Accessibility, convenience and affordability are fueling the burgeoning online rental business. Sahyujyah Shrinivas delineates how it has emerged as a win-win situation for both companies that work on this model as well as buyers and has the potential to be the next big business model in the near future.
Gone are the days when moving to a new destination for a few years meant shifting lock, stock and barrel or spending a bomb to find the right furniture and other home appliances to settle down comfortably. Now, one can relocate with ease with the help of myriad online rental platforms satisfying the demands of consumers at affordable prices.
The rental business is growing exponentially to include everything from furniture to clothes, vehicles, toys and your favourite accessories, too. However, the concept of renting is not new to us; it has always existed in one form or the other since ages. Renting books, video cassettes, two-and four-wheelers and of course, accommodation, are all quite commonplace. It’s just that today, the scope of renting has expanded tremendously to encompass items such as designer wear collections, jewellery, home appliances and even pets.
From a consumer’s perspective, all these services on rent are as much about saving money as they are about convenience. It makes much more sense to rent a service or an item, if it is for a short-term purpose. Consequently, one business model that is growing by leaps and bounds is the rental clothing segment. Hiring designer dresses or party attires has come as a rescue for all those who love to pick up a new dress on every occasion without making a dent in the wallet.
With most startups offering as-good-as-new clothes, dry-cleaned and altered to fit perfectly against a fixed daily rental and a refundable security deposit along with doorstep drop-and-pick up services, hiring clothes is no longer deemed as an inconvenience.
It’s no surprise that the thought of renting is becoming acceptable and popular with each passing day. More and more people are getting attracted towards rental shopping as they can now experiment with new styles and indulge themselves with high-end designer wear, all without shelling out extra money.
Accessibility, convenience and affordability are the key factors driving this business model. The renting business has emerged as a win-win situation for both, companies that work on this model as well as buyers.
Rental businesses can earn more returns on investment when they rent out a particular item. They have gross margins of up to 50 per cent which increase with scale and improved efficiencies by virtue of data and technology. Investors too have started to back startups in the rental business, as they have a huge market potential to scale up.
The turnover in this business is directly proportional to the usability of the product, which does come with a limit. But if sellers can optimise their processes, then they can earn much larger returns than traditional selling.
While online rental is picking up pace at an impressive rate, it still needs to expand to smaller pockets and towns in India, where the concept is still nascent. The scope of renting also has to be fully explored and the areas where it may not be the most feasible option need to be carefully considered. For instance, renting an item that is needed on a regular basis may not be advisable. School uniforms or sports uniforms should preferably be bought.
In many similar cases, subscription will be a better option than renting for consumers, as they can select the products and dates beforehand. This will help avoid hassles during times when demand for rented apparel may be more than supply. If the event is too close, then renting can pose a problem in case the delivery is not done on time. Therefore, it is a good idea to only rely on segment-leaders which offer assurance of impeccable and timely logistics and rented clothing that comes in as immaculate a state as possible.
Since the whole point of renting is trying out new outfits every day, customers who are style conscious as well as financially savvy, are fast seeing the merits of renting. They are able to flaunt 30 dresses at the cost of five and have the freedom to express themselves beautifully each time.
Renting eliminates that feeling of boredom and the statement every style-conscious person dreads: “I have nothing to wear.” Also, renting requires no maintenance, no fighting with the tailor, and no spending money on laundry and most importantly, no more worrying about storage space, which means less impact on the environment and no wastage. It truly is a business model of the future with only benefits and lots of fun for all those involved!
About the author: Sahyujyah Srinivas, is the Founder & CEO of LibeRent, a start-up. She wears multiple hats and handles a vast spectrum of responsibilities including strategy, team building and partnerships. She is a Bachelor of Engineering in Metallurgy from PSG College of Technology, Coimbatore. She has worked as an operations manager in Tata Steel, Jamshedpur and Odisha before embracing the entrepreneurial life.