The global ecommerce industry is growing by leaps and bounds every year. The number of online customers is surging at an astonishing growth rate measuring up to an approximate half a billion from the year 2016 to 2021. This further signifies a massive scale jump in the number of e-retailers, which is expected to reach $5.4 Trillion by the end of 2022. Moreover, as per Deloitte, 43% of private companies are working on their digital transformation strategy. But, the question we aim to discuss is why are businesses moving online and can rental businesses also benefit from launching an online rental store?
The answer is there are various benefits of adapting to the digital internet era, ranging from a wider reach and automation to brand building and business expansion. To put it in context for rental businesses, along with the aforementioned benefits, they can benefit from launching an online store much more than sales businesses. First of all, an online store can give rental businesses more control over their inventory and streamline various processes.
It can also increase the number of repeat customers. As per statistics, 75% of repeat purchases take place on an ecommerce store. In addition, the automation and marketing benefits will help the rental business grow. Unfortunately, there are numerous problems that rental businesses need to consider while launching their online rental store. With the help of a carefully selected online rental software, they can mitigate those problems and save lots of time and efforts in custom platform development.
What are The Challenges that Rental Businesses Need to Look Out For?
Launching an online rental business takes more effort than launching a regular ecommerce store. Business owners need to take care of everything including invoicing, timely returns, product inspection, sanctioning terms and conditions, etc., all while ensuring a smooth and satisfying rental experience.
However, if they focus on providing the same streamlined customer experience that other ecommerce businesses do, they can create business management problems for themselves. Thus, to maintain an equilibrium between the two, which are increasing your business’ value and simplifying everyday operations, we have mentioned some key challenges that require your utmost attention.
Pricing and Invoicing
On an online rental store, the invoicing is going to be done for the number of days a customer rents a product. This functionality requires a separate booking calendar that can accept rental dates, prevent double bookings, and help in calculating the final amount. But customers also demand discounts for bulk volume and long rental duration orders. To tackle this problem, dedicated rental software has three provisions:
- A tiered pricing model to set different rental pricing for daily, weekly and monthly rental durations.
- Set bulk volume discounts. Example, a 10% discount for orders above $1000 and 15% discount for orders above $1500.
- Set rental duration discounts. A 15% discount for renting out a product for 3 months and 25% discount for 6 months.
Handling Complex Orders
Handling rental orders is more difficult than managing sales orders because of their sheer complexity. Large scale rental orders can include a diversity of products and add-ons for varying rental durations. Due to this, they can get disjointed easily and become hard to track. As such orders are mostly placed by big ticket clients, rental business owners cannot ignore them and any of the aforementioned pricing functionalities cannot handle.
For such cases, you will be required to use the traditional quotation-based approach, but can automate the entire process with an online rental software that has an Request-For-Quote (RFQ) module. Research shows that automation can bring a 12.2% drop in marketing expenses and thus, can be equally beneficial at handling custom quotations as well.
Using RFQ functionality, not only rental business owners can receive quotation requests directly through the platform, but also negotiate pricing and save all discussed conditions and quotes, All without the need to attend a phone call.
Business Scalability
Scalability for an eCommerce business is a big concern and considering the complex rental operations as discussed above, it can become a big issue for rental businesses if not handled properly. To be more clear, with the term scalability we mean the scalability of your online platform, its ability to expand with business growth and keep delivering the same performance.
As your business will grow, you will keep a large inventory, add-ons and have to manage multiple user profiles. You will also need software that supports that many product listings, transactions and user profiles along with a bigger and faster server. To resolve the scalability problem, rental business owners have the following options:
- Timely move to a bigger package if using a SaaS-based rental software
- With readymade online rental software, business owners will need to pick the solution that supports large numbers of listings, transactions and user accounts.
Managing Product Maintenance
Regular wear and tear is expected on rental products. While you cannot request reimbursement for expected wear and tear, you can request it for unexpected damages. Collecting reimbursement is crucial for rental businesses to elongate the product life-expectancy and conduct scheduled maintenance. Also, a recently returned product cannot be immediately lent out again as it requires inspection and maintenance checks.
For both these problems, online rental software allow rental business owners to do the following:
- Collect a rental security deposit and store it in the customer’s virtual wallet. This rental security will be used for reimbursing any damages and policy violations.
- Use a rental buffer period to inspect the returned products. Once the period is over, the platform will automatically add the returned product back to the inventory.
- Provide insurance coverage as a rental add-on product. This approach is more suitable for those rental business owners who do not wish to collect rental security.
Late Order Cancellations
Late order cancellations cause unprecedented losses to rental businesses in terms of order processing costs. Moreover, until the order is canceled, the customer keeps the product occupied to be lent out to another customer. This means you not only lose order processing costs but also a prospect customer who could have actually rented out the product. Thus, to reduce cancellations and prevent this double loss, your rental business software should have the following features:
- Late order cancellation charges where you can set different cancellation charges for different cancellation periods. For example, $10 cancellation charges for canceling 48 hours prior to the rental period, and $20 for canceling 24 hours prior.
- The option to deduct late return charges from the customer’s rental security deposit.
Overdue Returns and Low Order Fulfillment Rate
As per statistics, 43% of online customers consider product availability as one of the two most important factors when shopping online (the online one is faster and reliable delivery). However, inventory management and tracking are not that easy and simple as it seems in a rental business.
Ensuring stock availability is difficult when there are overdue returns, which can happen because of a lot many reasons. All late returns hinder the rental business’ capability to fulfill upcoming orders and low order fulfillment rate means low trust and orders.
- A simple solution for handling overdue returns is late return charges, which again can be deducted from the customer’s security deposit.
- Your rental software should also provide the option to purchase the rented product in case if the customer keeps the product with him for too long.
- A more subtle and customer-oriented approach is to automate return date reminders on your software. This can be done with an alerts and notification system that will notify the customers of the approaching return dates.
The Final Take
Taking preliminary precautions against these key challenges is a highly-resilient and responsible approach to launch your online rental store. You can try customizable software like YoRent and ShareTribe to deal with these challenges and save your time and efforts. On the other hand, neglecting these may result in post-deployment customizations and increased downtimes. Apart from these, you also may face several other unprecedented problems that require quick action. Consult your technology partner to overcome such problems and stay agile for maximum business growth.
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