The concept of the sharing economy is well understood in 2021, no doubt thanks to its foremost poster children, including Airbnb and Uber. What these behemoths have done is introduce a business model to the world that is “predicated around bringing an asset-light model to an asset-heavy industry” and this concept is trickling down to ordinary, everyday consumers as the rental economy continues to grow around the world.
Unsurprisingly, technology is central to the proliferation of the rental economy. Technology has allowed us to rethink how we access products and services, making this more flexible, more convenient and also more cost effective, which in turn has meant that rentals could get a real foothold in markets that would otherwise have been difficult to reach.
A contemporary obsession with convenience – we want our products and services pronto! – is helping to fuel the rental economy, which by its very nature seeks to offer the convenience of access without the burden of ownership.
Today, convenience is more than a brand value-add but the “new battleground”. A 2020 Deloitte report on consumer convenience points to COVID-19 as a further accelerant of the convenience-first trend. This is backed up by consumers themselves reporting spending more for the sake of convenience.
Convenience is central to the rent-to-own offering. The business model is simply about making products – in the case of Teljoy, appliances, consumer electronics and furniture – conveniently accessible through a flexible model.
The value once ascribed to ownership is gradually diminishing, thanks to changing customer behaviour and a more transient lifestyle.These evolving preferences have made way for the rental economy to grow. Paying only for what you use is already increasingly the norm. Think data, electricity, entertainment – we ‘subscribe’ to these services in various ways because they offer the flexibility of access, without the burden of ownership. What’s more, “Not only does the millennial generation demand the convenience of making instant purchases – but they can now rent almost anything they want, anytime, and anywhere,” as per this Visual Capitalist article.
In another article, the gist of this model is summarised in five key points; it’s about access, not ownership; it’s about customisation, not generalisation; it’s about constant improvement, not planned obsolescence; it’s about automating improvement and relationship building; and it’s not about perfect, it’s about responsiveness.
And not to mention, COVID-19
Unsurprisingly, the COVID-19 pandemic has also had its role to play in influencing this trend. Household incomes have taken a severe knock, which has meant deferring the purchase of big ticket items such as furniture, appliances and consumer electronics. The rent-to-own model offers a way of still acquiring these much-needed items without having to opt for high-risk credit. It’s a model that also doesn’t require an upfront cash outlay, which is particularly appealing to those feeling the financial pinch at the moment.
So why then is the notion of ownership still deemed superior to renting? Could it be that renting simply needs to be repositioned – as a flexible, convenient and cost-effective alternative to the burden of ownership?
Jonathan Hurvitz, Teljoy CEO