E-commerce is on the rise in daily rental, with software firm Epyx expecting half a million rentals to go through its 1link Hire Network platform this year.
But what exactly does e-commerce mean for fleet managers and why is it growing?
Essentially, a system like the 1link Hire Network is an online trading community linking fleet rental purchasers with their suppliers.
Ken Trinder, head of business development at Epyx, says deciding to use an internet-based e-commerce system is like choosing to book a holiday online rather than using brochures.
E-commerce also means a fleet manager has a choice of suppliers and isn’t tied to one company’s system.
“One of the reasons we’re doing well is that we’re independent; we don’t recommend one supplier over the other,” Mr Trinder says.
“There are some very good systems available from the rental companies, but that ties you to the supplier. And that’s often frowned on by the bank-owned leasing companies and major fleets.”
So far, there are about 12 daily rental providers signed up to the 1link Hire Network, including several ‘major players’.
Is a fleet manager likely to log on and find there isn’t a rental provider nearby?
Phil Davis, business development executive at Epyx, says the chances are slim because many are national companies.
Another system, IRIS (which stands for Intelligent Rental Information Systems and created by Nexus Rental Management) has 50 rental companies ranging from large national providers to smaller regional ones.
“The benefit is that if you’re a smaller client you’re guaranteed availability,” says Neil McCrossan, chief executive of Nexus.
Nexus and Epyx also cite cost savings as a benefit.
“A lot of companies, particularly in the economic environment we’ve got now, are under pressure. They’re looking at our type of technology to drive down costs and improve efficiency,” Mr Trinder explains.
“I couldn’t measure how much of an impact the credit crunch has had on our growth but it’s definitely had an effect.”
So how do online e-commerce systems drive down costs?
Part of the answer lies in reduced administration as the system replaces the traditional phone/fax method.
A 1link Hire Network client reduced its phone calls from seven to two per booking.
There is also a reduced need to check invoices as systems like 1link and IRIS will not submit invoices to clients until they are correct.
Anna Lawson, fleet support manager at Zenith Vehicle Contracts, which uses the 1link Hire Network, says: “We have improved our invoice accuracy to around 99%, which brings huge savings in cost and efficiency.
“A lot of the difficulties that caused errors, such as the need for double entries, have been completely removed.”
Mr McCrossan points out that there are “no surprises” with online booking. For instance, a bus lane fine or accident damage report can be uploaded to the system.
“It provides a single view of business,” he says.
Mr Davis at Epyx agrees: “Every time someone touches or does something within the platform it’s put into the audit trail.”
Both systems offer an authorisation function. When a driver books a vehicle, their manager receives an email or text message with a link to go into the transaction and authorise it.
A fleet manager also gains control over a booking as they can set ‘the rules’: they can specify that they want to use a company within a five mile radius and they can make sure drivers only book a vehicle of the standard they are entitled to.
The temptation to keep a rental car longer than necessary is reduced as a driver receives a text message when the vehicle needs to be returned and can also be reminded about putting fuel in to avoid a charge. The fleet manager can see that the message has been sent.
Preventing a rental from extending another day can be a big saving for companies.
A 1link Hire Network client reduced their average hire days from three to two, simply because the process they used before was fairly manual and the automated system speeded things up.
Another hi-tech feature is the ability to allocate a certain percentage of business to different suppliers. Mr Davis says this can aid contract negotiation.
So clearly e-commerce can assist fleet managers – what’s the catch?
Stefan Rogers, director of marketing at FMG Support, says: “While the provision of online service systems has succeeded in improving the management of daily rental enquiries, e-commerce is not a fix-all tool.”
He suggests e-commerce lacks the “personal touch” and that the system may not be flexible enough to deal with certain requests.
And what about cost?
Well, the 1link Hire Network is paid for per transaction – typically £1 to £1.50. There is an initial joining fee (£995 for a big leasing company, for example).
IRIS works either on a transactional price or on the basis that if a user gives Nexus business the system is free.
Both providers say they take security seriously and sensitive data is encrypted.
Training can be provided, although most systems are intuitive and easy to use.
The real challenge for e-commerce systems is keeping pace with customers’ needs. Epyx updates software every 10 to 12 weeks and has plenty of features in the pipeline.
Nexus, meanwhile, is considering providing CO2 emissions information rather than a customer having to book by car group.
So far then, they are working towards the challenge.