Furniture-As-A-Service: Everything You Need to Know.

Although home ownership remains to be the quintessential dream for young families and professionals, many lament the rising costs that come with turning a house into a home.

Not only is purchasing a home in the current real estate market expensive, furnishing one has also become a challenge. As statistics show in Germany, new homeowners are looking at an average expense of £3,000 to install a kitchen in their new space. Now imagine furnishing the bedrooms and living room with new furniture. This has led to only 42% of the German population becoming homeowners– the lowest ownership rate in the EU.

While affordable flat-pack furniture will always be available, recent trends have shown that Millennials and Gen Z are making additional considerations with their purchases. Instead of buying new, a 2022 ThredUp report shows that Millennials and Gen Z are thrifting more.

The global impact of the 2020 pandemic has inspired many to examine their buying habits and opt for a more sustainable lifestyle. Even Google suggests that the search term “how to live a sustainable lifestyle” increased by 4,550% in 2021.

While many homeowners and renters have begun to buy second hand, refurbish, and upcycle in their goal towards sustainability, a growing demographic of professionals with more disposable income and a preference for high-quality goods are turning to a new solution: furniture as a service.

What is Furniture-as-a-Service?

It's similar to Product-as-a-Service but for furniture.

Following the success of lighting-as-a-service and subscription boxes comes furniture-as-a-service, which allows furniture companies to rent out their catalog of home goods on a periodical basis to both residential and commercial properties. Think of it as a new take on furniture rentals, but with the membership and checkout process coursed through furniture rental software.

Furniture subscription allows customers to avail of a sofa, dining table, or work desk without having to shell out a 3 or 4-digit amount to purchase the item. Instead, customers will only have to pay a low weekly, monthly, or annual fee to use the furniture they like.

furniture as a service

Depending on the furniture subscription company, your furniture may be assembled or delivered to your home for free, or it may be insured from wear and tear. Of course, this all depends on the terms of your subscription.

How does this benefit furniture companies and subscribers?

  • For customers, this means paying a small and manageable recurring fee in lieu of dropping $500, the average price of a basic sofa, in one go.
  • For furniture companies, this means a guaranteed recurring income for a period agreed upon by you and your customer.
  • Furniture companies also retain ownership of their products no matter how many times it changes hands. The subscription model highlights access to a product instead of ownership.

However, unlike the traditional furniture sales model, furniture subscription hinges on the promise of circularity, which is a key aspect of sustainability.

Circularity ensures that a used item finds its way back into the market before it is ultimately recycled. When a piece of furniture loses its luster to a customer– which is a common occurrence in growing households– that item is either refurbished and returned to the catalog to be rented again. The driving idea behind circularity is to have as many customers utilize the item, thereby increasing its profitability before it finally makes its way into recycling.

The World Resources Institute estimates that the circular economy generates $4.5 trillion in various economic opportunities by helping reduce waste and creating employment. If the global push towards circularity is sustained, a net increase of 6 million jobs in the industry may open by 2030.

What are FaaS and the Subscription Economy?

Furniture-as-a-service (FaaS) is a model where a business rents furniture to customers at a recurring fee for a certain period or for as long as a customer needs access to a product. It is touted as an alternative to permanent ownership, especially of big-ticket items which are often expensive to acquire and maintain.

There are many reasons why subscriptions are appealing to many people, but the main one is flexibility. Furniture subscriptions are ideal for households that are either downsizing or growing, companies returning to the office, as well as companies making work-from-home part of corporate culture.

It is a customer-centric model that aims to work with the customer’s needs and finances by providing as many flexible solutions as possible.

what is furniture as a service

Instead of locking customers into a long rental period, customers are often in control of how long they would like to subscribe to a piece of furniture. Some furniture companies rent furniture on a weekly basis, others monthly. Companies like Ahrend lease furniture on a longer basis, like 24 to 60 months.

Changes in recent years to people’s living conditions, work prospects, purchasing habits, and desire for easy access to living essentials have given rise to the subscription economy of which furniture-as-a-service is part of.

The subscription economy is the umbrella term given to a business model where access to content, products, software, and services are granted to a customer for some time (usually monthly or annually) in exchange for small, recurring payments. The most popular products offered through this model include news content, software (software-as-a-service), and entertainment products, like Netflix, HBOGo, Disney+, and many others.

In recent years, physical products such as subscription boxes, baby goods, food, and other essentials have also been made available on a subscription basis, otherwise called product-as-a-service. As customers desire regular, predictable deliveries of their personal necessities and become more willing to pay for convenience, expect more products, both tangible and intangible, to be offered under this model.

By 2025, the subscription market is expected to swell to almost $500 billion in profit.

Who can Benefit from Furniture-as-a-Service?

Furniture-as-a-Service’s biggest customers come in the form of companies of various sizes, remote workers, and expats or professionals who move abroad for work every 2 to 3 years.

The demand for furniture rentals is expected to rise among remote workers, who have turned in their cubicles for small workspaces in their homes. As a result of this shift, remote workers are turning to furniture subscriptions as a more affordable, no-strings-attached alternative to buying work furniture.

Companies that are making work-from-home part of the company culture are also tapping furniture companies to help them provide suitable workstations for their employees.

How it Works

To illustrate how this works, think of furniture rentals. Customers rent an item from you, which they make payments for within an agreed period. When that period is up or if the customer decides they no longer want the rented furniture, the contract is ended and the item is returned. What you choose to do to the returned item is up to you.

For furniture companies looking to expand their offerings, furniture subscription is one promising direction to scale to.

Startups in this industry have reported growth in both income and memberships since the start of the pandemic. Even 125-year-old furniture brands like Ahrend are introducing subscription services to tap into the gradually-expanding subscription economy. Flat-pack furniture giant, IKEA, has also introduced the subscription model in select stores.

furniture subscription

Furniture manufacturers are set to benefit the most from subscription services, especially in an era where quality raw materials are either becoming more expensive or scarce or both. By introducing subscriptions to your business strategy, you can:

Currently, the furniture rental market is valued at $5.3 billion, but a Fact.MR survey conducted in 2021 is optimistic that the furniture rental industry will grow to $10 billion in market share by 2031.

So, how can your furniture business grab a slice out of this generously profitable pie?

How to Start a Furniture Rental Business

Start by assessing if the subscription model is right for your business and market.

Popular furniture subscription companies like Feather, Fernish, Nickson, and many others cater to a customer base that seeks affordability and flexibility in their furniture purchases.

This demographic, populated largely by Millennial and Gen Z customers in the 18 to 44 age bracket, are mostly renters rather than homeowners, are likely to move around for economic opportunities, and are already exposed to the subscription model through their access to Netflix, news sites, and other services.

They seek hassle-free ways to decorate their homes and would rather pay for temporary access to an item rather than own it permanently and outright.

If your existing customer base meets the description above, you may have a captured subscriber market.

what is furniture as a service

circuly's Furniture-as-a-Service Customers

As the world becomes more and more sustainability-conscious, many companies are beginning to see the value in furniture subscription services. These services allow customers to rent or lease furniture instead of buying it outright, which can save money and help to reduce wastefulness.

One such company is Live Light, which uses circuly's subscription management software. Live Light is committed to creating a more sustainable and circular economy through its furniture and accessories. Their products are designed with longevity in mind, made of high-quality materials that can be reused and loved for generations to come. When it comes time for recycling, they ensure that their products are recycled into new designs, closing the loop on wastefulness. Live Light's vision is a future where sustainability is the norm, and they are working hard to make that happen.

Another customer that sees the value  and necessity of furniture subscriptions is Switzerland-based Swaap. Founders  Carolann and Jules started Swaap because they believe that everyone deserves to find their perfect home. Swaap is a community passionate about their homes and wants to share them with others. By joining Swaap, customers can connect with like-minded people from all over the world who are looking for their next home.

Not for long,  circuly will also have Canadian furniture company Article, the UK first ever furniture-as-a-service marketplace Homebound, a well-established furniture family business Orangelo, and the FaaS-startup Rentchester using our subscription management software.

These are some of the upcoming furniture-as-a-service trailblazers that will change the way we think about furniture ownership.  

By using circuly, these companies are making it easier for customers to access sustainable, affordable, and high-quality furniture without the commitment of buying it outright. In doing so, they are helping to create a more sustainable future for us all.

Subscription Management for Furniture Business

The next step involves maximizing the features of your eCommerce store with furniture rental software.

Furniture subscription does not aim to replace the selling model; instead, it opens an additional income stream for your business. If you have an existing eCommerce website, nothing changes for your customers. The user experience, from product selection to checkout, remains the same, but integrations have to be made in the backend to support subscription payments.

rental software for furniture business

There are two common ways to start offering subscriptions on your website:

  1. By building your subscription operations from scratch using spreadsheets, proprietary software, and other CMS, or
  2. By integrating furniture rental software into your existing eCommerce website.

Option 1 requires that a budget be set aside for software development, so you can build a proprietary system that will oversee your entire subscriptions. Depending on your needs as a company, custom software development can set you back millions of dollars, on average, to create a scalable subscription management tool from scratch.

This doesn’t include research and the trial-and-error involved to set up a standard operating subscription process. While more personalized to your company, option 1 can get expensive in the long run.

If you’d like to offer furniture on a subscription basis as soon as possible, consider option 2 like many manufacturers, retailers, and rental businesses have done: by adopting the use of plug-and-play subscription software.

Option 2 is a more cost-efficient means to integrate subscriptions into your eCommerce website. At average costs ranging from $1.99/month to $240/month for rental software, starting a furniture rental business is easier when you adopt a fully-functional, scalable tool instead of creating one from the ground up.

What to Look for in Subscription Management Software for Your Rental Business

Subscription management software simplifies the complex process of furniture subscriptions by supporting your product subscription business through every step of the marketing funnel.

Ideally, this software should provide a white-label checkout experience that makes renting just as easy as purchasing an item. It should also be able to automate a company’s subscription operations, from customer acquisition to subscription management, to payments and invoicing.

Most importantly, it should help companies nurture their relationship with their subscriber base through robust transactional communication features.

Current State of the Subscriptions Market

The furniture rental market is expanding everywhere: in North America, Fact.MR reports an annual growth of 6.8%, while Fortune Business returns with a 9.6% growth forecast.

By 2029, Fortune Business reports that the furniture rental market will rake in $139.05 billion in profit in the Asia Pacific, while Fact.MR suggests more modest gains at $10 billion in the US & Canada.

Globally, the furniture rental market is seeing an acceleration never observed before. As seen by how fast the subscription industry is growing, there is promise and potential in adopting the subscription model for your furniture business. Increased profits, more engaged, lifetime customers, and reduced waste are just a few benefits you may enjoy as a service provider.

Consider becoming a subscription pioneer in your local market today.

Get Inspired By Other Companies Already Operating Such a Model.

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