Owing to the multiple benefits of living in the 21st century comes the coming of age renting models that are seeping into our lives like water just as once came the concept of net banking and ATM’s.
Commercialisation of these models such as the concept of e-wallets had started from a very conservative narrative but now has become the number one choice of consumers in the present day and age. This has opened up avenues to flourish businesses globally and at the same time providing the opportunity to have a feel of the world while sitting in the comfort of their homes to people from all walks of life. Taking a numerical future forecast, global revenues of renting businesses have been forecasted to increase from US$ 15 billion today to around US$ 335 billion by 2025 according to Price Waterhouse Cooper.
We as a global economy are moving towards shared models, which calls for the switch to renting and borrowing instead of sticking to the archaic models of ownership and re-selling at tarnished rates. Our history beholds the repercussions of switching models, the biggest being the opening up of our Indian markets to the world marking the iconic day that called for Globalization.
History stands proof that globalization, opening up of the economy significantly improved the standards of living for the public overall. Today Foreign Direct Investments have become a huge catch in being the building bricks to our economy and one of the contributing reasons why renting is the step forward and finds an easier route in a developing nation. India today is one of the only countries with the youngest people in the world. This significant demographic shift has led to a domino effect, like the changed viewpoints of all industries within the nation starting right from our entertainment industry to the boom of start-ups in our economy marking as a significant contribution by Gen-Y. We believe that the growth in the sharing economy is only just beginning.
As per research, by 2025, it is estimated that many areas of the sharing economy will rival the size of their traditional counterparts. The sharing economy models have rapidly changed and continue to demarcate new territories. Now the ‘sharing model’ no longer stands as just a catch phrase for articles but rather the default choice for younger consumers in society. In the US, the trends of renting are already high up in the charts with the consumers re-thinking the value of ownership and wanting lesser responsibility of re-selling, purchase, and quality-control expenses.
As per recent records, 81 percent agree it is less expensive to share goods than to own them individually, 43 percent agree owning today feels like a burden, 57 percent agree access is the new ownership. European markets are also showing a significant change and are expected to see a 20-fold increase to £570 billion by 2025.
This will particularly benefit service providers, who are predicted to pocket around 85 percent, or £487 billion, from the value of sharing economy transitions facilitated by 2025. In the present age, companies directly cater to the needs of millennial for quick access, hassle-free and trustworthy purchases. Shared economy is arguably considered to be an access economy opening up avenues for consumers to access the goods of owners at a price that derives the maximum marginal utility to the consumer. It is currently the most economic form of sustaining a win-win situation for the both the owners and the consumers.
Rise of the Social Media
The dynamics of the world are so rapidly changing and the heart of this change being no other than the Internet itself, which led to the rise of the social media world, mobiles, networking online and data analytics.
Transactions are moving towards real time through the use of mobile and the cloud, and social media is playing a huge role in driving increased trust in commerce so much so that Amazon is one the fastest growing companies in the world. As per the current trends of the market, only a few sectors have large established players while others are still in nascent stages when it comes to sharing. The established one’s being Uber in transport, AirBNB in hospitality, Netflix in videos.
Renting is now prominent in so many sectors like furniture, appliances, apparels, co-working spaces, jewelry, vehicles, books, handbags, equipment related to sports, leisure and entertainment. The millennial generation wants everything at the click of a button without actually having to make a long-term commitment with it. A significant shift in consumer behavior has led people to make investments in the shared economy sector implying further growth and innovations in the field.
In respect to fashion, experts predict renting clothes will soon be a big sharing economy owing to the changing patterns and massive social media usage. The market size is estimated to be $1.85 billion by 2023. Young consumers are a prime contributor to this industry, the youngster who is looking for immediate access at affordable pricing which fills their need to not having to worry about repetitive clothing, or the income size.
The Indian Rentscape
In India, rentals in fashion have been in the country for a while now but largely been an unorganized market that was restricted to renting only wedding lehengas and wedding jewelry.
However, over the past few years the tables have changed drastically with renting portals moving into niche labels and brands, having a mix variety of categories including dresses (from bodycon to sequin to casuals), work formals, ethnics (lehengas, sarees and more), jewelry, handbags, clutches, sherwanis, indo-westerns, sunglasses and more. You may rent out the latest fashion trends.
#RentingIsTrending and is considered to be the number one choice for the Gen-Y!
I have myself been in the business for close to three years and have seen conservative ideas shattering into growth mindsets and people being more adaptable to change. There has been an open switch to renting from the old fashioned buying specially because of social media’s impact that has increased the aspirations of the youth. Now, nobody prefers repeating outfits, it has almost become an impossible idea. The fact that continues to haunt many is that looking good comes at a price but renting solves all these problems. People are religiously following bloggers, influencers, celebrities who play a major role in establishing fashion trends and everyone wants to crack celebrity style or look in this case renting pans out really well.
Moreover, the kind of clothing also has changed from what it was a decade ago, to say the least our mothers wore rich silk sarees that were compact to store and lasted for years, but today the outfits are hefty and take a lot space that becomes a problem. How many can one store? Similar is a trend for accessories, the era of gold & diamond is totally out. The younger generations have stopped investing in gold or diamond and instead are looking for fashionable variety and changes for every occasion.
The new pacing trend is to look good every day, the trend fashion subscriptions are picking up really fast as well. All of this analysis and numbers are based on online data analysis and consumer behavior.
Technology For The Win
The players with technology as core are going to scale the game faster than the others. One open space for exploring the renting portals is the wedding market of India, which is massive and so is the expenditure on the ceremonies and clothes. The evolving mindset is encouraging youngsters to make wiser investments, now they feel that they can use all the money for a vacation and instead of buying expensive outfits that they will only wear once they would rather rent them out along with the jewelry. Parents feel that utilizing the money in buying gold or any permanent asset is way better than incurring the gigantic spend on wedding outfits which will just be worn once.
In an access economy/ shared economy the renting model relies on three things that form the pillars of the business – TECHNOLOGY, INVENTORY, and LOGISTICS. It is imperative for the company to master these three elements in order to gain traction and evolve the business into profitability. The mastery can be broken down into the following:
TECHNICAL EXPERTISE: A business should be up-to-date and scalable to reach consumers through all mediums be it android, iOS app, mobile site and having a website are the most basic must haves. Apart from these there is scope for innovation and figuring out ways to use technology to enhance user experience. If a company can make the process smoother for the audience then it becomes easier to pick crowd on the platforms. The easier the navigation along with having quality items the faster acceptance amongst the audience members.
INVENTORY: The best way to build a scalable business is to have an inventory less model instead of an inventory led one. An inventory less model reduces investment and significant risks of failures, which comes with the added responsibilities of it. In these cases, sticking the understanding with the vendor partners becomes extremely crucial and that comes if they can understand the model well to be able to become a part of the system while being able to reap the maximum in any form, be it actual renting or brand awareness.
LOGISTICS: The supply chain has to be very smooth for this business. The company needs to work on acing deliveries and reverse logistics in order to be a working model. This becomes a bigger challenge in a country like India wherein reverse logistics is not as stream lined as is in the western countries.
At the end of it all, besides gaining business knowledge and the requisite backing it is absolutely crucial to know your customers and their needs. In a place where renting is still a new model, an online portal becomes a playground for its consumers who want to have enough options to explore from.
We keep adding new categories and products after studying our current consumer base and keeping in mind the future possibilities of growth. We are trying to encapsulate all age groups right from the millennial to their parents and families. As far as the spending capacity is concerned it becomes easier for us to be more inclusive through our models allowing everyone to fulfill their wishes of wearing a certain brand or looking their best for the picture perfect moments without having to repeat anything or dig a hole in their pockets.