Sanket Lal works with a multinational corporation and recently shifted to Bengaluru from Gurgaon for a year on company deputation. While the company arranged a flat for him, he had hard time finding furniture and home appliances on rent. “I thought about renting than buying as my stay in Bengaluru was just for a year,” reasoned Lal.
After struggling for a week, Lal heard of RentoMojo from his neighbour and finally decided to rent furnitures and essential appliances from the company. Lal thanks RentoMojo and he has many reasons for it. “It just took two days to furnish empty flat and that too on a reasonable monthly rental of Rs 2200,” said Lal.
There are many millennials like Lal who resort on startups like RentoMojo, Furlenco for renting furniture and home appliances than buying.
Since its inception three years ago, RentoMojo has gained 25,000 plus subscribers, across eight Indian cities and is growing by 10-15 per cent on a monthly basis. Furniture and appliances are the prime requirement inevitably contributing the maximum business for the Bengaluru-based company.
Growing company is like watching your baby grow
Growing a product company, especially a consumer tech, is like watching your baby grow. Although, Geetansh Bamania, co-founder and CEO of RentoMojo is yet to be father, he correlates this with his brother’s journey.
During this journey, one will make mistakes but he will have friends, partners and people working together as a family, creating and standing for its identity, while solving a huge problem globally. “This motivates all of us as a team to anticipate newer challenges, push boundaries to solve them and keep moving forward,” added Bamania.
Income disparity: Prime driver for subscription economy
There is a huge disparity between the purchasing power of developed and developing nations. Rentomojo aspires to erode this problem and provides a necessary, comfortable life to the young generation who is affected by the low GDP per capita.
Although, subscribing to consumer products through leasing is a great concept as its cheaper than buying and effectively convenient and flexible than buying. It’s still a fairly new concept for Indian consumers. “Effectively reaching out to make them aware and influence our target audience with the appropriate marketing mix at optimum investment is the challenge,” said Bamania.
RentoMojo is solving this through effective targeting, relevant content, awareness hacks and communication which are primarily centered to educate the customers about renting and its benefits. “We face the same challenges as what Airbnb, Uber and lending clubs would have faced in their initial days,” added Bamania.
Garnering 25,000 active subscribers in 24 months
In the last two years, the company claims to grow an average of 40X in all the metrics that depicts its scale. “We grew from a less than 1000 active subscribers to a 25,000 plus while assets under management from a $100,000 to a $6 million base,” added Bamania.
When it comes to sourcing, the company works with only a few vendors than several, who have been identified meticulously by Rentomojo on the basis of their quality of products and turn around time. Instead of focusing on large and well-known vendors in the city, it relies on local vendors.
Funding and financials
Recently, RentoMojo also raised $10 million in Series B round from Bain Capital Ventures led by Salil Deshpande, Ex Co-Founder Renaud Laplanche along with current investors Accel Partners and IDG Ventures. “With this fund we are on a journey of maturing the product, educating and spreading awareness about the consumer leasing model and the brand,” added Bamania. So far, the company had raised $17 million in risk capital across three rounds.
According to the RoC filings with Ministry of Corporate Affairs (MCA), RentoMojo had posted loss $1.2 million (Rs 7.85 crore) against revenue of $300K (Rs 1.92 crore) in financial year 2015-16.
Market opportunity, competition in online furniture & appliances rental space
At Present, subscription or technology led rental space is in very nascent stage, however with rising urbanisation and frequent movements of working class from one city to another, scope of online rental platforms bound to get up. While over 90 per cent of furniture sector in India is unorganized, merely one percent of which is online.
According to a Redseer Consulting report, the home furniture industry is a $25 billion market altogether, of which $250 million is online. However, by 2020, the home furniture industry is supposed to be worth $35 billion on the whole, with $700 million of it being online.
In terms of competition, there are some direct and indirect competitors in the space. However, none of the scaled up companies in subscription economy including Furlenco, Flyrobe et al come has asset light model which Bamania believes is the only way to scale and crack subscription business globally.
Unlike aforementioned companies, RentoMojo follows an asset light model and don’t own most of its inventory. This lowers company’s operating cost and risk. “As an asset-light company we have the flexibility to expand to a new location at the click of a button, increase our number of partners and expand our capacity. Through outsourcing or asset sharing, we can focus on scaling by investing in R&D,” concludes Bamania.