The general merchandise and the DIY retail industry in Europe is a fiercely competitive market, where offering convenience through services is a terrific way to distinguish from the competition.
One such example is offering trailer rentals as an additional service for customers who shop at retail locations and need a way to transport large purchases home. Over the years, Twice has helped dozens of such retailers and rental operators to launch, run, and expand their rental services.
Here are some of the learnings that help demonstrate how retailers can benefit from offering value-adding services alongside the main business.
Boosting utilization rates through online booking
A trailer is one of the best examples of a product suitable for the rental business model. First of all, most people only need a trailer infrequently, and storing a trailer takes up a lot of space. Secondly, trailers are technically simple products, relatively durable, and easy to maintain. That's why they can withstand heavy use without massive maintenance costs.
By integrating trailer rentals into their existing business, retailers can significantly increase customer satisfaction and revenue. However, not all rental offerings are created equal.
We discovered early on that offering the possibility to book rentals online has a massive impact on the trailer fleet's utilization rate. By allowing customers to book trailers in advance, some retailers have seen a 200% increase in utilization rates compared to traditional walk-in rental services. This improvement is due to several factors:
Eliminating no-shows: Customers who reserve trailers online are more likely to follow through with the rental. This reduces the number of no-shows and ensures that the retailer can optimize its inventory and serve as many customers as possible.
Enhanced customer experience: By offering online reservations, customers can easily see when trailers are available and plan their rental accordingly. This saves them time and increases the likelihood that they will return in the future.
Better inventory management: With a clear overview of reservations and availability, retailers can more effectively manage their fleet of trailers. This helps them make informed decisions about when to invest in new trailers and when to retire old ones.
Increased revenue and profitability
The 3X increase in utilization rates can significantly impact the retailer's bottom line. With more rentals per trailer, a smaller fleet can serve a bigger number of customers. A smaller fleet will naturally have lower costs, meaning the better a retailer can maximize the utilization of trailers, the better its profit margin. This helps offset the trailer rental business's competitive and low-margin nature.
Furthermore, the increased utilization rate helps shorten the payback time for the trailer fleet. Some retailers have found that a trailer takes around 100 rental days to pay for itself. After this point, any income generated from the trailer is pure profit. After implementing an online booking system, the increased utilization rate has helped retailers achieve this milestone more quickly and enjoy a better return on investment.
The benefits of in-house trailer rentals vs. outsourcing
Another prevailing model is to offer trailer rentals as a service delivered by a 3rd party company. We have witnessed some very appealing reasons for doing trailer rentals in-house instead.
Enhanced customer experience: By managing the rental process directly, retailers maintain control over the customer experience. This ensures consistency and quality across all touchpoints, increasing customer satisfaction, loyalty, and repeat business.
Increased revenue and profitability: In-house trailer rentals allow capitalizing on the full revenue potential of the inventory. By integrating rentals into the existing business model, retailers can boost utilization rates, shorten the payback time for trailers, and generate additional income.
Greater flexibility and scalability: Offering trailer rentals in-house using a platform like Twice provides flexibility to quickly expand and adapt rental offerings to meet changing customer needs. This enables companies to grow and scale their rental business at their own pace without being constrained by the limitations of a third-party service provider.
Scaling and expanding with Twice
For businesses with no previous experience renting goods, starting small is often the best way to learn about the processes and keep the risks under control. However, once you get the hang of it, processes and tools must be designed early on to be scalable.
As the demand for rentals grows, adding more trailers to the fleet should not cause a significant distraction to the existing operations. Twice has often been praised for its flexibility and scalability when it's time to expand. What's more, Twice enables easy horizontal expansion, meaning retailers can smoothly move to offer a broader range of trailers, other vehicles, and equipment to cater to the diverse needs of customers.
Achieving a one-stop-shop reputation within your target audience increases customer loyalty and confidence that your shop has the solution to their problems. This confidence leads to increased foot traffic in your stores which in turn leads to increased sales in other areas of your business.
So, what's still holding you back? In many retail sectors, trailer rentals as an additional service is a no-brainer regarding ease of implementation, customer satisfaction, and profitability. While immediately improving the overall service level, you will accumulate important lessons in-house about circular business models, providing a foundation for building new services in the future.
If you need help, don't hesitate to get in touch!