How to build a rental marketplace. Fast.
Want to create an online platform where people can rent apartments, vehciles, equipment, and more? A peer-to-peer rental marketplace, or a B2C or B2B business? This article helps you get started, fast.
Table of Contents
- What is a rental marketplace?
- Building a rental platform
What is a rental marketplace?
A rental marketplace is a platform where individuals or companies can rent different types of goods from one another. The best-known example is Airbnb.
Since Airbnb first started, the popularity of peer-to-peer rental websites has skyrocketed. Sharing all kinds of goods from baby gear and cameras to bikes, cars, and homes is replacing ownership for more and more people all around the world.
And why wouldn’t it?
E-commerce, marketplaces, and the sharing economy are huge trends with massive business potential. Renting expensive or infrequently used items instead of buying them is a lot cheaper and much more convenient. At the same time, individuals are more and more willing to list their own items on a rental marketplace platform to earn some money on the side.
There has never been a better time to start a rental marketplace.
Marketplace platforms have another benefit: you can start a marketplace without any initial inventory. Because providers create your supply, getting started with a doesn’t require a huge investment.
Most importantly, marketplace software has become extremely affordable as well as quick and simple to use. For example, with Sharetribe Go, you can launch a fully functional marketplace in one day without writing a single line of code!
There truly has never been a better time to become a marketplace entrepreneur.
About the rental marketplace business model
So, if people use a marketplace website to rent items from each other, how does the entrepreneur build a profitable business?
Most peer-to-peer rental marketplaces generate revenue through commissions. Commissions mean the platform makes money by taking a cut out of each transaction that takes place. This is the business model that Airbnb uses.
The commission model has one additional benefit: it can offer users extra security through functionality called escrow.
Escrow means that when a customer makes a booking to rent something—say, a bike—their credit card is already charged when they make the booking. However, the provider who owns the bike doesn’t get the money before the customer actually receives the bike. The marketplace holds the funds in the meantime.
There are other kinds of business models available for rental platforms. For example, some marketplaces charge a fee for users to join or to publish a listing. Others make money by selling ads, or with premium services such as insurance or delivery.
However, the commission model is by far the most popular revenue model for rental sites because it’s usually the most lucrative one. The website owner gets a share of all of the value that goes through the platform. The commission model also makes it easier to attract providers as they only need to pay a fee when they make money.
How to start a successful marketplace business
A marketplace can be a fantastic business with low risk and high growth potential. But building a successful business is always a challenge.
As the popularity of rental marketplaces grows, so does the amount of competition. You need to find a business idea that solves a real problem for your users. Then you need to build a platform that both your providers and your customers love to use.
But how do you know your idea solves a real problem? How can you find out what kind of website your users would love? By launching the first version of your website as quickly as possible.
Launching quickly is the best way to validate your business idea and start learning more about your users. No customer research, crowdfunding campaign, or competitor analysis can reliably tell you if people will really use your platform to complete transactions. The only way to know for sure is to build something, get it in front of real users, and start learning.
After you know more about your users, you can start developing your marketplace in the direction that works for your specific audience and niche.
Launching quickly is the best way to validate your business idea and learn about your users.
Sharetribe’s products have been designed with this iterative process in mind. You can start a rental marketplace with Sharetribe Go in one day. You get all the essential features without writing a single line of code. When you’re ready to take your business to the next level, you can upgrade to the API-based Sharetribe Flex to expand your platform further.
Both Sharetribe Go and Sharetribe Flex are specifically designed to power rental marketplaces, whether they are P2P, B2C, or B2B.
Before you can start building, it’s important to understand what “essential features” actually mean for renting websites.
Building a rental platform
If you have an idea for a rental marketplace, you also likely have thought about how you want your platform to work. How users create user profiles, browse listings, post listings, start and complete transactions. What the website will look like and what kind of user experience it offers.
Many entrepreneurs think their website will have to match all of Airbnb’s extremely advanced features. Not to mention it’s stunning visual style.
But trying to build an Airbnb clone has been the death of many great business ideas.
In fact, Airbnb first started as a modest WordPress website, and the founders, Brian Chesky and Joe Gebbia and were forced to do many things manually for a long time.
In addition to viable, your marketplace also has to be lovable.
This approach is called building a Minimum Viable Platform (MVP). It’s the minimum solution that will allow you to test your idea without spending months and a fortune on development.
In the age of increasing competition, however, it’s not enough that your platform is viable. It will also have to be lovable for your very first customers.
So, what are the most important features that will make the first version of your website viable and lovable?
Essential rental marketplace features
All marketplaces need a unique value proposition to thrive.
But, most successful platforms also have many features in common.
This makes a lot of sense. Users are accustomed to expecting a marketplace to work in a certain way. Re-inventing the wheel on the most common functionalities can generate unnecessary challenges because your customers might find your website difficult to use.
Here is a list of the most critical features that almost every rental marketplace will need.
When people start using your platform, they first sign up and create a user profile. User profiles typically have the user’s name and photo, and some additional relevant information.
Both the providers and the customers usually first create a user profile before they do anything else.
For your website to be a marketplace, you need a listing functionality. This allows your users to post images and information about the item they are renting.
An excellent listing functionality can make or break your business. If providers feel that creating a listing is difficult or time-consuming, they won’t bother to do it. If customers don’t find enough listings, or if the listings they see look uninspiring or low-quality, they won’t make purchases.
Map & Location
For traditional e-commerce platforms like Amazon or eBay, users’ locations do not matter because products can be shipped anywhere. For rental marketplaces, this is usually not the case. If you’re renting a bike, a car, or a home, you typically need it in a specific location.
Even websites that focus on smaller items, like cameras or baby gear, are usually location-based. The need for a rental is often quite sudden, so waiting for the item to be shipped from a faraway location would often be a deal-breaker.
Most marketplaces make money by taking a share of each transaction. To be able to do so, the payment needs to happen through the website.
This means that customers need to be able to make a payment on your platform using their credit cards or Paypal accounts. The provider who rents the item needs to be able to receive the money to their bank account, but before that, the entrepreneur needs to be able to take their cut.
Renting your personal belongings to strangers can feel scary. Similarly, renting and paying for 2-week holiday accommodation from a complete stranger might not feel as secure as booking a hotel room.
That is why successful rental marketplaces work hard to create an atmosphere of trust between their users. Reviews is one way to do that. After a successful transaction, both the provider and the customer review each other. This helps both parties feel confident that they are dealing with real people with good intentions.
Availability & booking management
An availability and booking management feature does three things on your marketplace. First, it allows providers to control when their listings are available to accept bookings. Second, it helps customers browse the listings based on availability information. This is important because customers typically want to rent something for a specific period.
Third, booking management makes sure that there won’t be any canceled purchases due to double bookings. All these functionalities need to work without hiccups on your site. If they don’t, your users on both sides will let you know.
Holding funds & delaying payouts
Delaying payment is crucial for building trust on your platform. You need to make sure that providers deliver the product that they have promised and that customers pay the price that was agreed.
Delayed payments allow you to charge the customers’ credit card when they make a booking, but pay the provider only after they have delivered the item being rented. This helps both parties rest assured that they can trust each other and your website.
To run a successful marketplace, you need to know everything that goes on on your platform. How many users you have, how active they are, how many transactions are going on at any given moment, what kinds of reviews your providers get… All this information needs to be easily available whenever you need it.
You also need powerful tools to control the activity. You need to be able to moderate content, block users, edit payments, and keep track of messages. With proper admin tools, you’re equipped to take action whatever happens on your platform.
All these essential rental marketplace features come out of the box with Sharetribe.
How much does it cost to build a rental marketplace?
Costs are one of the biggest challenges for early-stage marketplace founders.
Building all of the features mentioned above from scratch—and making sure they work smoothly—is difficult, time-consuming, and very expensive.
At the same time, these features have become the bare minimum for rental marketplaces. Today’s users simply have less and less patience for anything but a premium-quality user experience. As a result, founders might spend several months and thousands of dollars building only the bare essentials—the features that need to be there but that the customers will probably take for granted.
The good news is that there are software solutions that you can use to build a marketplace without any coding. They offer the essential functionality at a fraction of the cost it would take to build it from scratch.
Use your resources on bulding your community and your business – not your tech.
As an example: Sharetribe Go offers you all of the essential rental marketplace features listed above.
Sharetribe Go starts at $79 a month, and the pricing only goes up when your user base grows. Instead of spending months and thousands of dollars on dev work, Sharetribe Go gets you launched in one day. No coding skills needed!
This allows you to use those critical first months and your resources on building your community and your business—not your tech.
Before you start paying, you can test Sharetribe Go by creating a free 30-day trial. You can check out all the features and see how your rental marketplace could look like. You can already invite users to your platform during your free trial, so you can start validating your idea from day one.
Peer-to-peer rentals? B2C vacation platform? A B2B marketplace for renting equipment? Turn your idea into a reality today.
No matter how creative or ambitious your business idea, you can build it with Sharetribe.
With Sharetribe Go, you can successfully build, launch, and grow a rental marketplace, be it peer-to-peer, business-to-business, or business-to-consumer. You never need to write a single line of code!
When you’re ready to take the next step with your business, Sharetribe has you covered.
Like Sharetribe Go, Sharetribe Flex offers all the essential rental marketplace functionality out of the box. Meanwhile, Flex’s API-based, headless architecture lets you code your own front end and expand your feature set.