RERMAG

Mind your own E-business

An RER survey of independent rental companies shows reservations about e-rentals.

It's hard to overlook Paul Anderson while he walks the streets of Aliceville, Ala. "People recognize me when I walk around town. They greet me with, `Hey, tall Paul,'" says Anderson, owner of Tall Paul's Rent-All.

It is Anderson's customer service, not his online abilities, that has made his rental center a local favorite.

He is not alone in that regard. An RER survey of 50 independent rental center owners conducted last summer revealed that a majority, 56 percent, don't conduct business online. The 44 percent who use it, such as Robert Lutz, consider the Internet a minor element in business.

"The Internet is like everything else that's new," says Lutz, owner of Ketchum, Idaho-based Lutz Rental. "You need to feel the water before jumping in."

Independent rental center owners are not preoccupied with the technology. Only 22 percent of those surveyed have heard of Web sites such as Ironmax.com and RentOnTheDot.com, and just 10 percent visit them on occasion. Why isn't e-rental clicking?

Many independent rental center owners say no to e-commerce because they do not have enough resources to undertake online deals. They still use the telephone and other conventional office tools to promote their services. The survey revealed that half of those who use the Internet log on to order parts, 34 percent to buy equipment and only 14 percent for rental reservations. Besides browsing on occasion and checking their e-mail, independent owners say the Internet has little rental value.

"We do some ordering online, and it's helped," says David Smith of Bourne, Mass.-based Bridge Rental and Contractor Supply. "But it's not a necessity. Running strictly on the Internet can't be done."

Others say the technology is not cost-effective. Intimidation and lack of know-how keep independent rental centers from investing in computer units and software. Because they are already established locally, owners say their business reach need not go beyond county lines.

Convenience is another reason small businesses stick with tradition rather than technology. While Web disciples argue that nothing is faster or more reliable than electronic communication, owners such as Wayne Flynt of Rental Tool in Tampa, Fla., weigh expediency another way. They put their faith in print advertisements instead of online services.

"The Net is a play toy," Flynt says. "Let's say you have a stopped-up sewer and need it fixed. You wouldn't turn on the computer and spend hours finding someone to do the job. Instead, you would look up the closest, most available people in the Yellow Pages."

Expanding the horizon Although independent rental center owners are not gung-ho about e-commerce, they are aware of its potential. Most owners surveyed recognize that today's workplace is changing.

"Our Web site has gotten hits from all over the world," says Carlos Martinez, manager of the El Paso, Texas, branch of Albuquerque, N.M.-based Franks Supply. "E-commerce brings in new business. It's the wave of the future."

Robert Freeman of Honolulu-based Mr. Sandman hopes its Web site brings in more business.

"It's a new venture, so we haven't gotten around to fully promoting it," he says. "Once set up, it will be a complete e-commerce site with fully cataloged products."

Based on the RER survey, e-commerce rental sites must gain the trust of independent rental center owners before they will try to find their niche in the global marketplace. To attract new customers, online services also need to lower costs and make electronic data interchange cost-effective. They might even learn from "tall Paul's" focus on more personal merchant-client relationships. Ultimately, e-commerce sites need to make it look as if people, not software programs, are doing the work.

A major rental player sees little value in the rental portal model.

"Our customers are intelligent enough to understand that business-to-business exchanges, like these sites, are basically broker exchanges," says Bob Miner, vice president of strategic planning at Greenwich, Conn.-based United Rentals, No. 1 on the RER 100. "As a result, they're putting themselves in the transaction without any type of value. Most savvy companies that rent understand that that's an extra person in the chain and they will be paying for it."

Miner also says B2B exchanges might make equipment rental a commodity. These specialized portals targeting renters typically work by transmitting requests for quotes from contractors to a network of rental houses, which often rely on low rates to lure potential customers. But he says equipment renters value long-standing relationships with rental companies, outstanding product support, durable products and timely delivery more than who offers the lowest deal.

"I see the value of a B2B exchange for customers who are not that sophisticated, possibly homeowner types or rental stores that don't have the capability to host their own site," Miner says. "But it probably won't even be beneficial for the do-it-yourselfers because when they need a particular piece of equipment, they go to somebody local. They don't go online. The guy who's (requesting) the bid can get the lowest bid from Joe Blow Rentals, but what if Joe Blow can't support his products? What if the equipment breaks down?"

Realizing that the Internet is a powerful marketing tool, as proved by e-ventures such as eBay and Amazon.com, United launched its own virtual rental company. "There's a tremendous value of the Internet to the industry," Miner says. "It allows customers (access) to a tremendous amount of information, to get online advice, to see their account online and to find out which (rental store) is closer to them. At our site, we give our customers an experience that's similar to going to their own rental store and talking to a rental manager 24/7."

Miner did not divulge United's online rental revenue because "it is not easily calculated" and because most transactions are finalized in United's branches.

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