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Rentoza, SaaS and subscription-based models as the future of commerce

Group picture of Rentoza staff sitting around a circular wooden table

This interview was edited for clarity.

Rentoza, a South African company founded by Mishaan Ratan and three other friends in 2017, has evolved its business model over the years to provide consumers with a better way to access the products they need. Initially operating as a rental marketplace, Rentoza quickly realized that this model wasn’t providing the experience it wanted to offer. After analysing data, the company shifted to a short-term rental model, allowing consumers to rent products for anything from 1 to 18-month periods depending on the product and their needs. This proved to be more successful, as it gave consumers the flexibility they were looking for and allowed Rentoza to offer a wider range of products.

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Over time, Rentoza continued to evolve and now offers a subscription-based model, providing even more flexibility and convenience to consumers. By offering a range of rental and subscription options, Rentoza is changing the way people think about consumption and providing a more sustainable solution for accessing the products they want. “We started this for a reason,” Mishaan explains. “We wanted to find a better way for people to access and use the products they need, and we’re committed to continuing to evolve and improve our model to provide the best possible experience for our customers.”

Despite the challenges of building a new brand and establishing a new company, Mishaan and his team are determined to make Rentoza a household name. “We’ve heard some really funny pronunciations of our brand name,” Mishaan says with a laugh, “but we’re confident that as more people learn about what we do, they’ll understand the value and convenience of our rental and subscription options.” As Rentoza continues to grow and expand, the company is poised to revolutionise the way consumers access and use the products they need.

I spoke to Mishaan about the evolution of the brand and how the concept of commerce, retail and ownership have changed.

Brendon Petersen (BP): Mishaan, it’s great to chat with you. You are the CMO and co-founder of Rentoza and you guys have had a very interesting weekend – not just because of Black Friday and Cyber Monday – but because you’ve also opened a pop-up store. Give us a quick breakdown of what Rentoza is, who you are, what you do, and how long you’ve been around.

Mishaan Ratan (MR): It’s great to chat with you as well. 

Let me tell you about Rentoza. It was founded by myself and three other friends as we were trying to solve a problem for ourselves.

We were trying to solve a problem for ourselves, which is how we as individuals access these beautiful products and how we find a better way to do this. That’s when we came together and said, “Hey, listen, let’s just start something. Let’s find a better way for people to access products and use what they want when they need to.”

Let me take you through a bit of the history of the brand and the business models.  

We built the original version in 2017 and realized that while we were solving this problem for ourselves that maybe another 20 million people in South Africa could use this solution. We decided to create a new way of consumption that completely focused on consumers in South Africa. 

Rentoza actually started as a rental marketplace and was basically a conduit between small businesses and suppliers and of course consumers. We just facilitated the transaction and we had no sort of oversight on anything outside of that. We did that model for about a year. We realized that we were basically just like shifting lazy assets around and that we weren’t giving people an experience. So we decided to look at what the data told us and it told us that people want stuff for slightly longer periods of time. So we shifted our model into a sort of short-term 6 and 12 months rent to own model because people wanted to buy this stuff. We ran that model for approximately another eight or nine months and got to a point where we realized that we weren’t doing anything different compared to other installment offerings.

Based on the data and trends that we saw that had developed from COVID as well as the increase in the proliferation of SAAS and subscription-based models in South Africa, we realized that people were accessing things differently here and we questioned how we could give them this option with physical goods as well. 

We moved to a subscription-based offering and built this model that’s a non-credit model. We don’t do credit checks on people and we give people access to their desired products for the period of time they need. We also give them the ability and the flexibility to choose a term as well as upgrade, downgrade and swap out an item whatever they want. 

Our value proposition that we built is we are about affordability, accessibility and flexibility.

At the core of our model, flexibility is what makes a big difference because you never have to own these items anymore. You pay a fee to access them as a pay-as-you-use model and if you change your mind, you can change your mind. Should you want to upgrade something, we’ll swap it out for you or change your subscription. You’re never locked down and never burdened by a credit-backed agreement for a long-term technology product that is rapidly going out of date. 

BP: A few months ago, Rentoza sent put a press release about the fact that debt counseling companies reported a 32% increase in debt counseling inquiries compared to 2021. Here’s a direct quote from that press release and from you: 

“Don’t buy your appliances and electronics and get into more unnecessary debt. Subscribe to it. Ownership is old-fashioned and unnecessarily expensive in these times. The state of South Africa’s household debt is a testament to the need for something more suited to our modern life.”

Across the world, subscription models are on the rise, helping consumers manage their need for must-have appliances, electronics and even cars. Ratan says this has changed the way many consumers manage their finances.

“We already subscribe to things like music apps, streaming services, or even internet. In the end, we are subscribing to a service, so why not extend this thinking to appliances and mobile devices as well? When the device or appliance can no longer perform that service, you aren’t stuck with a broken or updated item, you simply trade it in, get a new one, and continue subscribing to the service.”

How do you, as a company, navigate that very complex minefield of people getting into debt? It’s not your issue to solve.

MR: Yes, it’s not our problem to solve, but if we can make an impact on that, then 100% we’ll do it. We might be founders, but we’re also part of the middle class of this country. We all also have it. You’ve got a house, your car, etc. And I mean in the last stat, I think it was about 76% of total household income goes to servicing debt. Just think about that for a second, we’ve got 20% of our total income that people need to survive in this day and age. 

All the nice things that people want to get, you put on credit, you swipe your credit card for your loans, the technology that you need. 

We initially did credit checks on our platform and what we found is that the debt burden increased as we went along and we saw a higher default rate. W also wanted to avoid this because you know that people are gonna do all this stuff and at that point, it was a rent-to-own model. So it was a very different sort of dynamic that existed in the business then and we realized that it was just going to continue and persist forever. 

If we look at the macro factors that are impacting so Africa we know that’s not going to get any better. You’ve got other things like the global price because of what’s happening in Europe and all of these things are impacting us. As an individual you don’t think about it, you’re just swapping the credit card. Come two or three months later you see the impact of this and everybody ends up in a worse-off position. 

We asked if there was a different way to put access over ownership.

We went in and built our own IP and we built a behavioral analytical model that we use to validate customers on our side. We don’t do credit checks, but we do have a multitude of factors that sit behind the approvals. We’re giving people a way to use the products that they need in a very, very different way without giving them a long-term burden. It allows you to manage your finances very differently and then you can change the way that you live your life a little bit.

So yes, we’re not responsible for making those decisions, but we’re giving our customers the opportunity to find a way to use their money differently.

For the full interview, listen to the podcast here or search for Tech Reframed on your favourite podcast platform.

Read more: Huge funding boost for e-commerce platform Rentoza – Ventureburn

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