When he shifted from Kolkata to Bengaluru, the obstacles he faced while furnishing his home led him to his business idea. Along with Manish S Sugandhi and Aditya Sharma, he set up GrabOnRent Internet Pvt Ltd, an online product-rental marketplace, which is built on trust, quality and reliability.
For Shubham Jain, shifting to Bengaluru and setting up a home was an experience he would not like to remember! In 2015, he wanted to furnish the house that he moved into, when he shifted from Kolkata, where he was running a design solutions company called Perdix Business Solutions. However, he didn’t want to invest in new furniture, fittings and electronics and hence, opted for second hand purchase. “This is a dilemma that many people who shift to new cities, especially fresh graduates, face due to financial constraints,” says he. He searched various sites offering second hand furniture and found one common problem with all: no clarity on the quality of the products and no strict policies in place. After much search, he still went ahead and bought second hand products. “But the biggest nightmare came to live after that. The entire house got infested with bed bugs,” exclaims Jain. And his friends also faced similar situations. In fact, he adds, “My friends took beds on rental after evaluating five to six suppliers. But, they also discontinued with rentals after two months as the quality was poor or the post rental services were horrendous.”
Jain’s biggest learning was that there was lack of trust, quality and reliability that could make renting of furniture a great experience. “Why can’t they have something as good as new?” asks Jain. He started interacting with suppliers and a few customers who had rented in the past to understand the sector and its logistics. He realised that no one had a fixed process – while some collected cheques others opted for cash, some had no trucks to deliver and asked customers to pick up the products. There were more than 100 suppliers of electronics and furniture, but had no process or security in place.
Jain understood that the market had to be organised. Along with Manish S Sugandhi and Aditya Sharma, who had similar experiences, he set up GrabOnRent Internet Pvt Ltd, an online product rental marketplace. In an effort to organise the sector, the company helps suppliers with seamless online payment system; has put in place a logistics network for pick up and drop of inventory; has introduced insurance for the items; has got a KYC process in place for the security of the products, and so on.
It has grown well since its launch in 2015, serving almost 40,000 people across four geographies, and aims to reach one lakh customers by the month of July this year. In the last three months, the company has grown about 75 per cent on a month on month basis. It has also raised funds to the tune of US $3 million from Ivy Cap Ventures and Unicorn India Ventures. With a team size of 112, the company has also deployed Rs. 35 crore (US $5.5 million) worth inventory (assets) which is live in the market.
The business model
While the company has its line-up of vendors from whom it sources the products, it has also evolved a business model in the last two years that helps customers overcome their apprehension about renting furniture. It allows investors (NBFCs or family businesses looking for alternative investment) to invest in the inventory of GrabOnRent so that it can offer its customers new products, thus assuring quality. It offers customers a choice to either rent a new product or a refurbished one.
Lifecycle of an asset in the company’s platform is three years. “Over three years, GrabOnRent manages the inventory for the investors who can claim depreciation for it. GrabOnRent remains asset light,” adds Jain. The company’s role is to forecast and generate the demand. If one needs to mitigate risk and build a portfolio, it is better to invest in two or three categories (minimum investment is Rs. 1 crore), as each one has a different depreciation value.
Every new business idea comes with its own set of challenges. GrabOnRent’s most fundamental one is the mind-set of the audience itself, to make them believe in renting. The company is targeting migrants to urban cities, and the residents wishing to have an upgraded lifestyle. Its early adopters have been the audience that is living in a metros/Tier-I, working and in the age group of 21 years to 40 years.
“Initially, we thought that people who do not have high disposable income (income of Rs. 30,000 to Rs.50,000) will be the adopters of these rental services as there is no upfront cost involved,” admits Jain. The team also assumed that those who migrate to a new city will be renting from GrabOnRent. “This actually happened for the first year,” recalls Jain. However, as the company increased the selection on its platform and built better trust in the market, its customer profile changed. Today, it has 35 per cent of its customers from the 31 to 40 years age bracket. “If someone is renting even after enough disposable income and being married, that means renting is beyond just economic sense, it is becoming a lifestyle choice. This simply proves that the aspirations of any person is only limited by the capital cost and once removed, here we see a buy-in,” says Jain. Since the business is also shaping in this direction, GrabOnRent has gone ahead with better selection and products at different price points.
Growing along the way
The company currently serves four cities. It started its operations in Bengaluru in 2015, and entered Hyderabad in February 2017. Two months back it made its way into Gurgaon and Mumbai. “In each city our learning has been different,” says Jain. A top selling product in Bengaluru is a combination of bed and mattress while in Mumbai it is an air conditioner. So the demand forecasting has to be done city by city as each one has a different kind of audience set and climatic condition. Hence, even the marketing technique varies from one to another. “This will also influence the products being selected depending on the demand rather than having a general set of products everywhere,” adds he.
To aid in this, the company does proper market research, and gets first-hand information about each city’s demographics and customer potential from the supplier. It also works with the OEMs who help them understand the kind of products that work in a particular city. The company has come up with innovative furniture to suit the requirements of each city; it launched convertible furniture that worked very well for Mumbai and Gurgaon.
It aims to expand to other cities like Noida, New Delhi, Pune and Chennai. “With this we will be in the top eight cities in India where the maximum migration happens,” says he. If someone relocates from Mumbai, Bengaluru or Gurgaon, the person should be able to pause the rental products in one city and resume it in the next city on the company’s platform. “We are becoming relevant not only in this city for the customer but across the country,” adds Jain.
In the next three years, the company wants to be able to serve a customer not in one city but across multiple geographies. It aims to have the best possible selection and the highest number of unique products on the platform (currently 550). Serve a customer for a long period of time across multiple cities and increase the number of times they are going to rent from GranOnRent is its motto. “Our strategy is three fold – Selection, retention, and repeat,” says the CEO on a concluding note.
Shubham Jain’s biggest learning in his home furnishing was that there was lack of trust, quality and reliability that can give users a complete experience of renting products. With an effort to organise the sector, he, along and his co-founders, set up GrabOnRent Internet Pvt Ltd, an online product rental marketplace. The company helps suppliers with seamless online payment system, has a logistics network for pick up and drop of inventory, has brought in insurance for the security of items and has KYC process in place for the security of products.