Zude (白租), an online rental marketplace, has closed a multimillion-dollar pre-A round from China Creation Ventures (创世伙伴资本). The company will use the financing to hone its technologies, bring in more merchants, and expand its product categories, MA Lei, founder and CEO of Zude, told the Chinese biztech media 36Kr, parent of KrASIA.
A slew of rental companies have sprung up in recent years thanks to the booming of the sharing economy and maturing of China’s credit system. YCloset (衣二三), for example, is a clothing rental platform co-invested by Alibaba and SB China Capital.
Founded in 2017, Zude promotes itself as a rent-anything online marketplace. MA believes that rental will become a recurring revenue stream for businesses in the future. When there are a large numbers of merchants engaged in rental business, there is a increasing need for a platform that can provide them with traffic diversion and risk control services as well as software and financial support. Among consumers, there is also demand for a comprehensive third-party rental platform that does the preliminary sifting for them, offers after-sales services and allows them to rent everything they want without visiting different vertical platforms.
Zude cooperates only with licensed merchants that are equipped with the essential operational capabilities and have sufficient supply of goods. As of now, it has introduced more than 300 online and offline merchants to its platform, offering over 5,000 SKUs for renting of computers, communications, consumer electronics, cameras, games and videos, toys, accessories, clothes, bags and suitcases, etc.
The rental service can be accessed through either its app Zude or on Alipay. For risk management, the company introduced a tiered deposit scheme by taking advantage of the bevy of credit rating systems including Zhima Credit. Zude has, to date, garnered over one million registered individual users, with most of them aged between 22-28 years old and men accounting for over 70%.
In China, the penetration rate of consumer product rental is only 4%, as opposed to 22% in the United States. This, to MA, represents huge growth potential, yet, he is also fully aware that the market, which is still nascent at this point, will invariably need fostering. That said, the company does have a leg up in the sphere of consumer product rental as its team members are all seasoned experts in platform operation, and that the company itself is an early starter in this space.
Going forward, the company still has to constantly hone its operational abilities to improve circulation efficiency, achieve price advantage by listing more cost-effective consumer products, provide continuous financial support and offer premium follow-up services, in a bid to retain its users and retailers and eventually build the platform into a trusted brand.
The company makes money off the retailers by charging 5% of the entire transaction amount as technical service fees. As of now, the company registers around 200 transactions every day, with per customer transaction standing at RMB 1,500 to RMB 2,000 (approx. US$230-310). Going forward, the company plans to zero-in on diversifying its channels for acquiring users and retailers. In 2018, it expects to bring the number of retailers on its platform to several thousands.
The Hangzhou-based company now has a little over 40 staff. MA, founder and CEO of Zude, was an employee at the People’s Bank of China before joining Alibaba as a senior product manager. While he was with Alibaba, MA headed the design of discount sales’ channel of Taobao.com and the business operation of Aliware of Alibaba Cloud. The key members of its team are all former employees from Alibaba, Ant Financial, JD.com, Tencent and more.