Consumer electronics rental service Grover is expanding across the Atlantic to the U.S., aiming to give more Americans access to the latest technology without the pressure or commitment of a high price tag.
Andrew Draft, vice president and U.S. general manager of Grover, told PYMNTS in an interview that the size of the market and the proliferation of eCommerce across the country were key factors in the company’s decision to enter the U.S.
“This was a market that we’ve identified where we can bring our product and service and consumers will — it is our hope and belief — want to take advantage of this alternative to conventional ways of consuming technology,” Draft said.
Grover, which was founded in 2015 in Germany, is currently in three other European markets, including Austria, the Netherlands and Spain; the U.S. is its fifth market overall. In Europe, Grover has over one million registered users and saw its revenue grow by 150% last year. The company also raised $1 billion in new financing earlier this year.
Grover Chief Financial Officer Thomas Antonioli previously told PYMNTS that the company piloted its service in New York City for about two months several years ago, an effort that resulted in “hundreds of orders without much marketing.”
Related: Can Grover Do for Gadgets What Netflix Did for Films?
Draft emphasized that Grover stands apart from rent-to-own or buy now, pay later (BNPL) options, “in the sense that it’s a truly rental subscription platform” and is not relying on consumers to make a purchase at the end. The company does allow customers to outright purchase items at the end of a 12-month rental contract, but Draft said that in Europe, most people just return them or renew the rental.
“The majority of all of our subscribers simply like to continue renting, and appreciate that flexibility as opposed to outright ownership,” he said. “Grover is providing access to technology over outright purchasing, financing and owning the underlying asset.”
It remains to be seen whether U.S. consumers will be receptive to this model, especially with secondhand commerce and refurbished electronics becoming more popular in the last several months. But Draft pointed to PYMNTS research showing that 29 million Americans have used BNPL to make a purchase as evidence that consumers are looking for more flexibility and are open to paying for products in installments over time.
“Of course, we differ from those platforms in the sense that it’s not a buy now to own later,” Draft said. “It’s really a rent now and pay for the utility of that asset, so customers can really just pay for when and what they’re using it for.”
Equipment rental is not exactly a foreign concept for U.S. consumers. In July, Eddie Bauer launched a new gear and apparel rental program to give customers more confidence and access to equipment to embrace outdoor activities.
Read more: Eddie Bauer Launches Outdoor Apparel and Gear Rental Program
A Sustainable Approach
As Draft noted, part of Grover’s potential appeal is that at its core, technology rental is more sustainable than, say, buying the newest iPhone outright every year. When a rental period ends and the technology is returned, Grover then repairs, refurbishes and ultimately recirculates that product back to other customers.
“Consumers can go into it knowing they’re going to upgrade to a later version as they come out, and they’re not going to start collecting a bunch of hardware and devices that will ultimately be disposed of and contribute to e-waste,” Draft said. According to a study by Mastercard, 54% of consumers surveyed believe it’s more important to reduce their own carbon footprint since COVID-19.
This circular approach also has an impact on Grover’s pricing model, as the company isn’t relying on a single rental of an item to drive revenue. Instead, the company has a pricing and analysis team that looks at the current market value of the device, average rental durations and number of potential rental periods to derive a rental fee; additionally, the company charges less per month for longer subscriptions.
“It’s all providing that access and flexibility around engaging with the relevant and latest technology,” Draft said.
PYMNTS data, in collaboration with sticky.io, found that 80% of all U.S. consumers are now signed up for at least one subscription service. As of May, 20% were using subscription services for consumer retail products and nearly 10% were using them for the “internet of things” and hardware.
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