Experimental tastes are fuelling the shared economy market, with everything from white goods to furniture to fashion on offer
With the value placed on ownership pride changing for newer generations and affordability being redefined, renting instead of buying is emerging as a viable option for customers. The reasons for renting products vary, but the growth potential for companies in this area is huge. A shared economy allows consumers to be temporary users of products or services that may otherwise be out of budget, not conform to their conventional buying nature or the consumer prefers to not commit to that particular product/service for a long period of time. The Current and Future State of Sharing Economy by Brookings India estimates that the sharing economy will reach $335 billion by 2025. Across categories, start-ups are looking to find a model that works the best.
Ajith Mohan Karimpana, founder and CEO of furniture rental company Furlenco, believes that it is a myth that an asset-light model is a good one and being asset-heavy is bad. Flyrobe, an online fashion rental, operates on a hybrid model. It primarily deals in pay-per-use of its own inventory and has recently rolled off the Lease My Outfit service allowing consumers to list items from their own wardrobe on the website for rent. As much as 40-50% of rental proceeds are then shared with sellers.
Bengaluru-based GrabonRent offers six categories and conforms to an asset-light model. It focuses on furniture and home appliances, with the former accounting for 35% of revenue and the latter bringing in 30-32%.
While its key target audience falls within the 21-30 year-old bracket, around 27% of consumption comes from the 31-40 year age bracket. It has brought spotlight on that consumer segment which, despite having purchase capabilities, opts for renting as a lifestyle choice. Another Bengaluru-based outfit, RentonGo, has over 10 categories listed for rent, but its focus since 2015 has been on bikes. Within bike rentals, the usage is split between travel and commute, with the former taking a major chunk, accounting for 70% of revenue within bikes. As per global Morgan Stanley research done earlier this year, while 29% of millennial consumers prefer to make a purchase based on best reviews while staying within their budget, 22% of them are willing to spend a little more depending on good reviews. This willingness to experiment with their purchase patterns and slightly looser purse strings is an encouragement to fashion, jewellery and accessory rentals as they tend to operate higher price points than categories such as white goods or furniture.