All You Need to Know to Start an Online Rental Marketplace
Various studies have found that a major proportion of consumers these days prefer renting a product rather than buying it for good. To be precise, the population of such consumers is over 77% in the US itself.
With the growing popularity of online rental services, the particular business niche is flourishing at an unprecedented rate. Not just the new businesses and models are emerging but also a wide range of new products are being added to the catalog each day.
Started from per-to-per house rentals, the catalog has grown to accommodate anything you can imagine. No matter what you want- a gaming PC, refrigerator, furniture, kitchen appliances, or even a dress for the upcoming wedding reception, rental marketplaces have got everything covered for you.
This article will cover everything you need to know about a rental marketplace business. I am going to include major business aspects as I target aspiring eCommerce entrepreneurs who are looking for innovative business ideas to make money from the eCommerce market. So let’s start from the basics.
What are rental marketplaces?
An online rental marketplace is no different from a peer-to-peer marketplace like eBay. However, instead of selling an item, such marketplaces allow people to put on rent. Similarly, instead of purchasing the item for good, they allow the customers to purchase the rental plans. The role of the admin is however similar where he/she can moderate the site, collect the commission, and manage the users on the site.
In short, there are three types of users on a typical rental marketplace site:
- Admin- Owner of the site
- Renters- People who put their rentable items on the site
- Customers: People who are looking for items on rent
Popular rental marketplaces for different products
Based on the business models and types of products, here is a list of some popular rental marketplaces in the industry these days:
- House Rental – Airbnb
- Cars Rental – Turo, Hertz
- Dresses Rental – Rent the Runway
- Books Rental– Chegg
- Movies Rental – Red Box
- Games Rental – Game Fly
- Equipment Rental – Herc Rental
- Appliances Rental – Direct Appliance Rental
- Furniture Rental– Cort, BFR
How beneficial is an online rental business?
The generation in 2019 is more practical, tech-savvy, and travel-enthusiastic. They understand it’s more practical and easy to rent an item with low recurring cost rather than buying it for good with a huge upfront cost. The rental marketplace businesses are more popular among the bachelors and youth.
It’s comprehensible considering youth prefer moving around in search of adventure, experiences, and job. It’s unwise to buy stuff and move them from one town to another. That’s where renting works like a charm and give a cost-effective way to utilize the resources when required and return them when not required any more.
Rental marketplaces give a two-way benefit to both the renters and the customers:
- Renters can make some extra money from the stuff they don’t use anymore
- Customers can get items with ease and lower cost till the time they need them
Just take Airbnb home sharing for example. It lets a homeowner make some extra money from a spare room or home, while it lets a customer rent a homestay for a lesser price as compared with hotels.
How online renting marketplaces work?
The online renting business model works in three major modules: Renter Module, Customer Module, and the Admin Module. Each module is responsible for a specific set of task and possesses the corresponding level of access to the platform.
The renter module involves
- Registering a renter account,
- Listing an item/property
- Updating item details
- Updating deposit and rent/month
- Accepting a booking request
The Customer module involves:
- Registering as a customer
- Placing a search query
- Getting search results
- Selecting an item/property
- Sending booking request
- Updating Booking details: Rent start date, Duration of rent
- Making payment
- Receiving the rented item
The Admin module simply acts as a moderator of the platform. The Admin looks out for the customer support and also manages every user on the site. An Admin-
- Approves/Disapproves a new renter account
- Approves/Disapproves a new customer account
- Verifies Customer and renter details
- Manages the listing and their categories
How rental marketplaces make money?
As the name suggests “Rental” there is definitely the subscription revenue model involved in any such business. However, businesses find many other models also efficient in generating secondary revenue. Here is a breakdown of the primary and secondary revenue streams in a rental marketplace business:
Primary revenue for the business:
Subscription cost paid by the customers for the rented item.
Actual revenue for the owner/renter:
The owner of the item gets to keep the revenue generated from the subscriptions purchased for his/her items. The actual revenue for the owner is = Subscription cost – Commission to the admin.
Actual revenue for the site owner/Admin
The actual revenue for the site owner is the commission earned from the renters. However, we have seen many rental marketplaces using secondary channels to generate extra revenue from the business. For example-
- Featured Listing: Taking extra fee from the renters to add their items/properties in a highlighted/promoted catalog. More like paid advertising on the platform to get better visibility.
- Ads model: Embedding Ads on the site and getting paid by advertisers. For example, Google ads Network.
Key factors for success in the rental marketplace business
Starting a rental marketplace is not a tough task. However, surviving the competition is indeed a challenge. Inspired by Airbnb, Chegg, and Rent the Runway, many aspiring entrepreneurs have started their rental spaces. Everyone is trying their best to keep up with the market and generate as much profit.
If you want to survive this heat of competition, you need to perfect yourself on the following key aspects:
- Quality: offer the best quality of the product for renting. Inspect the items/properties first before approving them for your catalog.
- Support: Never compromise with customer support. Especially for your existing customers. Address and rectify the grievances as quickly as possible.
- Unique Selling Point: Offer additional benefits stand out in the crowd. For example, extra discount, lower rent, personalized offers, movement assistance, quick support, etc.
Major challenges in an online rental business
The challenge of running an online rental business is totally a deal breaker for those who can’t plan for the worst situations. Every step in a rental business is a challenge:
- The customers would always want the best quality item.
- The renters expect to retrieve the item in the original condition.
- The items might break or get damaged in the rent tenure
- The items might break or get damaged during the transit
- You have to spend on servicing and repair of the items
How to tackle the challenges in the online rental business?
None of the challenges are insane or impractical. Customers should expect the best quality and renters should be ensured of the item’s safety. As a business owner, it’s your job to minify the risk and expand the profit marketing despite these challenges. Here are a few tips you might want to consider to mitigate the challenges to the minimum:
- Verify the renter detail before approving the account
- Inspect the item/property before renting to a customer
- Verify the customer detail before approving a subscription
- Inspect the item/property after being returned by the customer
- Offer insurance to the owners with expensive products/items/properties
- Use geo-location filter to suggest the nearest items and avoid long transit
What is the easiest way to build a rental website?
There are many ways to build a rental marketplace site. Of course, you can develop your site from scratch if you have the tech skills, time, and money. However, I am talking about easier and economical options like turnkey rental marketplace software.
A turkey rental marketplace software solution offers a ready-made script that you can customize and set up your website in a day or two. You don’t have to code your site from the scratch when ready-made site builders are already offering better solutions.
The best thing is, they also offer the source code access so that you can customize your site by yourself or hire any developer to do it for you. In short, these scripts let you have full control over your site and get your business live in a quick time.
For example, you can purchase a turnkey Airbnb clone script to launch a home rental on the go. Moreover, you can use the same script to rent an array of other items and properties. For example, you can start a car rental, boat rental, dress rental or a furniture rental marketplace. The scripts from popular vendors also come with ready-made mobile apps too.
Just make a Google search, you would find dozens of Airbnb clone in the market. Take some time to research and test them all. I am certain you would find the perfect fit for your business plan in no time.
3 custom features for a competent rental marketplace in 2019
While you are searching for the perfect rental marketplace software for your business, I recommend you also make sure to add the following there features if not there by default. These features can give you an extra upper hand against your rivals and add to your USPs.
In addition to the items and properties listed on your site already, it would be perfect if customers are able to place a request for the items that are not listed. In this way, you would always get an idea of the popular items you should add to your catalog.
This is more like a policy than a feature. Many rental sites are offering a way to rent a product for a specific time and then later own that product paying a minimal upfront cost. Using it a customer can actually choose to purchase the same item for a used-item price. You can add some brand new items to the catalog from your own inventory and can actually sell them over time.
It is better to also have the features for direct eCommerce selling. If anyone wants to buy instead of renting, you can still grab a customer. It will add an extra channel of revenue where you can function both as a rental marketplace like Airbnb and product marketplace eBay and Amazon.
The scope for rental marketplace businesses is unlimited. As the cities are growing and more users are getting familiar with the eCommerce sites, the customer base is also expanding exponentially. Starting a rental marketplace business is one of the best eCommerce business ideas of 2019. It’s the best time to leverage reasonable rental marketplace software solutions and venture in the market with a boom. At least you won’t have to spend millions on website development like it used to be a few years ago.