Jump Deeper Into the Net

Will rental customers want to transact their rental business over the Internet? That is a question that the next few years might well answer.

Some industries have benefited enormously by adding Internet services for their customers. Others have experienced severe dislocations of traditional business as Internet capabilities are made available to customers.

How will Internet services affect the rental industry? Because few Internet services have been offered to rental shoppers, there has been little impact to date, but that is changing. I expect that in five years, 25 percent of a rental business' activity will take place over the Internet.

Internet transacting might not fit the rental business as ideally as it does the book business, but the venue offers advantages to a rental customer and benefits to a rental business - particularly when synergies with rental management technology are realized.

If you develop a Web site that includes product photos, specifications, operating instructions and more, and make that site interact with your rental management computer system, which handles reservations, contracts and invoices, you are using the Internet to enhance both customer service and sales. This is a classic win-win situation that can lower your cost of doing business and serve customers better.

Early in 2000, several companies involved in the rental industry announced new Internet initiatives that I believe will have a lasting impact on the industry. Large equipment rental companies have developed Web sites where customers can buy used rental equipment and place reservations for rentals. The requests are then transmitted electronically to the company's rental management system. Some of these e-commerce sites also give existing customers online access to their account information.

Several new companies announced Web sites that will present a prospective customer (usually a contractor) with a list of rental sources capable of filling a specific equipment request - complete with pricing and availability information. The expectation is that these Web sites, like the proprietary sites of the large chains, will transmit a reservation directly to the selected store's rental management system. The e-commerce term for this type of Web site is market-portal.

Harnessing e-commerce to its full potential can be a challenge for the independent rental operator. Rental operations that are not part of a chain should look to their system providers to deliver added value in e-commerce capabilities.

At Solutions, for example, we recently announced an integration capability that links a rental business' management system to its Web site. A rental center's customers can enter requests for equipment rentals, which are priced automatically using the system's rate data.

These electronic requests are integrated with all other quotations so that availability information is updated in real time. Other software providers are developing similar approaches.

Web-to-system integration also lets these same customers request equipment pickup or delivery, display rented equipment by job site and calculate rental charges through a desired date. In effect, it puts the independent rental operator on equal footing with the larger rental companies.

These capabilities offer unique advantages. First, the web is 24/7. Contractors or homeowners who want to place a reservation or get rental estimates after hours can do so at their convenience rather than having to wait for your business to open. Second, information is instantly available without the need to talk with a rental agent. This could include specifications on equipment, operating instructions, rental rate quotes or even verifying what equipment has not been returned from a job site.

Market-portal systems The Internet offers many conveniences to the rental customer. In the case of market-portal systems, comparison shopping among alternate rental sources is available as well. The rental center with its own Web site provides its customers with convenience and information about the operation, its service philosophy, services it offers and level of experience in addition to its product/price offerings, at little cost.

The market-portal systems allow Internet users to compare prices easily among rental sources - convenient for the renter, but limiting for rental operators who compete on service rather than price. The challenge is to harness e-commerce so that the choice of a rental source is not reduced to a commodity/price decision, which is a danger with market-portal sites. Rental businesses will need to cement their customer relationships more than ever to reinforce the value-added benefits they provide. It's in the industry's best interest to preserve the service nature of the rental business in its rush to e-commerce.

Costs and risks The Internet explosion is market-driven, and rental markets will be no exception. How difficult is it to implement e-commerce, how costly is it, and what are the risks?

All of the e-commerce benefits mentioned earlier will require the rental computer system vendors to provide integration with Web sites - either individual rental center sites or the market-portals. This can involve a substantial development effort for each Web site being integrated. System vendors who provide software enhancements as part of their support contracts might absorb most of the development cost internally. The integration cost to an average rental business could be less than $1,000.

The risks are commensurate with the type of implementation. For example, one risk involves the confidentiality of information flowing from the Internet into your rental management system. Most market-portal sites collect and analyze the data that passes through them. The companies that own these sites will usually guarantee to use information only in aggregate form as a matter of policy, with individual information not discernible. Still, the potential for abuse by unscrupulous individuals is there.

Another method of implementing Internet services for rental businesses would require the rental management system in the store to be directly on the Internet. This risks unauthorized access to the management system, which usually contains highly confidential information.

Negative publicity results when a Web site such as eBay or is "hacked." These are highly visible sites that many hackers spend a lot of time attempting to penetrate. XYZ Rental's site is not likely to entice hackers, but placing your rental management system directly on the Internet does makes you vulnerable to them and to people who want to gain unauthorized access to your system data.

Install firewalls, or protective devices, for some security. They start at about $2,000 and generally need technical expertise to install and support. Alternate methods of integrating Web sites with a store's management system provide more security but operate slower than a firewall-protection solution. While the use of firewalls and other devices can minimize the risk, today's technology cannot eliminate it. As a rental operator, you must make your own risk/reward evaluation.

Computerization for your rental business is no longer defined within four walls of the rental center. It should also bring your message to the market, capture new customers, retain current customers and expand your horizons, while maintaining absolute control over your inventory information. When e-commerce is used correctly, the rewards can outweigh the risks, and it doesn't have to remove service from the mix. It can bring more customers within reach so that you can serve them better.

Internet interfacing in real time has become a trend in the rental computer industry. According to many computer specialists, the ability to shop on the Internet and integrate data with rental management software is a key ingredient to taking the next step into e-commerce.

"About 80 percent of shopping sites on the Internet are disconnected," says James Lolley, president of Systematic Computer Services, Guelph, Ontario. "The sites aren't directly connected to the database of the suppliers but are keyed in manually after the customer leaves the order. So there is a conversion process which risks errors."

Real time, however, allows a customer to connect directly [from the potential rental customer] to the database of the rental center, providing immediate information about availability and rates, and allowing the customer to make reservations and access current account information. Such systems also allow customers to view equipment rental status by site.

In addition, when a customer inquires about a particular item, a real-time system can be set up to immediately suggest accessories to accompany the equipment that would fit the job. "If a customer is looking at a particular type of equipment, for example, a sander, he can download a picture of a sander," Lolley says. "The customer sees the sander, with its safety requirements and specifications. The rental company can then set up the system to explain the types of sandpaper or types of cutting wheels that should be used for particular jobs."

A number of computer software suppliers are experimenting with these kinds of approaches in this fast-changing industry segment.

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