Renting start-ups make a killing as millennials fuel sharing economy.
As Delhi was gripped by severe air pollution, with the onset of winter a couple of months ago, air purifiers became a much sought after luxury for many in the capital region.
Sensing the demand, rental company Rentickle added air purifier to their portfolio of lifestyle products, offering it on hire for as low as Rs 399 a month.
This is just an example of how a mindset change, driven by a millennial generation, that is willing to rent rather than own, is creating a fertile ground for a sharing economy and start-ups catering to it.
Rentickle, launched in November 2015, operates in the lifestyle rental space, which was traditionally mainly catered to by local furniture and neighbourhood shops. While products in transportation, like cars and bikes, have been offered on rent for a while by professional companies and lately given a boost by cab aggregators, the same cannot be said of the lifestyle space.
Vinit Chawla, co-founder, Rentickle, says that lifestyle rental has started getting organised in the last three-four years and remains a wide space, with not many players and demand growing by the day.
Rentickle set out by targeting young professionals who often relocate to different cities as part of their work. Its offerings include furniture and home appliances, cameras, and water and air purifiers. “We plan to introduce baby products, from cribs to prams and cots, to meet the changing needs of children in their growing stage. Fitness products is another category we’re looking at adding this year,” says Chawla.
“The trends are changing very fast, today’s generation is very aspirational and upwardly mobile. So, items like trendy recliners, swings, large screen TVs and fully automatic washing machines on rent reflect that.”
Rentickle is operating in the Delhi-NCR, and plans to expand to Bengaluru next month. And then to some other cities with a dense IT/ITeS workforce including Mumbai, Pune and Chennai later. It recently raised pre-series A round of $4 million which it plans to utilise in expansion, brand building etc.
Chawla says the company found newly-wed couples seeking rental furniture to be a growing segment, besides expatriates. In the next two-three years, the online lifestyle rental market could grow anywhere from $3 to $5 billion, he says, adding that convenience and quality are values that has to be offer to customers. New business-to-business alliances, such as the company partnering with LG on its platform, is also critical.
RevStart, a Noida-based provider of cost-efficient co-working spaces to entrepreneurs, freelancers and SMEs, has a mix of owned and rented office spaces.
Ishan Singh, MD and CEO of RevStart, has invested $2 million into the business. “We realise companies need addresses for long time. So, most people who are creating co-working spaces are taking a place for long lease and reselling it. I don’t think that model is going to work in the long term.”
RevStart, for instance, has its 100,000-sq ft building in Noida. It plans to expand to Gurugram with its own building, and gradually in other places by either owning the properties or collaborating with the landlord (minimum rent plus revenue share).
One of the reasons why people are looking at co-working spaces and for the growth of the sharing economy is largely a demographic change -- a millennial trend of emphasising on renting over buying. The largest facilitator for the sharing economy is technology,” Singh says, adding that different types of co-working spaces are required in India -- including for the mainstream IT worker and more high-end niches.
According to Singh, the “uberisation” of the work environment is driven by people looking for two things -- physical infrastructure such as a space that provides fast and reliable Internet, and more importantly for this space, the sense of community. The idea of “you are not the only mad person to start a business on your own” is key.
Singh adds that the logic of being in a community supported by sound tech infrastructure will apply in all places, with smaller cities such Chandigarh, Jaipur and Kochi also accepting co-working spaces.
He further adds that knowledge-based companies still have a mindset of operating from own offices, but this is set to change as they will gradually start investing in co-working spaces to look for more flexible options. Singh says his business is scalable being a cash flow positive firm, while small challenges in terms of finding the right place and the right location will always remain.
Hitendra Chaturvedi, founder and CEO of Delhi-based Reverse Logistics Company Pvt Ltd, which owns Greendust.com, says when he started the e-commerce platform for refurbished goods in 2009, e-commerce was non-existent as it has emerged only in the last four years primarily. So among initial challenges were educating retailers and OEMs about reverse supply chain, as well as educating consumers about how they are actually helping the environment by buying refurbished goods.
But, he points out, in India returns throw up a $10 to $15 billion dollar market in overall retail including e-commerce. And with Indians being “the biggest benefit maximisers in the world” a company such as GreenDust is left with the task of creating a prominent brand name as a seller of refurbished products — a category which has always been a recession-proof one.
Chaturvedi also gives the example of how in the appliances category, as against a country like the US where penetration is 80-90 per cent in India there are some markets where the figure is in single digits. As a result, demand for refurbished goods is evergreen, he adds.