- Principles: The rental of goods or services is an old and widespread business model. It allows customers to pay the company periodically for the time-limited use of a product without having to own the product. The company takes care of the maintenance of its physical assets, insurance costs and other usual expenses. It depreciates the costs of acquiring the products as it rents the goods.
- Advantage & Challenge: This business model makes it more accessible and reaches a larger market when the price of the product is important. It also ensures regular income for the lessor, as the lessee is required to pay periodically an amount agreed between the two parties. Finally, the lessor has the advantage of retaining ownership of the product, which ensures additional income in the event of resale. For the lessee, this model is advantageous when what he rents would cost him more than he uses. Instead of having to buy the property, they pay a fixed sum at regular intervals. From a financial point of view, the first disadvantage is the fact that the lessor will be subject to a double tax (first tax at the time of the acquisition of the property and then taxed at the time of regular payments made by the lessee). In addition, the maintenance of the property may require significant resources, particularly in terms of repairs and logistics. Finally, one of the challenges is also the increasing disintermediation.
- Evolution of the business model & maturity: This model is extremely old, it already existed under the Roman Empire. At the beginning of the 19th century, the industrial revolution favoured the expansion of this model with the rental of cars and printers. Digitalization has facilitated the rental process, and today it is possible to rent a large and growing number of goods on the internet. Finally, the importance of renting can also be explained by the environmental awareness that pushes to consume more sensibly, and renting is a very good alternative that favours the use rather than the possession of goods.
- Key figures: According to a report by the company FaitBit, the rental industry was worth $19 billion in 2017 and is expected to reach $59.4 billion by 2022. Moreover, 80% of rental revenues are generated in Europe and North America.
- Product adapted to the business model: This model does not apply to all sectors, it is especially widespread in sectors where the price of goods is consequent such as real estate, vehicles, equipment, furniture rental…
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