This Startup Is Tapping The Growth Of Sharing Economy
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It seems like renting furniture has become equal to pizza consumption in metro cities with the new age of cosmopolites preferring to buy furniture on rent rather than marry it by purchasing. This habit is fast nurturing, especially in the fast-moving young generation to indicate that traditional practice of buying assets, such as furniture, could soon be history.
This evolution of renting furniture has gradually grown in the metropolitan and Tier I cities amid rising aspiration of wanting something new among relocating and career oriented consumers. Their aspirations are fuelled by growing income level, rising spending power, and elevating living standards.
Tapping the future potentials of the renting furniture market, Furlenco, the Bangalore-based online furniture and appliance rental startup, which started in 2012 and already has 6,000 active consumers on board across Bangalore, Mumbai and Pune is planning to expand its operations in all the leading metros in the next five years.
“In the next three to fourth months we are opening in Delhi-NCR and in the next five years we will be present in Hyderabad, Calcutta, and Chennai seeing the huge demand for renting furniture”, said Ajith Karimpana, CEO and Founder, Furlenco.
“Spreading to newer metros is still a challenge due to different consumer behaviour, residual income, diverse geography, varying cost of operations and the timeline of 6-8 months for set up,” added Ajith
The renting furniture market with the objective of offering furniture for the short term need-based utilisation is ballooning with the ongoing eCommerce boom. More and more people are flocking to online platforms citing the fancy of convenience, assurance of secure transactions and the promise of delivery which is further supplementing the ever growing acceptance of rented furniture. This has made it easier for the Furlenco to convince the consumers while reducing its cost of customer acquisition.
“Since the past one year our cost of customer acquisition has significantly dropped down by 60 percent,” said Ajith.
Startup designs its own furniture packages of living room, bedroom, dining room and full room and offers it on rent starting from Rs 999 to Rs 3,500 a month while ensuring delivery in 72 hours. The average tenure of possession of its rented furniture is around 18 months per house. It deploys around 5000-6000 of quantity of assets every month and has around Rs 70cr of total assets.
Competing with the startups like Urban Ladder, City Furnish and Flatfurnish in the similar space Furlenco is growing with the rate of 30 per cent MOM with having around 4,500 active consumers in Bangalore, 1000+ in Mumbai and 500+ in Pune.
Planning for the next round of funding in four to six months of time Ajith Karimpana said, “Last year the company raised $6 million in series A funding from Lightbox Ventures and is planning to raise next round of funding in the next four to six months while targeting to break-even by 2017 with acquiring 20,000 customers by the end of 2017 and around 1 million customers by 2021. It is eyeing to reach $ 200 mn of turnover by 2020.”
According to PricewaterhouseCoopers, the sharing economy will generate potential revenue of $335 billion by 2025 globally.
“In the US the furniture market contributes to 5 per cent of the total GDP, in China it contributes 20 percent and in India it just contributes 0.5 percent. The Indian furniture market is of $20 bn and the rental furniture market could be of 2-4 per cent of the total value,” concluded Ajith.