Items from camping tents to sophisticated gadgets are rented out for $150 a day.
When founder Elliot Leung recalls the earliest prototype for Gaifong, a new peer-to-peer platform for item rentals, it was simply a Google spreadsheet where people could list things they want to rent out and at what price. Still, the concept hit a deep nerve, with thousands of people signing up as members and listing their possessions for short-term rentals.
"It was very rudimentary but it worked. People started posting lots of amazing products, from camping tents to pet care kits – even a Mahjong table, and began renting from others in the list," said Elliot Leung, founder and CEO of Gaifong. "As items accumulated, we decided to take this a step further and add in a security and payments layer and turn this into a business."
The Gaifong platform, which is accessed through an app and established by Leung with co-founder Hon Kuan Chan, soon got on its feet through a CCMF startup grant and angel funding through the British Chamber of Commerce Business Angels. To date, the rental platform has attracted 25,000 members or so-called ‘neighbours’ (the Cantonese word for Gaifong) and 12,000 rental items in Hong Kong.
The average item is worth around HK$4,000 and is rented out for HK$150 a day.
Gaifong earns by charging a 15% to 20% platform fee on each transaction, and Leung said the startup has bright revenue prospects. "We've still got a 10-20X revenue opportunity here in Hong Kong, so this will be our main focus area in the near future," the founder noted. "We only have 25,000 'neighbours' involved but are already close to breakeven."
Gaifong's immediate business focus in 2018 is to drive up its member count and also incubate a few more cities around the region. Leung said the rental market is underserved, which has made their platform popular among photographers and other professionals that do not want to invest in expensive gear purchases early in their careers. On the item supplier side, people with spare gear at home which they seldom use such as virtual reality and technology gadgets find it appealing to rent them out for some side income.
As Gaifong prepares for regional expansion, Leung remembered the startup’s early stages when it was hard to secure funding due to investor doubts on the business model. "Everyone thought we were crazy. Well, people still do! People couldn't see past the current craze for e-commerce and retail."
Part of the concern is security against scammers and thieves, which Gaifong weeds out through security checks for card and fraud. Renters also receive deposit protection.
The founder added that a key differentiation strategy for Gaifong is to build up a stock of products across a broad range of categories instead of specialising in a single one. "We're more Amazon rather than Ikea," said Leung. With many rental items to sift through, members might find it hard to find the exact one they need. This led the team to inject Gaifong with a proprietary recommendation engine which suggests items to users based on their interests, past app activity, seasonality, and other data points.
If the marketplace lacks the item they want to rent, members can use the Wish function to alert neighbors, which Leung said is a unique service in the market. "Once they see your ping, and they have what you need, they'll upload it for you," said Leung of the best-case scenario when using Gaifong's Wish function. "It's a bit like Uber mixed with Chinese location-based social app Momo, except it's for item rentals only."
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