Have you been bitten by the entrepreneur bug and are interested in creating your own rental marketplace? Whether this is the first time you are taking the entrepreneurial plunge or you’ve had previous ventures, this is probably the best time to look into the rental marketplace industry.
Although marketplaces used to be mainly focused on products, that is a thing of the past. Embodied by companies like Airbnb, we can safely say that rental marketplaces are one of the biggest trends of recent years which have transformed the global business environment. How do you find a service or service provider in your daily life? If your first answer was I look for it online, you’re not alone. Service marketplaces create a digital experience for both clients and providers, allowing people to find a service they need, pay for it, track the booking and review the service and the experience without leaving the marketplace at any stage. The outcome of this digital experience benefits all users involved, creating new sources of profit for providers and helping clients access the services they need without paying full price to purchase them. How many products have you bought which are now stored in your garage or lying somewhere in your house untouched? What happens to your holiday home in between seasons? These are simple questions but they are the foundations of the rising rental marketplace industry. And it doesn’t just apply to individuals, it can also be done at company-level, as the added value of a marketplace cuts across multiple industries and levels: monitored transactions, secure payments, booking transparency, reassurance in case issues arise, increased visibility for all services, peer-to-peer review system, etc.
Although there are multiple types of marketplace business models, a marketplace can be understood as an online multi sided platform in which providers and clients interact. One of these marketplace models is the rental marketplace and as the name indicates, it is a type of marketplace in which users, either companies or individuals, rent any goods, from houses and apartments, to cars or equipment.
As marketplace operator or administrator, your role is to provide the tools and structure that will bring these users together and enable them to complete successful transactions. Depending on your marketplace business model and strategy, you will have varying degrees of involvement. For instance, you will be in charge of driving user acquisition and marketing campaigns to boost the visibility and growth of your multi vendor marketplace. Furthermore, you will always have full control over completed payments, wire transfers, refunds and collected fees. Yet, you can choose to have a tighter or looser grip on which users can be active in your marketplace and which listings can be published. If you decide to apply a pre-moderation strategy, you will be able to ensure the highest level of service and quality but it will also imply a higher level of involvement on your end.
These are some main elements that will drive the success of your rental marketplace and you will have to dedicate some time to them so the marketplace solution you choose needs to help you maximize your efforts and optimize your time. With this in mind, at Hatch we have created a full service SaaS marketplace solution that combines the most feature-rich marketplace software with tailored strategic support to accompany you during all stages of the life cycle of your rental marketplace, from the early stages of testing the technology all the way up to your go-live and beyond. The full service experience delivered by our team will help you achieve every major milestone to succeed as you step into the league of marketplace entrepreneurs.
Once you have decided to create your rental marketplace, the first step is to define how you would like it to operate and what your monetization strategy will be. In other words, you need to create your marketplace business model, even if it will probably evolve over time. Let’s take the example of Airbnb. If you aim to create a rental marketplace like Airbnb, you will notice that their business model is not the same as when it started. Although it is still based on commissions per transaction, the rate has significantly increased compared to the low fees that were applied in its early days. Why? House owners were not inclined to rent their homes without concrete guarantees so in order to foster trust and promote transactions, insurance fees have been included to reassure users.
Commissions are not the only revenue model and your marketplace business could also be based, for example, on user subscriptions, listings fees, or a freemium model. Yet, although all marketplace business models have their pros and cons, commissions are the most popular one for rental marketplaces, especially for new ones, as it can help drive user acquisition. Since clients and/or providers only pay when they complete transactions, not only is it easy to justify why the commission is applied, but it also creates a sense of reassurance for users, as they do not risk paying upfront even if their services are not booked. Furthermore, this marketplace business model is also very effective since the marketplace will monetize each time a transaction is completed.
The main challenge of rental marketplaces which are based on commissions is providing significant value for users to make them keep coming back to perform transactions instead of communicating elsewhere. This is where your marketplace software can play a huge difference, as the main value will mainly come from ensuring secure payments, offering refund guarantees and a smooth user experience. Additionally, for the marketplace administrator, a powerful marketplace solution will also provide more flexibility to set a monetization structure aligned with their goals and industry. Setting up a fixed commission, a variable one or combining them? Applying commission only on the provider, the client or both? There is no right or wrong answer but this decision should not be taken lightly and the selected marketplace software should allow to define it in the best way possible. With Hatch marketplace solution, you have entire freedom to define the commission structure of your rental marketplace as well as define user-specific fees. This means that even if you have set a specific commission structure for your marketplace, you can also define a different commission for specific users to increase or decrease the fees collected on their transactions.
As explained in the previous section, a smooth user experience is crucial for your rental marketplace to provide value to users but sometimes it can be hard to achieve the right balance between a frictionless user experience and security. Our Hatch marketplace solution delivers the most powerful marketplace software with the richest set of features which are both relevant to you and your users. Hatch will ensure your rental marketplace is fully compliant and can complete secure transactions without hindering user experience thanks to features such as escrow payments, automated content translations, yield management, synchronization of the listing’s calendar, fully integrated KYC requirements to verify users anywhere in the world, international payments, automated split payments, machine learning algorithm to maximize bookings and much more.
Once you have set up your rental marketplace and defined all the elements we have gone through so far, you are ready to go live and start onboarding users. Although it’s always a challenge to launch your marketplace business, a SaaS marketplace solution is a great way to do so with low risk, as you will be able to validate your business idea without incurring in high initial costs. Our Hatch solution is designed to meet the technical needs of your rental marketplace while also delivering the strategic guidance and support to maximize your chances of success and growth potential.
One of the main challenges of a new rental marketplace is acquiring the first providers and clients. However, although taking the first steps is the hardest, once the number of providers starts rising, so will the number of clients. In order to trigger this virtuous cycle, an interesting approach can be to focus your efforts on certain industry verticals. You will therefore aim to boost the development of certain service categories and once they reach a significant number of users you move on to the next vertical.
These verticals can also translate into geographical regions. If you do not yet have a solid international user base, you can start local, focusing on a specific country or region. Your Hatch marketplace is fully scalable so once you start gaining traction you will be able to expand it without complex developments or unnecessary investments. Step by step you will build user trust and tackle each vertical or geographical region. The synergy created with the added value of your marketplace will boost both user acquisition and user retention.
If you have made up your mind and are ready to create your rental marketplace, contact us to discuss your marketplace project and we will deliver a personalized marketplace in 48 hrs. Start your 2-week free trial with a fully operational marketplace and work hand-in-hand with a dedicated Hatch strategist to maximize these weeks. Combine your vision with our marketplace expertise to master the technology, identify best practices and onboard users from day one. Whether your rental marketplace is B2C, B2B or P2P, our Hatch marketplace solution to build enterprise-grade marketplaces will live up to your ambitions to create your rental marketplace today and grow it without limitations, even across borders.