Online rental marketplaces are soaring in demand courtesy of the changing consumer habits favoring rental over the purchase of goods/services. It all started with Airbnb; a peer to peer website that offered people a way to find affordable rental spaces and explore foreign cultures like a local. After that, there’s been a flurry of websites offering rental options for everything from home and office furniture, textbooks, construction equipment, travel gear, to dresses and musical instruments.
It’s not difficult to understand why renting has garnered widespread popularity when one considers the benefits it has to offer. Right off the bat, there’s the cost factor; it makes more sense to rent expensive or infrequently used items. On the other hand, individuals who own such items are eager to list them on online platforms to make passive income. In a way, both of these scenarios feed each other’s growth.
At a macro level, renting reduces the stress on resources as a single item circulates to fulfill many people’s needs over its lifetime. Furthermore, an online rental platform can be started just about no inventory since the sellers/providers create your supply. All of this makes one thing clear – if you’re planning to become an online rental marketplace owner, this is the right moment.
If you have a business idea to start an online rental marketplace platform, then you’d have thought about how it will operate. From the user’s profile creation, item listings, browsing options, order placement and so on. Moreover, you must also have some ideas about the website’s looks and it’s overall user experience. It’s vital to not try to match your website against the likes of Airbnb because their present website doesn’t tell their entire story.
In the beginning, Airbnb was nothing more than an average WordPress website managed solely by its founder Brian Chesky and Joe Gebbia. What it did allow them was to test the market demand for their idea and that should be the aim of every startup online marketplace owner. That’s why it’s better to launch a minimum viable platform and integrate new features/functionalities as you learn more about your user’s needs. But even that journey is rife with challenges.
At FATbit technologies, we have built a number of marketplace platforms for a diverse range of industries. In our experience, we’ve found the following are the major roadblocks in setting up an online rental marketplace.
What serves as the major advantage of peer to peer online marketplaces – a large number of sellers with diverse offerings, also acts as one of its biggest challenges – streamlining the search and ensuring the buyers easily find what they are looking for. There are two prevalent approaches to address this concern:
In a centralized approach, the attempt is to reduce the number of options available to both buyers and sellers with the ultimate aim of achieving efficiency. This approach is most common in on-demand products and services which are more and less homogenous and don’t require an array of search options. Cab booking services are the best example of this approach. Users are more concerned with reaching their destination as early as possible and less with the make of the car or the driver driving it.
So the approach to the centralized model is accomplished in two ways: Geolocation and Zip Code. Uber deploys this approach effectively. Passengers are shown taxis with set prices based on their location. Users may opt for a certain type of vehicle if that’s available in their location but otherwise, the nearest taxi is offered for booking. Likewise, drivers get very limited options; they receive requests based on their location and can choose to respond to them as they see fit.
As the name suggests, the decentralized model is the opposite of the centralized model where users are offered a host of options to modify their search. This approach is ideal for products/services that are heterogeneous with endless varieties. Accommodation or property rental is one such niche where this approach proves highly effective. While some people may opt for proximity, others may look for something as fancy as a boathouse or treehouse.
Another service could be freelancing where requirements play a key role in finding the best match. While some tasks may call for a general skillset others may require proficiency in a foreign language or sound technical expertise in a particular technology. So, searching and matching in a decentralized approach can be facilitated using:
Rent The Runway deploys this approach to the best effect. Plenty of filters to help the user find what they’re looking for on the marketplace.
There is always going to be an ebb and flow between the demand and supply in a marketplace. Moreover, the external economic forces can easily disrupt the whole demand and supply chain. That’s why there’s a special need to have a pricing mechanism that takes different factors into consideration. The two most prevalent ways to provide contingent pricing are as follows:
eBay is a good proponent of the auction method. As an online marketplace for buying/selling used goods, it allows users to place make online bids. The method it uses is called automated bidding. So, if you’ve got the highest bid on an item, the system will automatically upbid for you until the current bid is small increment above your competitor’s highest bid.
For surge pricing or dynamic pricing, the best example is Uber. The system automatically increases the price of the ride if it experiences an increase in demand.
While other factors carry their weight, trust is something that can single-handedly make or break the success of a marketplace. Before Airbnb, not many people would have fancied the idea of inviting complete strangers to stay in their house or businesses/individuals felt secure in hiring freelancers from the other side of the ocean to build their website. But it’s all common practice nowadays, thanks to the introduction of security measures adopted by leading marketplaces around the world. Following are the 3 ways to generate trust:
Upfront inspection isn’t viable for many types of marketplaces given the constraints related to the sheer number of products. But marketplace owners continue to come up with innovative means to verify the products and services listed on their platform. For instance, Airbnb allows hosts to get photos of their accommodation approved by certified photographers. This adds that element of trust and the professional shots increase the property’s appeal to the viewers.
External enforcement relates to the measures and practices marketplace owners put in place to restrict access to scammers and regulate the behavior of existing members.
Some of these measures are as follows:
Upwork is a good example of a marketplace that deploys all those measures for the security and trust of its users.
Despite how far eCommerce has come, people have their qualms when making a purchase online. This problem of insecurity is solved by inviting users to submit their feedback, review, and ratings based on their experience. This creates the effect of social proof where other users feel reassured in making online purchases.
Some of the common features to build reputation could be as follows:
A combination of all these features could make a huge difference in establishing the trust and reputation of an online marketplace.
Through the course of this blog, it’s become clear a collective approach laying equal emphasis on every possible aspect of an online marketplace gives owners the best chance to gain traction and make their business a success. To reiterate the points highlighted in the blog, it’s vital that a marketplace offers optimum value to its users by – simplifying the search process, deploying fair pricing mechanisms in place and ensuring security through smart and innovative means. Finally, you want to invest in a trusted eCommerce development solution to build your online rental marketplace.
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