Online rental start-ups like FunStation and Eves24 are giving a renewed push to a market that was, till about a few years ago, confined only to products such as cars and electronic items.
MUMBAI-BASED Kashyap Shah, a self-confessed Lego enthusiast, was once wandering in a toy store in the city to buy a set of the cult interlocking plastic construction kits when he realised that despite their global appeal and acceptability, Lego sets have become more and more expensive over time—today, a Lego set can sell for anywhere between R7,000 and R40,000 in India. After considerable research, the 31-year-old entrepreneur found out that there wasn’t one online toy library in the country that exclusively stocks Lego kits.
That was in 2014. A year later, Shah launched FunStation, a unique Lego-renting website that allows one to rent small and large Lego sets for a monthly membership fee and a fixed refundable deposit. “FunStation was born out of an idea to do something different related to children’s education and toys, and Lego is the best learning tool for kids,” says Shah, an engineer by education.
Currently, FunStation has close to 500 registered users. “It’s a new concept and people need time to understand it. But it’s slowly and gradually picking up. Till date, we have shipped over 400 Lego sets,” Shah adds.
Similar is the story of Eves24, a start-up offering unique jewellery solutions that enable women, among others, to rent out authentic gold and diamond jewellery against a security deposit. Sometime back, when Rahul Banka, its founder, was getting ready for a cousin’s wedding reception, he heard his aunt lamenting the fact that she would have to wear her emerald and pearl set once again, having worn it three weeks earlier for another wedding. “The desire of women to look their best is nothing but natural, especially at social events, festive occasions, weddings and parties,” says the Mumbai-based Banka, a chartered accountant by qualification. Thus was born the idea of providing a one-stop jewellery solution to Indian women—one that doesn’t cost much. Banka founded the website in July last year after quitting his job with Centrum Capital in 2013, where he was vice-president, investment banking. He also bootstrapped the venture.
Not just cars, electronics
Online rental start-ups like FunStation and Eves24 are giving a renewed push to a market that was, till about a few years ago, confined only to products such as cars and electronic items. Digitisation and the e-commerce boom have fuelled rental e-commerce and turned it into a mature market. The affordable availability of short-term utility, as well as luxury items, has helped in creating more acceptance for rented goods among Netizens.
In March this year, auto major Mahindra & Mahindra launched an online platform called Trringo, aiming to do for the tractor market what Ola and Uber have done in the car rental segment. The company has set up this venture as a start-up for farmers to rent tractors and equipment and in which it will invest upwards of R10 crore. “The drive to do this came from the fact that 80% of farmers in India are small and marginal, and for many, owning a tractor is a dream. So the question was how to reach out to these small farmers. That’s when we started uncovering the realities of informal renting practices in India,” says Arvind Kumar, CEO, Trringo.
Trringo works on a physical-digital model. Through the physical model, it has set up franchisee-owned rental centres, where tractors and a range of equipment are available. There is also the facility of training drivers on the correct usage of tractors and equipment. “As for the digital model, we have a call centre and an app-based order generation mechanism, making it convenient for the farmer to order from anywhere. A back-end system tracks orders, collects data, gives reporting and analytics on usage, and optimises utilisation of machinery,” explains Kumar.
Trringo’s current reach extends to Karnataka, Maharashtra and Gujarat, where it has around 13 operational centres. “In Karnataka, we also have an MoU with the state government that allows franchisees 75% subsidy on purchase of equipment worth R50 lakh. We are in talks with the governments of Rajasthan and Madhya Pradesh too. We have served around 3,000 farmers so far and plan to reach 20,000 farmers by the end of the year with 165 hubs,” adds Kumar.
Why own when you can rent?
The idea is more about accessibility as opposed to ownership. “The majority of Gen-Y is not sure about where they are going to be in the next one year or so. When the future is not certain, it makes sense to rent rather than buy, as there is no commitment involved and you can return the products when you no longer need them,” says Harshwardhan Raikwar, co-founder and CEO of Guarented, an online marketplace for renting consumer durables based in Bengaluru.
“Today’s generation of consumers do not want to invest in assets, but like to invest in experiences. They are frequently shifting jobs and moving cities. So it becomes increasingly difficult for them to own and transfer assets. We are essentially trying to solve this problem by giving them a reliable and affordable option of renting the best-quality home appliances,” says Raikwar, who, along with former IIT-Kharagpur batchmates Abhimanyu Dikshit and Prateek Agarwal, launched Guarented in November last year after they found themselves in a soup when one of their flatmates had to leave the house, which they had furnished themselves. “This gave us the idea to build an ‘AirBnB’ for the stuff that makes a house a home,” he adds.
Ajith Mohan Karimpana, founder-CEO of Furlenco, an online furniture rental start-up based in Bengaluru, had a similar predicament. “I was working as the VP for Goldman Sachs in the US and while moving back to Bengaluru, I had to sell my furniture worth $5,000 for little over $300 on sale. That’s when I first experienced the perils of relocation—having to sell furniture,” says the former employee of Goldman Sachs and Morgan Stanley.
“And to my dismay, I had to once again go through the harrowing experience of buying furniture from local vendors in Bengaluru. This is when it became clear to me that there is an opportunity to introduce a ‘rental furniture’ concept in India,” adds Karimpana. As a result, Rent Ur Duniya was born (later rebranded to Furlenco) in 2012.
As part of its services, Furlenco rents out premium furniture with matching furnishings and decor on a monthly subscription fee. The service also includes free doorstep delivery and installation, making it extremely convenient and hassle-free to furnish your home. It promises delivery within 72 hours of an order being placed with the flexibility to swap/return furniture annually based on need. The start-up has shipped $20 million worth of furniture till date to over 15,000 homes. Furlenco recently closed a large fund raise consisting of $15 million of equity led by Lightbox Ventures and Axis Capital, and $15 million of debt from banks, NBFCs, individuals and family offices for a total haul of $30 million.
As in e-commerce, fashion is a much sought after category in rentals as well. Sahyujyah Shrinivas, founder and CEO of online fashion rental platform LibeRent, says her start-up has been growing at 20% month-on-month since it launched in August 2014. “Our business model is simple: we source outfits, both western and ethnic, with accessories from designers and boutiques, among others, and rent them at just 10% of the retail price,” says Shrinivas, who is a metallurgical engineer by qualification.
Elaborating on her business model, Shrinivas says there is no deposit. The start-up delivers in Mumbai, Hyderabad, Chennai and Bengaluru. “In Bengaluru, we have same-day deliveries. We also custom-fit every outfit that goes to the customer to fit their measurements,” she says, adding, “Our USP is that we don’t have sizes like ‘small’, ‘medium’ or ‘large’. We have bust, waist and hip measurements. You just filter the options, using your bust measurement, and while booking, tell us your other two measurements. When we deliver, it will fit you perfectly. We also have an option of back-up dress, where you book two outfits, pay for the higher-priced one, try both at home, and wear the one you like.”
Another fashion rental platform, Stage3, is letting young millennials experience the glamour and style of superstars and celebrities. “Our customers can play dress-up with curated, authentic outfits from top designers that have been paired with accessories by our in-house styling team. Our mission is to make higher-end outfits accessible to our members and leverage technology to help them choose what would look best on them for different occasions,” says co-founder and CEO Sabena Puri, who started the platform with fashion designer Rina Dhaka and Sanchit Baweja in January this year.
As per Puri, Stage3 has grown 8x over the past 10 months and has raised a seed round from a core group of investors that include Nisha Kumar, the ex-CFO of Rent the Runway and AOL; Puneet Dalmia of the Dalmia Bharat Group (in his personal capacity); and Balaji Prabhakar, professor of computer science at Stanford University and chief scientist at Urban Engines.