A concept that has been going on from centuries in the offline world has now come as a storm in the online world. People through broker or middleman have been renting out property and equipment from a very long time.
Entrepreneurs with this idea started online businesses of renting houses, cars, etc. The sharing economy has grown tremendously in the 20th century as people prefer to rent out products for a short duration of time rather than buying.
The rental industry has changed people’s ideology over time in many industries like hospitality and transportation. It has given these industries a new venture to branch out.
What we will cover in this blog post:
Number of sharing economy users in the United States from 2016 to 2021 (in millions)
The rental industry is rapidly growing as a platform that provides temporary access to various assets. This industry which was valued at $19 billion in 2017 is expected to be $59.4 billion by 2022. In areas where the sharing economy is already booming, growth in rental services is exceeding both Gross Domestic Product (GDP) and infrastructure construction.
This is particularly true in the US, where rental has been expanding at annual rates of between 5-7%. The number of adults (in the U.S) using the increasingly popular renting economy is 73.7 million in 2019 and is likely to increase to 86.5 million by 2021.
Property for Rent
Earlier, people rented their property for extra income through a property dealer. Since the advent of the internet, startups have taken over the way people search for properties available for rent. Many businesses have come up with different ideas to do business on the internet and one of the many ideas was to make a property rental website. As technology grew, every sector went through certain changes.
Short term property rental websites like Airbnb grew enormously among the masses. People can now start a venture related to any of these businesses: Home, Venue, Parking Spaces, Garden, Office space, Conference Room Rental, Storage space, Celebrity Home, and more.
Cars for Rent
The spending power of each person is not equal, some people manage to buy a car, others don’t. Now as technology has evolved most of the industries, it has also changed the working of the vehicle rental segment. People can now rent a vehicle according to their specific requirements.
Since Uber became operational, people have reduced the usage of personal cars. They can hail any kind of vehicle according to the trip they want to take. Some of the vehicles that can be rented out are a car, scooter/bike, trucks, bicycles, boats, RV industrial vehicle, and more.
Equipment for Rent
A person goes into a local shop, checks if the required equipment is available and then rents it for a set period. However, the customers did not always find the equipment they needed at the time they desired. So with technology came the equipment rental businesses.
Mahindra & Mahindra, the automotive arm of Mahindra Group, saw an opening for a sharing business in the vast countryside. To reach the farmers who couldn’t afford mechanical equipment on their own, this business was a hit.
Though Mahindra could have targeted these types of customers by lowering the cost by removing some features and sacrificing the quality but instead it created a sharing platform “Trringo”, where farmers could rent equipment by Mahindra or its competitors.
Many big brands that offered their products offline have shifted their efforts in renting out their products to people who do not want to own these products. Some of the products that can be rented in this niche are tools (any kind of tools and electronics), medical equipment (also include wheelchair rental), medical supply, tech hardware, sports and outdoor (also include camping gear), home appliances, washer/dryer, heating, and air conditioning.
Interior Decor Items for Rent
People, especially millennials, have started moving to different places for many reasons. They also prefer to travel light and take the least number of furniture items. The place where people wish to settle, they prefer to rent furniture and interior decoration material. This niche has huge potential as people are moving more and more towards renting furniture than actually buying it.
Many businesses have come up in the interior decoration rental segment. They now provide items on a monthly rental basis. Packages are set up according to an item which is being rented. Long term renting has become a trend in this industry. Some items can be plants, furniture, household appliances, and more.
Clothes for Rent
A person would want to wear a Louis Vuitton tuxedo for his best friend’s wedding but would not want to spend thousands of dollars on one event. A trend amongst millennials is to wear designer clothes to a special event, but most don’t want to repeat the dress for other parties. The whole idea behind clothes rental is to utilize the worth of branded clothing by renting them to other people.
Many businesses which can generate profits in this niche have been subjected to a centralized business model. The owner of the website has an inventory of the clothes and rent them to multiple people.
Even large enterprises are using this model and making their expensive clothes available on rent. Some businesses in this industry are also utilizing the subscription-based revenue model to yield continuous income. The items that can be rented in this niche are dresses like formal wear, traditional dress, wedding dress, fancy dress, and more.
Accessory for Rent
There are items that complement the main product and are needed only for a short period. Such items are often left in storage rooms after one-time use. People have started utilizing the full value of the products as the condition of these products wears off after some time.
Businesses are not just renting out single items they have a decentralized model where all the categories of items are present. Jewelry rental website has become immensely popular but they will be profitable only in the centralized model. Items that can be rented in the accessory rental industry are Camera Lenses, Festival Items – Lights, Christmas tree, Jewelry, etc.
Other than the above-mentioned items there are more items which can be rented. These items were being rented in the offline world but they have shifted online according to the demands of the users.
There are a lot of things that can be rented and some of them are caskets, animal/pet, portable toilet, cake, baby toy, and more. Entrepreneurs have to make sure that these items do not involve emotional value because people do not prefer to rent items which they are emotionally connected to.
In 2018, the German video rental market generated revenues of roughly 190 million euros, according to the Society for Consumer Research.
Businesses in the sharing economy are dependent on the renters and rentees to make the website profitable. An entrepreneur might be sure that his/her website will bring ease in the area of operation, it is important to take note of the demand and supply of the products in the target area.
Due to the complexity in the rental industry, the entrepreneur has to research and analyze both the customer and the supplier side. Make sure you conduct extensive research to study the market. If there are enough customers in your area make sure there are enough suppliers too.
After thorough research, make sure you test the market too. Start with a minimum viable product (MVP) and launch it in the market. Check if people are volunteering using it. Doing so will help you identify problems that you can rectify later.
Note: There are some products which people do not prefer to rent out or use. Many factors influence product selection, some of the factors including emotional value, hygienic reasons, etc.
Airbnb does not need to spend a massive amount of money to entice property owners to list on their website. The owner will prefer to list themselves as they will be earning extra money. Answers to questions like “What’s in it for me?” should be elaborated on the website to enable visitors to understand the value. It is an essential element to consider before creating a content strategy for your brand.
In the sharing economy, the trustability of your business is directly proportional to the success of your business. Honest and transparent reviews are important to improve the trustability of your business. Provide quality products and customer service and you can easily win customers trust. Furthermore, customers must be able to voice their concern and give feedback.
You can select either a custom or off-the-shelf solution. Launching your online rental website through a market-ready platform like Yo!Rent can add competitive advantage while building a rental ecommerce website from scratch will take a few months.
It is a platform through which entrepreneurs can easily launch a website. Important multivendor capabilities, including renting and selling, that are needed to make the website profitable are already present in the platform. Furthermore, entrepreneurs can customize the platform according to their business needs.
In Europe, where economic growth rate is lower, rental has still been expanding at around 3% each year, and more in some countries – the highest growth in European countries occurred in France (5.7%), the Netherlands (5.2%), and Spain (5.1%).
Based on figures published by the American Rental Association (ARA) and the European Rental Association (ERA), the global rental growth rate is around 5.0%. That’s for a market that is valued globally between US$90-100 billion, with approximately 80% of that generated in Europe and North America.
Choosing the right technology partner is the most important aspect of a successful business. Yo!Rent is an online rental marketplace system which can help entrepreneurs launch a multivendor website. It is customizable according to the needs of the entrepreneur. Other benefits are – self-hosted, licensed based system, free 1-year technical support, and many more. Check the demo now or schedule a one on one demo to know more about the system.
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