Online shoppers are increasingly turning to rental firms for products and services due to the condition of the economy, industry figures have claimed.
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Steve Sammartino, founder of online rental platform Rentoid, says the rental market is a reflection of current consumer sentiment.
Rentoid is a user-generated site working on a peer-to-peer basis, whereby renters decide what to charge customers for renting their products.
Sammartino says his site has recently seen a strong demand for everyday items.
“What we have noticed is that [demand for] a lot of items that were doing well two years ago – vicarious lifestyle items like high-end handbags and expensive cars – has really dropped away,” Sammartino says.
“Everyday living items, particularly prams, baby equipment and toys, are popular products to rent at the moment.”
According to John Hughes, managing director of rental company Thorn Group, the rental market directly benefits in times of economic uncertainty.
“I think the economy is not as strong as other people would suggest. Those colleagues of mine… keep telling me that they are seeing poor, soft, difficult trading conditions out there in the market,” he says.
Shares in Thorn Group recently soared to 11% after it upgraded its full-year profit guidance based on solid demand for rented household goods.
According to Sammartino, party items and specialised equipment are also in demand because customers only require them temporarily.
“For example, tradesmen putting up [for rent] their dingo diggers that they only use once a week,” he says.
“We also see a lot of micropreneurs using the site… We collaborate with ladies who run little businesses where they’ve got baby equipment and they use Rentoid as a portal.”
“Even computer technicians, who have a lot of computer equipment, use the site as a way of getting some revenue back on the equipment they just so happen to have,” he says.
He says consumers are also treating Rentoid as a try-before-you-buy service, particularly in relation to technology items, to ensure complete satisfaction before they purchase a product.
“People never rent things that are less than $100 to buy unless they’re quirky items that are hard to find,” he says.
“The average item that people rent is priced between $400 and $1,000. These items are not overly expensive to rent but people might think twice before going out and purchasing them.”
According to Sammartino, the ideal pricing model is 1% of the item’s value for a one-day rent, 5% for a week or a weekend, and 10% for a month.
“That’s typically a model that works and when people have pricing that’s above that, they just won’t get people renting their items,” he says.
Sammartino says start-ups would be well advised to utilise rental platforms, particularly if they offer specialist or one-off products.