Key opportunities in the rentals focused Circular Economy sector

This week saw the long awaited launch of the next season of HappyPorch Radio, focused on rentals. We had the chance to sit down with Danai Osmond, whose eclectic experience spans the circular economy and beyond.

Currently the Founder of Refulfil, which gives full spectrum support for rental commerce companies, he is well positioned to share many key insights on the market.

While the episode in some ways served as an audible counterpart to our earlier primer article, “Rentals, The key to unlock the circular economy?” it also delved into some deeper details & themes that bear highlighting here.

But first it must be shared how Tandi Tuakli, co-host of the show, turned out to be in a way a poster child for the benefits of rental. When asked what the last thing she rented was, she said, 

“I have a clothing subscription, so each month I get a box full of three to four new items, and this has significantly helped me with not buying more clothes because I do have limited space. And also being able to keep my wardrobe a little bit more exciting and wear the clothes that I have more.”

A profile to keep in mind as you shape your business. 

Now let’s dive in further, gleaning insights from this fertile conversation:

The theme of Utility comes up numerous times. If you’re already in the sector, you know it’s an important metric to attend to. And for those of you considering starting, optimising Utility from the start will have you well prepared to succeed. 

What do we mean by Utility?

Danai puts it into context when he says

“…with something like fashion rental, I’ve seen stock utility probably averaging about 20%. When I say stock utility, like the time it's out with a customer versus inactive, either being washed or in the warehouse and sat doing nothing. 

That's one of rental's real problems - how do you maximise that utility whilst also keeping the availability to make sure that you're able to convert the customer when you hit their site? Because availability is probably the most important thing that goes into rental conversion.”

So clearly, it’s a balancing act of maximising the use of your inventory while at the same time making sure to have enough on hand to meet customer’s needs. How do you address that? 

Data. 

He says, in essence, that there’s a missed opportunity in terms of software use, to go beyond the basics. That we could take a cue from the retail sector, which has squarely focused on optimising all aspects of their business via data. Which, by the way, we can deftly help you do, integrating your various tools, optimising both your data and day to day operations.

As Danai puts it, 

“It's in that data that you find those extra margins that maybe make this model profitable. With more advanced data that's accurate enough that you can make intelligent decisions on what to buy, both from a demand perspective - like buying at the right time, the right color, the right sizes - so that when someone visits your site to rent something, they're not presented with an out of stock for the dates that they want.”

It’s details such as these that can determine whether a business simply survives or actually thrives. 

But it takes being/getting known in the first place. The discoverability quandary. Which you as an existing brand outside the rental space may have a significant advantage:

“I think the real struggle at the moment is discoverability. There are very few ways for rental brands to acquire a customer that they're creating a market for themselves, right? And there is an amount that you can do with influencer marketing, with social media marketing for discoverability. 

There's only so much you can do in the search space. If people aren't searching for what you're offering, then there are very few ways to rank there. There are a couple of things you can do with location based search and stuff like that, but it is really an uphill battle. 

So I think one of the things that we really tried to do when I was at Supercycle was get brands involved in rental. 

Brands already have the eyeballs. They already have the consumer on their website, so it's very easy to convince that consumer, especially if the channel is brand-owned to rent that thing for much less than they could buy it for.

But you can understand the concern from brands that it might cannibalise the sales. I have views on that. I don't think it actually would - I think they're selling to a different market. I think they're selling a different value of item to the same person if it is the same person.”

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For  more insights into how to optimise your rentals focused Circular Economy business, visit the dedicated episode page. Here you’ll find the full episode, transcript, key highlights and relevant links. 

Here you’ll learn:

• The optimum location for rentals focused businesses
• Key rental business model types and emerging opportunities in each.
• The realities of scaling circular operations in high-pressure environments
• Why customer trust, convenience and shared infrastructure make all the difference 
• The role of joy, care and humility in systemic change