Startups Asking “Why Buy When You Can Rent, Share and Borrow?”

Renting, not buying, is increasingly becoming the choice way for consumers to experience new things, try out new tools, get around and do even more in their day-to-day lives. There are a number of startups cropping up to capitalize on the growing tendency people have not to want to commit to the expense associated with purchases (especially for big ticket items). Both users and startups win when users start to look around for the best ways to get what they need, when they want it, with the convenience of ownership but without the responsibility, costs and headaches.

It’s a phenomenon that’s already well-established among car sharing services, like Zipcar, Autoshare and Car2Go. Zipcar went public in 2011, and early predictions suggest that they may be on their way to becoming profitable in 2012. Car2Go recently expanded in North America, including opening its service in Toronto, Calgary and Vancouver, and market research firm Frost & Sullivan predicts that car sharing revenue in the U.S. could be a $3 billion industry by 2016.

But cars aren’t having all the fun. Collaborative consumption, as authors Rachel Botsman and Roo Rogers called this trend of resource sharing, is on the rise in general, with countless startups emerging to capitalize on the desire of people to rent or borrow what they don’t need to buy. There’s Bixi for bike sharing, Airbnb for house swapping, recycling communities like Freecycle, BookRenter for sharing textbooks, and many more.

New York-based startup Rent The Runway is one such company. Founded in 2009 by Harvard Business grads Jennifer Hyman and Jennifer Carter Fleiss, the company provides dresses to women looking for high fashion for special occasions, but without the big price tags that general come with designer brands. Rent the Runway has gone on to raise $30 million in VC funding, from Highland Capital Partners, Bain Capital Ventures and Kleiner Perkins Caufield & Byers.

In an interview, Rent The Runway’s Ashley Savage told BetaKit that in part, the rise of interest in rental services is a product of people realizing that for occasional needs, purchases don’t make sense as a way to scratch a fleeting itch.

“There are a lot of women today that experience the ‘closet full of clothes and nothing to wear moment’ that inspired the concept of Rent the Runway,” she said. “With increased social calendars and salaries that often do not support the amount of occasions women need dresses for, renting is a great solution. We are not discouraging buying and instead, are promote purchasing investment pieces and renting the one-shoulder hot pink gown that you would never want to have in your closet.”

In general, the drive towards group buying and renting is something that Will Dennis, founder of bicycle sharing service Spinlister, says has been in the works for a while now, but the advent of social media really helped jumpstart that evolution and kick it into high gear.

“I’d say collaborative consumption and renting is a shift in consumer behavior that’s coming about as a result of the online behavior we’ve seen for the past 10 years,” he said. “Social networks and real identity online set the groundwork for renting, sharing, and buying from people you don’t know. What used to be renting from a stranger, is now renting from someone who has 200 followers on Twitter, 600 friends on Facebook, a solid Klout score, and in a lot of cases might be a friend of a friend. The social web results in trust, access to what you need quickly, and in the long run a more authentic and interesting experience.”

Spinlister is banking on something that’s even more about shared consumption than Bixi’s model, since it allows users to share their own bicycles with others. The company is looking to capitalize on how Dennis says people actually use bikes, not on strict time limits and extra charges.

“We’re providing the experience of renting a great, affordable bike from a local,” he said. “Bike share systems are catering towards commuters and people going from point A to B. We’re looking to provide an option for people who want to meet new people and explore by bike without worrying about racking up fees if they’ve had the bike for more than an hour.”

While the startups mentioned above generally focus on specific verticals, there’s also a growing interest in just offering a place where anything can be put up for rent, kind of like a Craigslist but for short-term use. Boston’s Rentabilities is one such startup, which has been offering users the ability to rent anything for rates of their choosing since its launch in 2011. Getable, which raised $1.4 million in seed funding last summer from investors including Andreessen Horowitz and Ron Conway’s SV Angel, is another broadly focused rental marketplace allowing any kind of listing, with the twist that it also offers a business backend product for people who make their living from renting inventory. And YBUY operates as a “try before you buy” subscription service, allowing users to rent or rent-to-own items like espresso machines and iPads.

So, in the end, is renting the new buying? Conspicuous consumption is hardly going away anytime soon, giving the still-dizzying statistics around sales of consumer goods around the world. Retail sales in China alone are estimated to climb to a whopping $5.55 trillion by 2015, for instance. But with economic uncertainty leading to a refocusing of priorities, the sharing of resources, which can both help renters save money and help people who already own things they’re not using make some, seems like a good trend to bet on in the near future.

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