Rental Industry Guide: How to Start a Profitable Online Rental Business

Rental businesses have been around for a long time but have shown rapid signs of growth in recent years. The reason for gaining popularity can be attributed to advancements in technology for creating apps.

Furthermore, unlike earlier eras, modern times have a new set of lifestyle expectations. The present generation is more invested in traveling and living liability free. They adhere to the philosophy that using rental items is preferable to investing their entire budget in an expensive one-time purchase, as rental options can be more affordable and hassle-free.

Traditional equipment rental to more cutting-edge products is among the rental business ideas that are growing in popularity due to the enormous shift towards the sharing economy and the desire for more inexpensive rental options. These ideas offer opportunities for development and profitability.

Here are a few rental industry stats of a few popular rental niches:

Heavy Equipment Rental Market:

• The heavy equipment rental market is expected to surpass $170 billion by 2026.

Car Rental Market:

• Estimated CAGR of 10.7% in the forecast period 2020–2027.
• Expected to reach $214.04 billion by 2027 (130% increase in 7 years).

Boat Rental Market:

• The global boat rental market is expected to reach $280 million in the next 6 years.

Dress Rental Market:

• Dress or fashion rental is estimated to reach a $2.2 billion valuation in 2026 with a 10.6% global CAGR in the forecast period 2022–2027.

Party Rental Equipment Market

• The party supply rental market is estimated to reach $29.132 billion by 2027 with a 7.18% global CAGR (2022–2027).

Stats source

For entrepreneurs planning to start a rental eCommerce business, this article will be a guide to starting an online rental business in any niche.

Table of contents

• Top players in the Rental eCommerce Industry
• Most Trending Rental eCommerce Niches
• Business Model
• Revenue Generation Model
• Recommended Features in a Website
• How to Build a Rental eCommerce Website?
• Our Recommendation
• Conclusion

Top Players in the Rental eCommerce Industry

Some of the marketplaces that made the rental eCommerce industry enticing by fulfilling the growing demands of the customer are:

1. GearFlow (Heavy equipment rental industry): A Chicago-based marketplace founded in 2018 offers Rental Construction Equipment. The Annual revenue growth of GearFlow since its founding is $239,400.
2. Turo (Car Sharing): San Francisco-based American Peer-to-Peer car rental company was founded in 2010 as RelayRides. The estimated annual revenue of Turo is estimated to be $627.2M per year.
3. Cort (Furniture rental): An American furniture rental company whose roots date back to 1957 was able to expand its business in 80 countries. Cort is a dominant furniture rental company in America. CORT generates $520.0M in revenue annually.
4. Rent the Runway (Fashion rental): Founded in 2004 Rent the Runway is an eCommerce apparel platform. Rent the Runway has a revenue generation of $236.9 Million.

Most Trending Rental eCommerce Niches

Based on Google trends, statistics, and lots of research some of the most trending eCommerce niches to start your online Rental eCommerce marketplace are:

• Heavy Equipment Rental

Due in part to the escalating cost of new machinery, and equipment rental services have become more popular with both small & major construction firms in recent years. It’s worth noting that there are now a few online marketplaces that cater to the construction/heavy equipment rental business; nonetheless, equipment rental is projected to be a $38 — $50 billion market, with construction accounting for less than half of that figure. It may therefore be the appropriate time for entrepreneurs to launch a business renting out heavy machinery.

• Furniture Rental

In current times people are attempting to utilize environment-friendly products to reduce their carbon footprint. Reusable furnishings are more cost-effective than buying new furniture since they eliminate waste and are eco-friendly. However, given that most people prefer to rent their homes for a variety of reasons, a furniture rental company may be the best option for meeting a customer’s furniture demands. For entrepreneurs looking to launch a rental firm, furniture rental may be a perfect choice.

• Party Equipment Rental

Once in a while, everyone hosts a party or an event. These social gatherings can be tied to a variety of occasions, such as a graduation party, a birthday, or an anniversary, and they feature a large guest list. However, hosting may be stressful, therefore many people choose to rent party supplies to set up their venues for the occasion. The total revenue from party supply rental activities is around $6 Billion in the United States. If you intend to enter the online rental industry, you can have a thriving party rental business with the correct marketing approach and business plan.

• Camera rental

The most lucrative industry to launch your online rental business may be the renting of cameras. The majority of people find it difficult and expensive to maintain cameras for occasional use. Thus, an online rental camera company can offer quality cameras that are cost-effective and convenient to use. Hence making an online camera rental business the most profitable rental business for entrants.

• Baby equipment rental

Nobody can deny that transporting baby equipment when traveling is a challenge. From strollers to car seats, transporting them overseas or away from home might be difficult. People can rent baby equipment easily and conveniently in such circumstances. Therefore, renting baby equipment could be a wise investment.

• Books Rental

Owning a book is always a delight. However, there are instances when an individual does not intend to keep the book forever. Regardless, used books can be obtained on the online rental book marketplace for half the price of new copies and returned when not required. Opening an online rental bookstore can be a successful business concept for entrepreneurs looking to enter the rental eCommerce market.

Business Model

The business model aids in understanding how the business operates. Based on below mentioned variants entrepreneurs can choose a business model.

• Single vendor online store/website

This business model is ideal for businesses that want to rent items as a standalone firm. There are two types of users in a single-vendor online rental store. Admin and customer.

1. The business operations and the website are handled by the admin.
2. Customers make a rental request, and the admin accepts the booking and gets the item delivered after receiving the rental fee and the security amount.
3. The customer uses the rented item based on the rental duration and then returns it to the admin.

• Multi-vendor online marketplace

For multi-vendor, the marketplace notion serves as the foundation of the company model. There are three user types in the multi-vendor marketplace, the admin, vendor, and customer.

1. The Admin handles the website and invites multiple vendors to list their products on the website.
2. The vendor lists the items on the website and accepts the bookings and gets the rental products delivered to the customer after receiving the payment.
3. The admin collects the rental commission from the vendor.
4. Based on the rental duration, the customer uses the rented items and then returns them to the vendor.

Revenue Generation Channels

The marketplace owner has a variety of revenue-generating options on the rented items. Some of the revenue generation streams include

1. Rental commission
2. Display ads
3. Monthly Subscription
4. Rental Ad-Ons
5. Service Fees
6. PPC Campaigns
7. Featured Listings
8. Paid pick-up and drop services

Recommended Features in a Rental Website or Marketplace

Once your business strategy is in place and you’ve decided on the market segment you want to launch your rental business, it is time to start looking for features that will improve and increase your company’s value. Some of the core features that a rental eCommerce website should have

• Booking Calendar

Customers can verify the items’ availability on the booking calendar, which also assists the admin and vendor in scheduling appointments and managing reservations.

• Rental security management

The management of rental security facilitates the online rental security collection. The damage to the returned property can be paid for and additional expenses such as late cancellation and late return can be recouped using the rental security.

• Agreement Management and eSigns

Customers should be able to electronically sign both the vendor’s terms and conditions and the rental agreement on the website.

• Document verification

When renting, security is the first concern. By ensuring that the vendor and the clients have the required ID proofs and permits, document verification aids in enhancing the security of the rental business.

• Filters and Product Comparison

Having personalized filters and a tool that enables product comparison for customers to make better-informed decisions would make the website more user-friendly.

• RFQ management

A request for quotations (RFQ) is a business procedure where a company requests price quotes for a certain task or project from a select group of suppliers. Through RFQ you can generate an invoice upon acceptance of the bid.

• Multi-currency and Multi-lingual

A website with several languages and currencies will be helpful in globally scaling the business. This function will prevent currency and language conversions.

• Real-time buyer and seller chat

Without using a third-party app for inquiries, the real-time chat assists in bringing together vendors and customers and helps solve all the queries and issues typically encountered.

• Real-time Inventory Management

An efficient technique to monitor the status of the rented property and confirm the stock’s availability. Aids in maintaining the supply chain and receiving the restock alert.

How to Build a Rental eCommerce Website or Marketplace?

The key to running a successful online rental business is choosing the right approach to building a website/marketplace that aids in reaching your target market. There are two ways you can build an online rental marketplace.

• Custom Software Development

An approach to software development where the program is created from scratch. The website is developed using the preferences of the company during the bespoke software development process. However, developing custom software can be an expensive and time-consuming task.

• Off-the-shelf Software Development

Entrepreneurs can begin with off-the-shelf software development because it is economical more cost-effective and requires little planning. It can usually be launched in a week and does not require any programming.

In comparison to building software from scratch, it is convenient to get ready-made software that is cost-effective and less time-consuming.

In the ready-made software category, there are two types of software SaaS & Self-hosted

• Saas Software: Because it is housed on the server of the provider, this type of ready-made software does not grant the platform owner exclusive rights. Only those who have a premium package get access to the platform on a subscription basis and get to use all the features. Booqable and HireHop both are SaaS based.
• Self-Hosted Software: Since the software is housed on the platform owner’s server, access to the marketplace is completely granted to them. The software is also a cost-effective choice because it has a one-time fee, no feature cap, and a lifetime license. YoRent rental software is the best example of a Self-hosted solution.

Our Recommendation

You need software that will not only help your clients find the right products, but also make sure that the website is easy to use, run, and affordable. The online marketplace ought to have rent-focused features with no restrictions on users, listings, or transactions.
However, there are several benefits to self-hosted software over SaaS-based software. Access to all features that are available for a one-time fee is also granted in addition to ownership rights. Because of the market’s incredible adaptability and scalability, it expands as the firm grows.

Conclusion

Establishing an eCommerce rental business is a profitable investment. The market must be robust and extremely adaptable to the necessary changes. A sound business plan and a good marketing plan can help entrepreneurs create a profitable business. Although, paired with an appropriate technology partner, a highly qualified marketing team serves as the engine of your rental company.