Home / Money / Personal-finance /  Power to lease or own a product should be in the hands of the consumer

Rentomojo, a subscription-based leasing platform has its presence in eight cities. The startup, that was set up in 2014, provides several products—furniture, appliances, bikes, smartphones, laptops, and so on—on rent at affordable prices. Geetansh Bamania, its CEO and founder, talks about the renting trend in India and the company’s unique instalment model

What is the concept of Rentomojo? How does it work?

Strictly from a consumer perspective, there are two models of buying a product—one is buying it upfront and the second is taking it on EMI. But if you get bored of the product, then you are stuck with it. If you want to relocate or take care of maintenance, then it’s going to be a problem. So there are a lot of problems that come along with ownership of a product. 

When it comes to millennials, they don’t really know what can happen 12 months down the line. So we offer the benefits of affordability of EMI, but have also made it flexible for millennials to get out of the contract whenever they want. Our model is that somebody should be able to use the product for a certain time period, and then, if they want to, they can own it, or return it. That puts the power in the hands of the customer to avail a service which is worth, say, 20,000, at, say, 600 or 700 a month for a 12-month or 18-month period. We take care of the returns or relocation, maintenance, or any manufacturing defect. So a lot of these problems are taken care of. 

Why do you think people prefer things on rent these days?

From 1995 to 2005 to 2007, everyone wanted to buy a house. Cut to now—the decade from 2007—hardly anybody is buying a house. Nobody wants to get stuck in a 20-year loan that restricts mobility. The same is with cars. People are happy hiring an Ola or Uber and spending around 3,000 a month rather than buying a car on loan. So the psychology of today’s users—be it millennials or anybody for that matter—is they want the product and they have all the aspirations in life but they don’t want the problems that come along. The same goes for furniture, phones and appliances. 

We don’t see ourselves as a renting platform. Renting is typically considered to be 2-4 months. Our customers stick with us for 14 to 18 months. And long-term renting is not a phenomenon that was there earlier. We try and portray ourselves as a lifestyle solutions platform, which is more long term. 

You have this concept of Rentomojo Monthly Instalments (RMIs). What is it and how is it better than EMIs?

So RMI isn’t really much in fight with EMI. It has more to do with the real notion of outright purchase. The nature of RMI is very similar to an EMI. Traditional renting companies offer fixed renting products. If you go to a shop and ask for a table on rent; they would say this is for 400 a month irrespective of the tenure. But if the rental is not changing as per the period, there is no benefit for the consumer to take it for 2-3 years. For us, the 12-month rental of a product is much lower than the 6-month rental and 18-month rental is lower than 12-month rental. RMI is a term we have coined to tell people this is similar to EMI but not the same.

Millennials want to use products but they don’t want to own the problems that come along-

You also have the “rent to own" option. But your whole concept is driven by the fact that young millennials don’t want to own things. Isn’t that a contradiction?

The millennials want to use products but they don’t want to own the problems that come along. So if they are certain they will stay at one place for more than 4-5 years, they might want to own the product. RMI gives them an option to decide later on in their lives; when they become more stable. So we are not in the fight with this mentality of people wanting to own the product. We are actually a catalyser to that. In fact, we push people to start using and owning a product. The consumer should decide if they want to be in the lease cycle or own cycle.

The 12-month RMI for iPhone 8 is 3,699— 44,388 a year. One can own it after a year by paying another 31,477; so a customer is effectively paying 75,865. The same is available on Amazon for 57,499. Under the 12-month EMI option, it will cost 61,952. Phone prices drop when a new version hits the market. How do you make sure your offering is cheaper?

The right comparison should be with EMI. If 58,000 is the worth of the product, then the EMI is going to be with an interest rate of 13-14%. We don’t want consumers to take us as a loan platform. The nature of the instalment is that we are helping you not pay that upfront capital. For a 12-month period, the consumer only pays about 45,000. 8-12 months is a typical cycle a person uses the phone for. When the new model comes, users can return the phone and take the new model. So it’s a huge saving if you just take the lease. At the same time, we are also saying that if you don’t want the new model, you can own it by paying a certain price which is going to be expensive because that’s the price for the additional benefits of return, free repair and maintenance, any manufacturing defects etc. Imagine now people can try a product for 6-8 months and return it. Under EMI, you can’t do that.

How do you verify your customers?

We have our own proprietary algorithm built using over a 100-plus variables. We try and understand how well-integrated the consumer is within the ecosystem. An individual who is working in a decent company and whose earning potential is also decent is not someone who is going to vanish. Some of the attributes in our algorithm check for that. Then we verify the user and deliver the product. It takes us a couple of minutes to do that. So as a user you fill in a few details like which company are you working in, your PAN card, government ID, which lets us identify you. We use Cibil score, too.

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