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Sharing and renting economy sees flourish amid slowdown

In times of uncertainty, sharing rather than owning creates a compelling proposition. Why buy a house or car, furniture or appliances, or even fancy clothes when you can rent them?

The idea also fits into the millennium way of life – spend more on experiences like traveling rather than getting stuck in the rising debt you have to pay.

Rajat Arora, 23, who is moving from the US to his financial services firm's India office, plans to break free – as well as his new office at a coworking facility in Pune. "I don't want to buy anything but rent it – furniture, apartment, car and even an umbrella when it rains." The reason for the rent is that he is not sure how long he will be with the current employer. He is also not very optimistic about the job market in general.

Apparently, even small businesses are unwilling to spend money, as even startups are sharing through intercompany agreements.

NestAway, a home rental company, often partners with other startups, such as Furlenco and City Furnish, to rent apartments to share apartments with sofas, beds, pillows, appliances, etc.

This win-win situation, where there is growing and ready demand, has attracted a number of companies whose business model is rent and not sell. And this business is exploding in the midst of economic darkness. Consultancy EY sees the size of India's shared economy become almost $ 20 billion in five years.

Scaling Sharing

Stage3, a fashion renter funded by Blume Ventures, says it saw a sixfold increase in user base between October 2018 and 2019. The startup lets you rent clothes or wedding wear from designers like Sabyasachi Mukherjee, Rina Dhaka. , Anju Modi or Manish Malhotra in one tenth of the MRP. NestAway also claims to have 75,000 tenants in 35,000 homes. So far, the startup has raised $ 125 million from several investors, including Flipkart, Tiger Global, Ratan Tata and Goldman Sachs.

"This generation is consuming more and having less," says Karan Jain, co-founder of Revv, a car rental platform.

While Uber and Ola cater to peer-to-peer travel, startups like Revv see an opportunity in a longer commitment. There are about 4,000 cars on your platform and they are rented – for hours, days, weeks, months or even years.

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“There are people who want new car models every two years, without the hassle of paperwork or having a heritage. We help them, ”says Anupam Agarwal, the other co-founder of Revv.

SmartWorks founder Neetish Sarda says 25 to 30 percent of India's office space is either under coworking or shared.

He sees coworking scale office space from 20 million square feet to today to 100 million square feet over the next five years. About five years ago, the workspace was just under 10 million square feet in India.

"Factors driving coworking growth include low costs, plug-and-play environment and hassle-free operations," says Sarda.

Nothing Permanent

In a way, sharing is not new – paid accommodations or PGs have been around much longer. However, PGs could never go beyond local areas, usually around campuses.

What changed the sharing business was mobile apps that made assets more accessible and some clever innovation to solve real problems.

The trend began with taxis and expanded to rent different types of assets, including appliances, bicycles and dresses. And now business is booming.

Of course, the show's economy is also contributing its share to the expansion of the shared economy.

"There are no permanent jobs. Why should I lock myself in permanent assets that will be expensive to maintain and probably not going to use them throughout the life cycle?" asks Pankaj Jain, 24, who left his job in an online market to take a finance course. "There are options to meet any asset need and I don't want to be in a situation like my parents, who spent years paying off loans and had to sacrifice their vacations."

Global companies are seeing the market expand in India – with the millennium generation driving the trend. For example, Airbnb offers 54,000 properties in 100 cities in India. By offering unused space for sharing, the platform says owners raised $ 28 million and received 800,000 visitors in 2018.

"We're just scratching the surface," says Amanpreet Bajaj, national manager of Airbnb India.

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Airbnb estimates that 240 million of India's nearly 450 million millennials are in urban areas, and this forms an untapped potential base that is much larger than any other region or country.

Pradeep Parameswaran, president of Uber India and South Asia, says: "We believe we can replace your car with your phone – an app that separates the personal car by addressing everything you use." One such service in its portfolio is UberPool, which the company claims to have seen double-digit growth since its 2017 launch in India.

"Sharing addresses the issue of accessibility," says one venture investor, who declined to be named.

Anurag Mathur, PwC India's retail and consumer goods leader, adds: "Sharing used to be done on campuses. Startups are making it more organized as they see the growing demand for shared assets among 20-30 year olds. "

A typical participant is someone who seeks accessibility and flexibility and sees his or her career punctuated with short breaks – for study or travel.

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Piece by piece

On Stage3, the average ticket size per rental dress is Rs. 1,500 to Rs. 2,000, although the rent for a designer wedding outfit can reach 30,000 for three days. The startup serves 15 cities, although 80% of its current businesses come from Delhi NCR.

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At NestAway, 80% of businesses are rented at home and 20% are sharing. But it is the second part that is growing faster. "Increasingly, users are choosing to rent a room instead of the entire apartment," says Ismail Khan, business director. This also works better for the landlord and tenant – the former receives more rent for the entire property, while the latter pays rent only for the space occupied.

NestAway is in 10 cities and will expand to 35 next year. By March, it expects to have 100,000 tenants. In addition, nearly 30% of your current user base is women.

"The shared economy will grow. For example, it makes no sense to buy houses, as rental income in India is very low (2-4%)," says series entrepreneur K Ganesh. He sees bright days for startups like Rapido, Rentomojo and Bounce.

Furlenco, a Bengaluru-based rental furniture supplier, started with 10 products and now also offers children's appliances and furniture.

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The company says its current net subscription revenue is $ 25 million, which is expected to reach $ 300 million by 2023. To date, Furlenco has served more than 90,000 subscribers or users in Delhi, Noida, Hyderabad, Chennai, Pune. and several other cities. "Our long-term goal is to make furniture signing as normal as DTH or OTT signing, and we are moving fast in that direction," says founder and CEO Ajith Mohan Karimpana.

Feeding each other

Sharing economy startups is also feeding each other's needs. For example, a homeowner often leases his empty house or flat and young tenants are unwilling to buy furniture or appliances, which they will have to take if they move their address.

To help both parties and facilitate the sharing experience, NestAway has partnered with Furlenco, City Furnish and other furniture and home appliance suppliers to bridge the gap.

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"Every player is doing their best and sticking to the main problem they can solve," says PwC's Mathur.

Such agreements are common among companies. At Revv, its own car inventory is about one-third of the total, while the remainder is from leasing companies and channel partners.

SmartWorks also rents some of the properties, where it sets up joint workspaces. As the market matures, this may lead to new models such as "sharing as a service," says the director of the aforementioned venture firm.

Stage3, Revv, NestAway, and others focus on improving the user experience while scaling their services to new cities. As the market grows, there will be new offers as well.

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For example, Stage3 cofounder Sabena Puri points out that users in the United States often rent office clothes for a week at Rent The Runway, returning them over the weekend to buy office clothes the following week.

Even items like umbrellas and sporting goods are available for sharing. The sharing period can be three days for designer clothes, an umbrella season, up to 24 months for cars, and so on.

But some old challenges persist. "When tenants get involved with us, it's expected to be like a hotel service," says Nest-Away's Khan. Also, in many cities, homeowners have to provide air conditioners, which they disapprove of.

"A faulty microwave or a car where I have to get under the hood doesn't work," says Pankaj Jain.

For designer clothes, to ensure repeated use, dresses should be custom made. Appliance maintenance and repairs should be managed by service providers.

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Often if users want to rent their own cars, they cannot do so due to regulations.

And, above all, costs need to be reduced to continue sharing an attractive millennial option. The unit's economy needs to work in favor of providers to give more room to innovate and offer more products for sharing.

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