As the sharing economy continues to grow across industries, The Shed is getting in on the game and bringing product manufacturers with them.
Running on the idea of “monetizing idle assets,” The Shed offers a place for manufacturers to store items that might be taking up space (think tools, outdoor equipment or even healthcare equipment) while making money off of them. The startup's online platform lists these items available in their warehouse for people to rent them out on a daily basis.
Co-founder and CMO Karen O’Neil began developing The Shed after connecting with Richmond business owner Daniel Perrone in Boston last year. Perrone, who had previously sold his digital mapping company to Apple, helped O’Neil launch The Shed with the specification that they be located in Richmond and source from Richmond investors.
The Shed received initial investment from local investors including Mark Cooke, Marc Oosterhuis and B Gottwald of the prominent Richmond Gottwald family. In the first round of fundraising, the company closed with $1.25 million. Work now begins on the next round of fundraising.
After coming onboard The Shed’s team as an investor, B Gottwald decided to get even more involved by licensing a location for The Shed in Denver following his move there last year. He now runs the Colorado-based operation in partnership with the Richmond team.
There is no fee to store items in The Shed, and the cost of daily rental of an item is split 50/50 between The Shed and the approved business partner.
The Shed initially tapped into everyday homeowners to store and rent items taking up space in their garages. But they have shifted their focus to commercial partnerships with individual manufacturers. With this model, manufacturers provide products that get stored in The Shed that customers can then rent out on a daily basis.
Off the bat, The Shed has attracted manufacturers that have provided shelves-worth of products to be stored in the Rockville, Va. warehouse (located in the Rockville Commerce Center, just across from Midnight Brewery). Examples include Greentop, who provided kayaks, Traeger grills, Yeti coolers, fishing rods; PD Brooks safety equipment; Amenities Galore, who provided vacuums, coffee makers and other home appliances; World Pediatric Project; and Dunmar Moving & Storage.
Another key local partner has been Commonwealth Events, who gave The Shed all the necessities for hosting a large party or catering event, including food service trays, tables and chairs, flatware and tableware and even a full bar cart.
“We really think we’re about to disrupt the party and event scene,” O’Neil said.
O’Neil sees this as an opportunity for manufacturers to continue to make money off of one product over and over again, rather than selling it once, as would be the case with a direct sale to a consumer or a traditional rental company.
“The sharing economy is shrinking the buying economy and manufacturers are trying to find ways to adapt,” O’Neil said.
The unique pricing structure that The Shed has created for its suppliers is estimated to make the manufacturers more money off an item at the end of the year, based on an average of 17 rentals per year, than they would have if they had sold the item at a wholesale price to a rental company.
The online platform that customers will be able to browse for a rentable item was developed by The Shed’s team in India, in addition to the Richmond team’s development of QR codes and recruitment of “gig” drivers who will handle delivery. The platform allows customers to reserve items for a particular day or series of days, similar to Airbnb's rental calendar.
In exchange for retaining half of the money made from a rental, The Shed supplies logistics management, marketing, delivery and maintenance. The Shed offers delivery and pickup of all items that can be rented. If you are storing your items in the warehouse, you are entitled to six free deliveries of your item back to you a year at no charge, so that you continue to have access to your item through this storage system.
Next up for The Shed is expansion to markets that might include Nashville, Austin and Dallas; the goal is to be in five markets by the end of 2020.
Editor's note: An earlier version of this story focused more closely on The Shed's initial business model of sourcing equipment from everyday people. While the company started that way, it has shifted to focus on working with manufacturers and is no long accepting items from the general public. We've updated the story throughout to reflect the pivot. The story had also misspelled Daniel Perrone's name. We've corrected that in this version.
