If we look back a couple of years back, ownership was all that one cared about. People wanted to own everything from house to cars to clothes, furniture etc. But now if we look around, shared economy is the BUZZ. Rather than ownership, people are looking for overall value of the product/service and hence, ready to rent out everything that leads to a greater value. Value can be anything – monetary benefits, convenience, options… anything at all!
Renting is not a new phenomenon; it has been in existence for years but only now that it has become a fad!! And for all the right reasons. Let me take an example:
If one wants to rent out a designer lehenga for a wedding function, it would not cost lesser than 15,000 even for a decently priced lehenga and going by the brands, the cost would be anywhere upwards of 20,000. The number of usage of the lehenga would be anywhere between 2 to 4 that too over a period of 1-2 years. Plus, additional challenges of getting it dry-cleaned, repaired (in case required), space to keep it in the already crowded wardrobes. Now consider that the same lehenga is available for 25% of the cost. One need not spend anything extra than what she is spending over a purchase. On top of that, with the fast changing fashion, one neither needs to be concerned of going the dress out-of-fashion nor of repeating the same dress multiple times. Its like FOREVER NEW, just for you!
Ultimately, its not about buying versus renting but its about value for consumers. Lets take the same example: if the person uses the same lehenga for 6 times, its better to buy than rent out if looked purely on monetary terms. Then a person may decide between monetary benefits versus that cost of repetition and probability of getting out of fashion.
The calculations take a different turn when it comes to investment items like house, jewellery etc where the assets can have a good appreciation. Though renting them out might look more attractive in the short term but might be more beneficial buying them when considered over a long term (depending on the market conditions). But most of the other items like car, clothes, accessories, furniture etc are all depreciating assets.
There are multiple models in this space:
Own and rent – In this the company essentially owns the asset and gives it for usage to consumers on a rental basis. Firms like Furlenco, Justbooks,Kyasa etc fall in this category. This model works best when quality is of the paramount importance.
Vendor owned – In this model, vendors essentially own the item and offers on rent to consumers. The company essentially shares a portion of the revenue with the vendor just like RentSetGo.
Marketplace – Here, the company essentially has service providers on one side and service utilizers on the other. It connects the two and might also provide some value add services, more on likes of Ola. This model is typically used for quick scaling up especially when there already exists service providers in the ecosystem.
While all these models are there, there is a huge unmet and unexplored need that can be solved through a combination of all these models.
So, what does renting mean to you? Which products would you rent?