Tech Viewpoint: Three reasons online rental is hot
Several consumer trends are prompting retailers to provide online rental services.
Online rental is becoming an increasingly popular way for retailers of all sizes to provide products to consumers. Startup Coozie Outdoors and established sector leader REI both provide online rental platforms for outdoor gear. Startup FashionPass is taking on the granddaddy (or grandmommy) of online rental retail, Rent the Runway, which itself is introducing a new children’s offering. Fashion retailers Express, Ann Taylor and New York & Co., and even Amazon, also offer rental services.
Retailers are not adopting the online rental model in a vacuum. Here are three consumer trends that make online rental an increasingly viable e-commerce platform.
The influence of influencers
Digital influencers are having a very real effect on shopping and spending. According to a recent survey from Episerver, 52% of online shoppers who use social media have clicked on an influencer’s post, and a third (31%) have made a direct purchase from the post. In addition, data from Influencer Marketing Hub indicates that Instagram influencers alone will generate more than $1 billion of spending this year, and research from Vice shows there were 28 million “haul videos” (videos of influencers opening purchases) on YouTube in 2018. FashionPass founder Brittany Johnson is a millennial fashion influencer.
Influencers do not stay influential by purchasing something new and displaying it more than once. Instead, they constantly promote new products, encouraging followers to buy more and more merchandise. With most consumers lacking closets or wallets big enough to keep pace, platforms that let them rent items they see influencers purchase serve a valuable purpose.
Rent a home, rent a product
Millennials, who are the second-largest generation behind baby boomers, are not purchasing homes at the same rate of previous generations. Pew Research data indicates 15% of millennials age 25-35 still live with their parents, and Urban Institute research reveals millennial home ownership rates are eight percentage points lower than Gen Xers and baby boomers at the same age.
So, a lot of millennials are crashing with their parents or renting apartments, meaning they probably have limited storage space. Renting clothing for a particular occasion or season, or outdoor equipment for an annual camping trip, makes a lot more sense than buying it and cramming it under the bed (if they’re not on a futon).
Constant connectivity changes consumers
Mobile apps have altered how consumers live their daily lives. Rideshare services create instant online access to transportation, so owning a car becomes less important. A myriad of online delivery services will bring virtually any product to your door in as little as an hour, meaning you don’t need to keep things stocked.
The list goes on. Entertainment content can be streamed on demand to your device, eliminating the need for CDs, DVDs, or the equipment to play them. Almost any task requiring tools or machinery can be cheaply outsourced via online gig services. Online rental fits naturally into this new, connected consumer landscape. Ownership is so pre-2007.