A recent study in the US found that 77% people prefer renting products over buying, as it is a great way to save money. As a result, in past few years, niche-based online rental marketplaces for vehicles, dresses, home appliances, travel gears, etc., are becoming popular among customers; and giving rise to the peer to peer renting via online mediums.
The trend of ‘renting over buying’ is changing the face of the e-commerce industry, which is reflected in the fact that more than $1 billion has been invested in online rental startups, within last 5 years. While Transportation & Fashion are two sectors for which rental websites are particularly popular among investors, rental marketplaces for appliances, equipment, gears, etc. aren’t too far behind.
Here are some of the most popular product categories for rental marketplaces:
Product – Marketplace
• House – Airbnb
• Cars – Turo
• Dresses – Rent the Runway
• Movies – Red Box
• Games – Game Fly
• Books – Chegg
• Appliances – Direct Appliance Rental
• Equipment – Herc Rental
This post will help aspiring entrepreneurs in understanding all the ins& outs of online rental marketplaces, as well as guide them on how to build one.
How digital rental services help a consumer
The tech-savvy, travel-enthusiasts youth generation is more likely to rent things – house, cars, bikes, etc. – instead of buying, as it is a more practical & cost-effective way to use resources. In fact, a study found that most users of online rental marketplaces are below 35.
On one end, online rental marketplaces provide consumers with the option to use products without buying them; on the other end, these websites help people make some money from their under-used products.
How does a renting website generate revenue
A renting website is where an owner rents out a less used product, which another person would want to use temporarily. Per day charges are updated by the owner which is paid by the person renting the item. So in this process, how does the website owner earns money? These are the ways the website owner can generate revenue from a peer-to-peer renting marketplace.
- Commission fee– Website owner can charge a nominal fee for every booking from the owner of the product.
- Featured listing– The website owner charges some money to get the products highlighted in the top search results.
This is how renting products online works
- A renter searches the internet for a specific product he/she is looking for, such as “Books on rent in California”, “house on rent in NY”, etc.
- The renter surfs on different websites according to the search results. He/she collects information on the product.
- The renter compares different sites & selects the one he/she believes offers best quality & value for money.
- The renter orders the product for a fixed period of time.
- After using the product for the specified time, the product is returned to the owner.
Features consumers look for before renting a product
Starting a peer-to-peer renting marketplace has emerged as a popular concept these days. Many aspiring entrepreneurs are inspired by the success of Airbnb, Chegg, Rent the Runway and other rental marketplaces, and want to try their hands in the booming sharing economy.
The key to success for new businesses in this sector is to understand what customers look for when they rent things online, which are:
• Quality of product
• Trustworthiness of the website
• Personalized offers
The biggest challenge of renting products- Earning the trust of the product owners & renters
The main concern that people have before renting a used product is its quality. When customers pick a particular website to rent a product, they rely completely on it to get products in good condition. Additionally, when owners list their products on the website they trust that it will get their product back in the same condition as they offered it.Thus, for any rental marketplace, ensuring the quality of rented items is the foremost challenge.
Apart from that, there are many other things that can go wrong while running a rental business. Products can get damaged in the transit; Need of expensive shipping while transporting large and heavy products; What kind of cleaning or processing does a product need after it is returned by the renter and ready for next?; and so on. Website owners need to understand various difficulties they can face during the entire process.
To Curb Challenges with Rental Websites Here’s What You Need to Know
The mindset of the consumers for renting products from online platforms has changed due to various reasons. For online rental businesses, earning trust and confidence of both, owners and the renters, is important. New players should work on following areas to ensure a good experience for customers(in regard to the quality of products0:
• Authenticating a profile before renting products
• Providing insurance policy for expensive items
• Quality check before renting a product
Key Website Features for Rental Marketplaces
Request an item
Renting website should not only let renters to choose from available products but also allow them to request an item which is not listed on the website. Offering such features will allow a rental website to become a one-stop platform for every need of a renter.
Easy Item Listing
There are lots of rental websites from where people can rent items& list their rentals. To stand out the competition, what you can do is simplify the product listing process. Keep the “item listing” form as minimal as possible, without missing out on important details. This will make users list their rentals on your website first, or on your website alone.
It is also a wise choice to turn your renting marketplace into an online product selling store as well. It is definitely one of the easiest & most mindful ways to add new revenue stream to your online rental business. To implement it, all you need is to integrate the module for product selling with your website and turn it into a complete e-commerce platform.
There is huge growth potential in the idea of renting used items. Starting-up a renting marketplace is a unique idea, and there are lots of markets which have very less direct competition in this sector. This allows new players to easily enter the market with their rental platform & grow their business rather seamlessly. However, to ensure long-term success, priority should be given to customer satisfaction, which you can achieve only by using the insights & implementing the tips provided in this post.