Has renting stuff gotten easier than buying? Yes, it is! Online renting has been gaining popularity in the current market. People prefer renting over buying in this recession hit economic situation. Renting is cost-effective as well as a practical method to reuse resources. Some common rental product categories include homes, dresses., books, automobiles, furniture, and appliances.
Starting an online rental marketplace will be just as simple as starting any other online business. The rental business model is based on strategic partnerships with multiple vendors and agencies who want to showcase their products online and rent it to potential target customers. As a rental marketplace owner, you earn a certain part of the rental price as your fee. This fee will also cover the cost of dry cleaning, sanitizing, and minor other expenses incurred throughout the renting process.
Renting might look easy from the surface but it has its own challenges that need to be overcome in order to provide a good online rental experience to the customers. Let’s have a look at the 5 basic things to consider for your online rental business to run smoothly and effectively.
Solve the chicken and egg problem first
This is a very common challenge faced by the new online marketplace owners, it simply means a situation where a business owner is confused about attracting the rentor or rentee first to initiate the business.
Some strategies to tackle this problem is by analyzing which type of users are more difficult to attract the business and try bringing them in first.
Each eCommerce business is distinctive from the other so one cannot directly confirm which category of users to attract first easily but after careful analysis of the business will one get an idea to whom the product needs to be pitched first.
The business capital required
In a rental business capital, the estimation part is very important as it comes slow but if well managed you get way more than any other eCommerce business. Rental businesses need to have a reasonable amount of products to pull customers into the business. So it is necessary to choose your products based on economics.
Consider a scenario where a product costs you 100$ if you rent it out at 20$ a month with a two months deposit and in one year the product belongs to the customer and will be at a rent value of 280$. Then this is a healthy renting process since you will have the cost price in your hands.
Logistics in a rental marketplace
Your rental products need the right kind of transportation and warehousing. Choosing a trustable logistics agent is very important. Damaged goods and late transportation can cause customer discouragement in using your products.
Cleaning and sanitizing your goods or items step in the renting process is very important these days, so this step should be carefully monitored.
At the beginning of the rental business, you should not overspend in inventory, only once the business catches momentum the inventory spending should be increased. Spend more on products that are currently trending and business-friendly.
Risks management is a key part of any eCommerce business, the risks should be forecasted to avoid future damages. Common risks in a rental business include theft, damage during shipment, or unreturned items.
Rental product’s value tends to decline over time and you need to balance it out by properly analyzing current market demand by changing pricing accordingly. Also one should take note of the replacement costs that sometimes tend to be ignored.
Keep tracking down your customers and keep them updated with penalties for damage of items, or any other misconduct from their side. Communicate clearly with the customers about the consequences of damaging or stealing the products delivered to them. This reduces risks to a certain extent. Revise regularly the policies regarding product or service mismanagement for both the vendors and customers.
Offer an easy rental shopping experience
With customers nowadays having very short attention span one complicated buying process could make them unhesitantly switch to a new rental platform. It is always best to keep the long documentation part for the business side and less work to the customers.
The business model should be simple but effective. Allow customers to be able to chat with your customer service for suggestions and complaints if any this will give you more space for improvement and improve customer satisfaction. Allow customers to choose from the products available in your inventory as well as request for products they would like to see added to the line of items in your inventory.