Running a Rental Business – An Entrepreneurial PerspectiveOnline rental businesses are becoming a viable business opportunity owing to their popularity today. They are a sound way of maximizing profit margins with a venture that can scale quickly, requires reduced capital investment, facilitates long term customer relations, and provides an immense opportunity for growth. There are generally two platforms you can run your online rental business on – a virtual marketplace and your own website.
Option #1: Deploying Your Products on a MarketplaceMarketplaces are a good way to start your business when you are in the process of building your brand and creating a niche for yourself in the market. They provide a quick and simple start as well as an additional channel for your business. You should ideally sell on a marketplace when you have a reasonably lower number of products. Marketplaces are pretty reasonable to advertise on or to get your products ‘feature listed’ on. Naturally, they provide a great kickstart for your business.
Option #2: Building Your Own StoreIn the meantime, it’s always advisable to start building your brand and selling on your own website as well. Building a website is feasible when you have, say, over 30 different items to sell. As opposed to a marketplace, your website has only your products. This makes your store an extremely powerful tool in your branding and marketing arsenal. Starting to sell on your website is a great way to increase your profit margins and maintain them. It’s also the best way to build a strong brand presence when you’re in a position to scale. All things said and done, there are some important aspects to consider before starting an online rental business. Although it’s a sound business idea with good prospective growth, basic concerns cannot be overlooked.
The 4 Important Questions to Answer before Starting an Online Rental Business
How much capital will I need?That answer depends on how your venture pans out. If business picks up quickly, you will need to purchase a larger number of products in a fairly short amount of time to cater to consumer demands. Depending on the type of products that you are renting, you should be able to arrive at an estimated value based on your business trajectory.
How do I Stock to Scale?Now the trick to stock is ‘smart’, not stock ‘more’. Don’t overspend on stocking up inventory right at the start. Buy a minimum required amount and then observe the business trends. Is your business picking up immediately or is it taking time? Assess the demand for a certain period of time before investing further in inventory. You don’t want to be stuck with products that are not as popular among your customer base. On the other hand, you can’t be struggling to keep up with the demand of the best-sellers on your store.
What will the replacement costs look like?The risk of running an online rental business is that of product damages. If a product comes back in damaged condition, you’ll be incurring additional costs to replace it. You need to consider the type of goods you’re renting out in terms of fragility. Can they be easily damaged? What percentage of your products are likely to come back damaged? How much is it going to cost you to replace the product? Depending on all of these factors, you need to fix your ‘security deposit’ amount. Now, coming up with this pricing can be quite tricky. That’s because your security deposit can by no means be high enough to push away your prospects or low enough to cause huge losses.
What about logistics?Logistics is an important aspect to bear in mind, especially when you’re renting out products. This involves the warehousing, shipping, storage, and also the cleaning, maintenance, and refurbishing of your rental products. What kind of processes does a product go through when it is returned and before it is shipped out again? Where are you going to store these products? What delivery channels are you going to use? Take all these factors into consideration beforehand, because logistics is a critical part of online businesses. Once you have these fundamental aspects taken care of, the next step is setting up your website. WooCoommerce along with its extended arms – WooCommerce Bookings and WooCommerce Subscriptions – makes for a solid foundation of a Rental Products business. Let’s check out some features that are critical to any Rental Website.
Setting Up your Rental Business Website on WooCommerce