Since the inception of the “Sharing Economy” by companies like Airbnb and Uber to the successful BlaBlaCar and Getaround (ex. Drivy) in Europe, sharing owned assets has become commonplace for many consumers. This trend is now making headway in B2B markets, particularly in the construction industry. Audrey Courant, Managing Director of Heavy Equipment in EMEA, explores the impact of the Shared Economy on the construction equipment industry. Don’t miss Part 2 of this series on Preparing Your Business for the B2B Sharing Economy in Construction.
The United States introduced one of the first successful marketplaces: Getable, offering to share idle equipment between contractors. Other online players then began to offer fleet owners – contractors, rental companies, dealers, or manufacturers – the ability to share underutilized equipment online. Kwipped or BigRentz in the US, as well as Tracktor and Klickrent in Europe, are just a few players in these growing marketplaces. Even manufacturers are starting to invest in these future models: Caterpillar invested in 2017 in Yard Club, and Yanmar in MakinaGetir in 2018.
Some of these companies like EquipmentShare and Getable have evolved their business model to support customers with their entire fleet management by providing smart job site and asset management solutions.
The value proposition of the Sharing Economy is simple and appealing – online marketplaces accelerate the search for rental equipment while providing a more expansive offering, with or without operators. The Sharing Economy allows fleet owners to increase profitability by increasing the utilization of their equipment and reducing idle fleet. Owners access a wider end-market, save on marketing and promotional costs, and receive guaranteed payment terms.
In addition, the current crisis linked to COVID-19 has already triggered an acceleration of digitization in the heavy equipment market. During the lock-downs everywhere around the globe, companies’ staff had to work remotely, and developed communication via digital solutions for both internal meetings and commercial interactions. In the heavy equipment industry, which is typically not the most advanced in connectivity and digitization, this was the occasion to prove the efficiency of digitization tools. This effect, coupled with the new sanitary and distancing rules, will for sure accelerate the adoption of non-physical ways to do business.
Construction companies are now, more than ever, open to connect digitally with their suppliers (both OEMs, distributors and rental companies): from gathering information on machines via customer portals, signing rental contracts digitally, to e-invoicing. DuckerFrontier believes this will be an accelerator to the deployment of marketplaces.
As marketplaces continue to emerge and grow, stakeholders in the construction equipment market and intermediaries of the value chain should be aware of how their business model could be impacted:
- Customer Relationships: Equipment rental companies and dealers risk losing direct contact with the end client when accessing the market through online platforms. Information gathering, booking, payment, and even transport and service of machines could be offered online; as a rental company or dealer you have less direct access to your customer base, as well as fewer personal interactions. Under these conditions, how will you continue to build the customer relationship that you rely on so heavily today?
- Product Commoditization: With online rental platforms, customers can easily compare daily rental prices for equipment. As a result, traditional intermediaries struggle to convey their added value and differentiators needed to stand out in a competitive market. Dealers and intermediaries should consider the following questions when struggling with product commoditization: How do you promote regular, thorough machine maintenance on rented equipment? How do you emphasize the services you offer like transport, fueling, reactive customer support and training, if you don’t have direct contact with your clients?
- Equipment Safety: Safety is a crucial element of the construction equipment industry. Let’s take for instance the aerial platforms segment: People working at height need to be properly trained, and the machines they depend on should be safety checked and approved before use. Areas of concern that need to be addressed include: ensuring that equipment is properly inspected and maintained on the job and providing confidence for customers that the machines they rent are safe and ready for use. This problem is exacerbated when customer interaction is limited.
DuckerFrontier’s Heavy Equipment team is at the forefront of key trends impacting the industry. Our experts are constantly monitoring changes in the industry to provide clients with the most impactful insights. How can we help you deliver better outcomes for your business? Contact us to connect with an industry expert and keep an eye out for Part 2 on Preparing Your Business for the B2B Sharing Economy in Construction.