1001 Startup Ideas - P2P Rental marketplace for household goods

What is the idea?The startup idea is to establish a peer-to-peer platform for connecting individuals who want to rent out products they own to other people.  The startup will help consumers rent or share items they own, such as furniture, kitchen equipment, garden equipment,  and electronics items that they possess.

Market DefinitionPeer-to-peer economy or sharing economy has given birth to some of the most exciting businesses in the world. It has been estimated by Price Waterhouse Coopers, that the revenues of the sharing economy companies could reach USD 325 Billion by 2025.

The sharing economy is moving at neck breaking speed. In 2015, more than 60 million people used the online platform Airbnb to book private lodgings in 34,000 cities in 191 countries. Airbnb, which debuted in 20018 only is heading for another record this year and as on date commands a valuation of over 40 billion USD.

According to Nielson, revenue gained by consumers turning personal assets into income via sharing economy surpassed $3.5 billion in 2014, with growth exceeding 25 percent. It also states that 81% of the consumers in Asia Pacific say they would utilise shared products or services, compared to 66% globally.

Nielson also says that " Consumers in Asia Pacific are among the most receptive globally to the share economy proposition. Four of the top five markets prepared to share or rent their personal assets for financial gain hail from Southeast Asia. Just 22 percent of consumers in Asia Pacific are unwilling to share or rent their personal assets, compared to 32 percent globally". In addition to this, Sharing Economy businesses have a unique proposition that sometimes leads to an increased demand in an existing market.

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Jappreet Sethi

Co-Founder|YoStartups.com

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Competitor AnalysisThere are platforms which provide the same services but are restricted to geographies or have not been able to work across various geographies because of many reasons. One such platform is Peerby.com which can be used globally but is the most successful in Netherlands, the country where it started its business.

Pain Point & Target AudienceThe target audience for the startup will be "individuals who want to rent products instead of buying and people who want to make money out of products that they already own".

One of the biggest challenges for certain individuals is that they end up buying items that are put to use once or twice or at best very sparingly. In addition to this, there are so many things which lie idle at homes and many people would love to make money by renting them out.

Value PropositionThe startup will allow people to rent things from their neighbourhood. It can be anything ranging from electronics like big or small music players, speakers, sports gear like golf kits, garden equipment like lawn mowers, furniture for parties, etc.

This not only makes it easier to rent products which you would not want to buy but it also creates extra revenue for the owners who can rent those products out. A recent

McKinsey's report adds to the growing list of evidence of the positive effect the sharing economy has on our society, more so for those who are on the lower end of the earnings spectrum.

Business ModelThe startup can create a platform on any of these lines.

It can either be a subscription-based model where users pay the platform for using it. In this, the subscription fee will be given by only the owners and not the renters; or It can be commission based where on every successful renting from the platform, the platform earns a part of the rent as commission; or the platform could make its services free but make money with advertisements.

The platform could also create an additional revenue line where it can help in pick-up and delivery of products rented out on the platform and charge a fee for every such transaction.

Way to marketLooking at the data mentioned under 'Market Definition' section above, it is essential that one of the markets in Asia is chosen as the primary market. South East Asian countries, as mentioned above, have shown a keen interest in peer-to-peer businesses and one of them could be selected. And other could be cosmopolitan cities where the houses are relatively smaller, and it's not possible for everyone to own many products.

Startups' primary customer would be both renter and owner, as they together create the marketplace. The focus should be to move the initial set of owners who are currently looking to sell their old products and buyers who are looking to buy new or used products to the P2P renting marketplace. You can find such leads from platforms such as Craigslist, Gumtree, Quikr, etc. and move them to your platform.

MilestonesThe platform should initially aim at onboarding as many consumers as possible so that they experience the benefits of renting products rather than buying them. Some of the key parameters that startup need to track would be; total number of users (& active users) on the platform and the LTV (Life Time Value) to CAC (Cost of Customer Acquisition) ratio, which ideally should be above four.

Regarding the number of users, the startup should target to get 50k plus users with 100-200 transactions per month by the end of year one.

Investment Needed For PrototypeFor testing & building the prototype, pitch for raising 100k USD from angel investors or incubators in your home country. There are some accelerators which are focussed only on sharing economy startups. Some of the names are Anthill, ‘sharing accelerator' and the Sharing Hub. There should be no office rentals or salary payout; the entire budget should be set aside for customer acquisition and operations.

Team CapabilityIn addition to having a tech co-founder, you need a growth hacking expert to spearhead the campaigns to get more users on the platform.

Investment Scenario & Expert TakeThe world is moving towards sharing economy, and the investors realise this. Research by Arun Sundararajan and Samuel Fraiberger from New York University and Harvard University in October 2015, found that: “Peer-to-peer rental marketplaces have a disproportionately positive effect on lower-income consumers across almost every measure.” They also say that the Sharing Economy is: “a force that democratises access to a higher standard of living.” Therefore, there is keen interest in sharing economy businesses.

According to Srdan Mahmutovic, Founder & CEO of Platformax.com, a sales acceleration and enablement company from Slovenia " Building trust is the biggest challenge for the sharing economy business, since the platform acts a facilitator between the two sides, having a transparent rating system can go a long way." Srdan advocates building a CRM platform from day one so that data can be captured and analysed to improve and refine customer interactions.

Recently, Peerby.com raised USD 2.2 million by using crowdfunding. The consumers want to utilise the products and are even willing to fund the companies to kickstart their operations.

Some of the key investors in P2P and sharing economy space are Insight Venture Partners, Lead Edge Capital, Vostok New Ventures, SoftBank, Tiger Global, Steadview Capital and Accel Partners. In case you are looking forward to starting a business on this idea, we will be more than happy to help you in this journey. All you have to do is to visit Yostartups.com and drop us a contact request.