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Why the traditional ecommerce tools don't work for managing online rentals?

7 min read

We have covered a lot of different aspects of ecommerce for rental shops in our recent blog posts but never really explained why rental ecommerce is different from traditional retail.

By continually communicating with our customers and observing consumer behavior, we have learned that running rental ecommerce operations side by side with walk-in services can become quite a hassle without proper systems in place.

This article explains the differences in ecommerce between rental and retail shops, both from the consumers’ and shops’ perspective. Let's start with a look at the consumer perspective.

Consumer perspective

In marketing and consumer research, the customer journey is often split into five stages. These stages apply well for both renting and buying. The difference lies in what’s happening inside each of these stages.

the stages of customer journey

Need recognition

The customer journey always starts with recognizing the need. Sometimes need is born more intuitively, while at other times, the demand can be more considered and rationalized. Usually, the more expensive the purchase is, the more rationalization occurs at this stage.

  • The need for rental services is often temporary and tied to specific dates and time.

  • Usually, the motivation to rent is to experience something (recreational) or get something done (utilitarian).

  • The consumer recognizes that the need is temporary and, therefore, is willing to pay for access instead of ownership.

Information search and evaluating alternatives

The information search stage and website experience don’t differ much between renting and retailing. Once a customer has recognized the need, she browses the internet for alternatives and chooses the website that best fulfills the occurring need.

  • No significant difference between renting and retailing.

  • The companies and websites that can answer the demand and communicate the offering the clearest are most likely to succeed in both rental and retail environments.

  • Strong brand and social recognition will benefit the company.

Purchase decision

Several factors lead to the final decision a consumer ends up making. The combination of product and service offerings, price, and convenience are, in most cases, enough to convince a customer to make the decision.

  • In renting, customers emphasize location and service offerings more than price when making purchase decisions.

  • Due to the time-bound nature of renting, being able to virtually confirm the availability of equipment on specific dates and times adds certainty, which is often expected by the customers. Certainty alone can trigger a customer to complete the purchase.

  • Additional services, such as guided tours and lessons, add value to the customer experience in renting and help customers get the most out of their rental gear. In retail, these services have a smaller role.

  • Both in retail and renting, the website experience and ease-of-purchase are common factors behind successful ecommerce websites.

Shop perspective

Even though there are some differences between renting and buying from the consumers’ perspective, the most significant differences lie in how rental and retail shops manage their operations behind the scenes.

In the worst case, some companies have dropped online bookings completely because they cause too much trouble. Either it is the software in use that doesn’t bend into the tasks that renting out requires, or the back-office operation isn’t planned to support both walk-in and online customers.

In any case, because modern consumers prefer booking their rental gear online, these companies risk losing sales to their competitors that offer online booking as an option.

With proper systems, we mean rental software and some specific back-office implementations that will make life in the back office significantly easier.

Returning products and maintenance times

The first difference is how the two-way direction of rental equipment affects managing the operation.

equipment renting process chartWhen renting out equipment, the equipment is to be returned once the rental is agreed to end. In retail, the premise is quite the opposite, and returning the sold items is bad for business. The two-way movement of the equipment adds an extra layer of complexity to the inventory management and scheduling, which solutions designed for retail are not able to cope with.

Even with a small equipment fleet, rental software can provide a significant benefit in smoothing up the inventory management by calculating the availability automatically based on the starts and returns of the rentals and other temporary unavailabilities of equipment e.g., during equipment maintenance.

Significant time-savings can be achieved when letting software keep track of the available equipment automatically rather than an employee calculating everything manually.

Rentals are tied to a specific time and date

The second difference is that from a customer’s point of view, rentals are more tied to a specific point of time than buying.

Let’s observe this through an example:

You have agreed to go mountain biking next Sunday with your friends. You don’t have your own bike, and you don’t want to buy a new one only for this occasion. Most likely, you want to be confident that there is a rental bike waiting for you in the rental shop on Sunday - not Monday, Tuesday, or any other day. Compared to retail, most of the time, it doesn’t play a significant role whether the purchase is delivered in two, three, or four days.

What does it mean from the rental shop’s perspective?

To avoid any conflicts with double bookings and to be able to confirm the availability of equipment to the customer, a rental shop must be aware of the real-time availability of equipment.

A common way to avoid double bookings is to take booking requests via online forms, direct email, or phone. However, this solution is suboptimal because confirming these bookings requires an employee to go through the reservation calendar, match it with the inventory status, and answer each request manually. The process is very time-consuming compared to if all was automated. Furthermore, the customer won’t get an immediate answer.

Software that calculates the availability automatically and blocks bookings when the stock is limited on a specific date is a huge benefit and relief for the employees of the shop. It also provides a better and faster customer experience.

Tip: Showing the limited stock availability on the website is a commonly used tactic by many e-commerce companies. Showing the limitation of a resource creates a matter of urgency for the customers, which improves the conversion rate for the checkout.

Same inventory for online and walk-in rentals

Commonly, rental companies have their inventory storages together with their store locations because the actual rental is tied to a specific place. Ski shops are located where there are mountains, surf shops where there are waves, and so on.

In the retail environment, larger companies especially tend to have separate inventory storage for e-commerce and storefronts because the lease of retail space is significantly more expensive than a lease of a storage building on the outskirts of a city. Thus, using any square meters of the retail space as storage would be a bad usage of space — and money.

What does it mean from the rental shop’s perspective?

From an operational perspective, it is also simpler to have separate inventories for online and offline sales. However, in many cases, that is not possible for rental shops due to the earlier-mentioned bond with a specific location. To support the needs of both online and offline sales served by a single inventory, you need software help - or more hours in your day.

Rental shops with both online and walk-in customers should pay attention that the software takes both online and walk-in rentals into account when calculating inventory availability.

Same pick-up location for online and walk-in customers

When shopping online, usually, the purchase is delivered to the customer's home address or the nearest pick-up point. In-store pick-ups exist but are relatively rare.

In the rental business, in-store pick-ups are the most common way to hand over the equipment to the customers, while a small share of online bookings are delivered to customers.

What does it mean from the rental shop’s perspective?

To make the equipment pick-ups as smooth as possible, rental shops with a high volume of both online and walk-in customers are recommended to develop their in-store pick-up process. Pay attention to the following:

  • Collecting necessary information in advance. For example, skis need to have DIN-value adjusted based on the customer's measurements and experience level.

  • Directing walk-in customers to check-in and online customers to the equipment pick-up (to avoid unnecessary queuing)

  • Preparing the equipment in advance, marking the equipment properly, and instructing with the start, usage, and return. For instance, if the equipment is prepared but locked, provide the customer with a method of taking the equipment into use.

Specific payment technology requirements

When consumer shops online to buy, the checkout is often made with a simple credit card payment, PayPal, or bank transfer. The point is simply to transfer the money from the buyer to the seller. In the rental business, risk management has a more critical role.

As customers only pay for temporary access instead of ownership of equipment, it is essential to have methods of managing the risk of damaged or lost equipment. After all, the rental equipment is the rental shop’s most valuable asset, and any damaged or lost gear is a direct monetary loss for the company.

A rental contract obviously obligates the customer to take good care of the equipment, but sometimes that’s not enough. A modern way to manage the monetary risk of damaged and lost equipment is through deposits and after-charges. By having the credit card token stored, rental shops can return the purchase and charge fair compensation for the damaged or lost equipment.

Article written by Akseli L.

A marketer who gets excited about all things e-commerce. Outside of office hours, you'll most likely find Akseli from the countryside, hiking and shooting landscapes.

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