In this article, we take a look at the click and collect business model and how it can be applied to rental businesses. We have invited a click and collect expert, Teijo Taipale, to tell more about his experiences and tips to starting a click and collect business.
What is the click and collect business model?
Click and collect is more commonly known as an omnichannel retail strategy, where shoppers buy or reserve a product online and pick it up in a designated location. However, the flexibility that the click and collect business model offers creates a unique opportunity for rental businesses.
Before we dive in, let’s take a look at the three main ways of implementing a click and collect strategy:
In-store click and collect
This enables the customer to either purchase a product and pick it up at their preferred location or pay upon pick-up. Although the customer is still physically visiting the store, they avoid roaming in the store and waiting in the check-out lines. Another option is ship-to-store, which allows customers to have products that aren’t available in their location to be sent there from another location or a distribution center.
In-store click and collect is the most popular way of operating. Many Rentle users take advantage of this model even though they are considered as more traditional rental businesses: by accepting online bookings and payments in advance, they get to prepare the orders for the customers to pick up.
Similar to the in-store click and collect concept, brick-and-mortar stores offer parcel lockers from which customers can pick up their orders. The difference between these two models, however, is the lack of need for physical contact between the customer and employee. Instead of having to queue in a line for their pick-up order, customers receive a locker code that contains their product.
In case the customer needs to return the purchased product, they can use either the same parcel locker or use another drop-off location where they can return the product. Usually, this requires registering the return of the product, after which the customer will be provided with a code for the locker where they can drop the product off.
This form of click and collect includes the use of various affiliated stores or, for example, postal offices as designated pickup points. Many places utilize places like grocery stores and malls where they have their parcel lockers located. Instead of going to the store, customers can choose a pickup location where the product will be delivered, followed by a code to the locker. This option offers the most convenience and flexibility to the customer.
Metripe, founded in 2020 in Tampere, Finland, runs a tool rental business based on the remote pickup model. Instead of a brick-and-mortar store, they operate multiple parcel lockers around the city, from which customers can pick up and drop off their rented tools at any time. After the order confirmation, the customer will receive a code that they can use to access the parcel locker during pick up and drop off. Once the rental is completed, the product will be checked and maintenance, if need be, before the next pickup.
Growth of the click and collect model
Brick-and-mortar retailers that adapted this model experienced growth in sales as more and more shoppers were drawn to the model’s convenience and speed. Back in 2018, nearly 82% of ecommerce shoppers worldwide reported ordering items online for in-store pickups.
Of course, the global pandemic has affected the way consumers are able to shop, as well as consumer preferences to the way they want to keep shopping in the future. According to Shopify, local delivery orders in English-speaking countries increased by 600% in 2020. In this context, local delivery means a product can be delivered to a customer that lives within a certain area - for example, within a 10 km radius of the store location.
Research done back in 2016, even before the restrictions set by COVID-19, suggested that by 2025 10% of all sales will be fulfilled by click and collect. All while in-store purchases will decline to 60%. The pandemic has an obvious and significant effect on shopping trends and consumer behavior, making it tricky to predict an accurate growth of click and collect. However, it has become evident that even when in-store shopping becomes safe again, people will still prefer the more convenient and time-saving option.
Click and collect in the rental industry
While the click and collect model is familiar in the retail world, it is still rather unfamiliar when it comes to the rental industry. According to Teijo, Metripe was founded based on personal experience and a gap in the market. For example, buying power tools for a one-time use is not only expensive, but it also takes up a lot of space in the home. While there are tool rental services available, instead of ‘’everyday individuals’’, they’re usually targeted towards construction businesses that need to rent out equipment for bigger projects.
This is still an extremely new and underdeveloped business model in the rental industry. The way I see it, there is a plethora of different services and products that can be offered in the future based on this model
Benefits of a click and collect business
Of course, before diving headfirst into adopting a new business model, it's important to acknowledge how it benefits the business, as well as the consumers. As consumers continue to increase their online shopping and renting, they expect businesses to keep up in being able to offer more convenient options to the way they shop. Fortunately, the click and collect model has win-win benefits for both the business and consumers - let's take a look at what they are.
No need for brick and mortar
Operating solely based on the click and collect model allows for the rental business to operate without a brick-and-mortar location as Metripe does. This increases the ability to offer more flexible services without having to tie them to specific opening and closing hours, all while avoiding any additional costs that would go into renting a store space.
Offering in multiple locations
Additionally, having parcel lockers in multiple locations or in one central, high-traffic location means you are able to cater to a larger audience. You are locating yourself exactly where your customers need you to be without making them come to you. It might seem obvious, but worth mentioning: making it easy to do business with you will drive more customers to your business.
From the customers’ perspective, renting products that use a click and collect model is much more convenient and easier. Having parcel lockers in high-traffic areas (like a mall or grocery store) means they don’t have to go out of their way in order to travel to a specific location. In fact, 45% of consumers that use click and collect services use it to save time by not having to shop in-store.
Another big benefit for both the business and the customer is shipment fees. In addition to neither having to pay for shipping, it also helps to avoid abandoned carts - according to a study done on European consumers, 65% leave a checkout because of high shipping costs. Although all industries have their differences, it’s very likely that offering a free alternative, like click and collect, will improve the sales performance and decrease the number of abandoned carts.
In short, for customers, the click and collect model is time-saving, convenient, flexible, and more accessible. This is also beneficial for the businesses, here’s what Teijo has to say:
The biggest benefit from the business’ perspective is the fact how easy it is for the customer. The easier you make it for the customer, the easier the customer chooses your business over any other business.
How to get started with a click and collect rental business
Click and collect isn’t only for big retailers. While it’s still a rather untapped business model for many rental businesses, statistics show that this could also be the future for the rental business model.
As we previously mentioned, Metripe’s main line of business is offering the parcel locker network for other rental businesses. In order to set an example and prove the effectiveness of this model, they started a tool rental business. Metripe is now offering tools in 5 different parcel locations in the city they operate in. Teijo will give the best tips and advice on how to get started with click and collect based on his experiences.
Any rental business requires an inventory that it rents out. Regardless of the industry or whether you operate with a brick-and-mortar or solely online, investing in inventory revolves around the same best practices.
When deciding on what to buy, it’s important to make sure that the product you’ll be renting out will have a long lifetime, this way, you’re making sure you’re getting your money’s worth. One of the best practices is investing in equipment that is relatively easy to maintain and, more specifically, relatively easy and affordable to find spare parts.
Parcel lockers and location
For a click and collect business to work, you’ll need a parcel locker. There are a number of parcel machines from which you can use to get your own locker system, another option is renting out a selected amount of lockers from an already existing postal service point.
If you decide to invest in your own parcel machine, you have to take into account the location you can place it in. If it’s a public space like a mall, for example, there most likely will be rent fees to pay for the space. Wherever you decide to place your parcel locker, it’s important to make sure the location is convenient for your customers.
It [parcel locker] has to be easily accessible for the customers, preferably located in a place where the customer runs their errands on a regular basis - so grocery stores, malls, and so on.
Having a parcel locker to operate with requires much more than just the machine. You also need, preferably, an all-in-one tool or software that takes care of all renting-related operations. While there are a vast amount of ecommerce platforms and websites that you can choose from, for the most part, they’re designed to fit the needs of retailers.
You can always find producers of parcel lockers - but they’re not equipped with a rental platform. You’ll need a tool that will integrate with your parcel locker, as well as take care of inventory-related tasks, pick-up codes, overall communication with the customer, and so on.
Communication with customers is always important, no matter if you’re in the retail or rental industry. However, in click and collect, the importance of communication is even more emphasized since the customer won’t be able to visit a store and interact with store personnel.
This means setting up automatic emails and text messages regarding the different steps of the rental process. In case there is a need to be in contact with the store, the customers should be able to do so - whether it’s through customer service email or even a chat. However, making sure you provide all needed information before, during, and after the rental should make sure that you don’t have to be in contact with the customer at all.
Nowadays, consumers want to be on track of everything that is happening and when it’s happening. A sign of a successful customer experience is not having to be in any sort of contact with the customer, which again highlights the importance of well-thought-out messaging.
In addition to direct messages to the customer, another form of communication that shouldn’t be overlooked is product descriptions. Again, the information you provide on your website and store should compensate for the lack of physical contact with the product itself and communication with the shop personnel.
Writing detailed product descriptions with high-quality images ensures that customers will know what product they can expect to receive.
Running a click-and-collect rental business means there’s an increased need for risk management. Because both inventory and parcel locker are in the center of your business, it’s important to make sure you minimize the risk of any unwanted incidents which can ultimately lead to monetary loss.
For each product in your inventory there’s an average of how many times you should rent it out before it pays itself back and an average of how many times it can get used before it runs itself down.
Making sure you dedicate enough time to maintenance your inventory will ensure that you get the most of your products and prolong their lifetime value. The longer you can keep your products in good condition and rent them out, the less risk there is for you to lose any of the invested money.
Getting the most out of your inventory isn’t the only reason to make maintenance a priority. Of course, depending on the type of products you're renting out, you want to make sure that they’re still usable and not defective in any way. Skipping maintenance times increases the risk of the customer receiving a broken product, which can ruin the whole customer experience for them.
Even worse, if the maintenance is carried out carelessly and the customer gets a hold of a faulty tool, it’s a huge safety risk. You don’t want your customers getting injured because of missed maintenances.
Like with any rental business, there is also the risk of the product never being returned. Especially with click and collect, where the physical contact between the customer and the business is minimal, it’s important to prevent these sorts of incidents. Deposits are a great way to ensure your business doesn’t experience any monetary loss due to missing or damaged products.
We’ve had a few incidents where the product was never returned, fortunately, the deposit function has taken care of this problem entirely.
While many retailers have already introduced click and collect services, the growth is only expected to grow. Just like with retail, providing more convenient options for consumers is undoubtedly the future of rentals as well, and would be a great benefit to rental businesses of all industries and of all sizes.
Even though the click and collect model is still relatively new in the rental industry, we expect to see more businesses like Metripe taking advantage of this model. Hopefully, this opened new perceptions of click and collect and inspired more of you to at least test out this model.
Photo credit: Metripe