and more individuals are moving to rental options. Renting and sharing products is a very beneficial proposition for a lot of categories if quality and service assurance is provided. There was a time when people considered renting as lack of status and budget, but with the new carefree generation, renting is as preferable and comfortable as buying,” says Gaurav, Co-founder, rentOne.
Talking about his product, he adds that the platform works with local vendors who can meet rentOne’s requirements in terms of both quantity and quality. Although currently operational only in Pune, the platform will soon be launched in Mumbai. The rental duration ranges from one day to five years.
According to the co-founders, the challenge was to create a model which had operational efficiency along with the ability to provide quality of product and service. Their aim was to fulfil customer needs while providing flexibility of tenure and a wide variety of products which could suit different lifestyles. Finding vendors as quality-conscious as themselves as well as building the right team were a few more obstacles they faced.
The platform is bootstrapped till date. The initial investment was spent on getting the product ready, setting up operations, and product marketing, mostly through digital channels.
It works on a commission basis for most of the categories. For each paid order, it receives a certain percentage of commission. For categories like furniture and appliances, its strategic long-term alliances with selected vendors help fetch higher revenue.
The team of eight claims to have clocked revenues of over Rs 10 lakh so far.
“We are now on a growth path and in talks with investors to fast track the growth. Within seven months of operations, we have clocked over 500 orders and acquired over 200 customers and are working with over 50 vendors. Our clientele is a mix of individuals, startups, and corporates,” says Gaurav.
According to PricewaterhouseCoopers, the sharing economy will globally generate potential revenue of $335 billion by 2025. Industry experts estimate that the furniture renting space is worth $500 million. Bikes and cycles is another big category.
The sharing economy is on the rise across various sectors. Right from cabs (carpooling and renting) to apparels and furniture, everything is available on rent.
There are platforms in both vertical and horizontal space. Furlenco in furniture, IndiaReads in books, RentoMojo in furniture and bikes, RentSetGo in the travel segment, and many other platforms are offering services and contributing to the rise of the rental economy in the country.
In December last year, according to media reports, Furlenco was in talks with investors to raise Series B funding of $20–30 million to expand its operations. In March 2015, Furlenco announced having raised $6 million from Lightbox Ventures. It had previously raised a small angel round of $100,000.
During November last year, RentoMojo announced having raised $2 million in pre-Series A from Accel Partners and IDG Ventures India.
The number of new entrants to the rental economy is always growing. When asked about the sustenance of so many players in one market, new entrants seem assured of the economy’s ability to support all such operations.