A growing segment of B2B ecommerce is proving that in many cases renting products can make far more sense than purchasing.
For a company like Mayfield Medical Services Inc., which repairs, calibrates and provides preventive maintenance of products ranging from hospital surgical equipment and microscopes to dental chairs and X-ray equipment, the renting option surfaced about a year ago. “Many companies look to us for recommendations on equipment and where to rent it, so we started renting equipment about a year ago,” says Greg Lanoue, Mayfield’s laboratory equipment sales manager.
When a medical laboratory needs an ultra-low-temperature freezer that keeps enzymes, bacteria and other substances as cold as minus-86-degrees Centigrade for a short-term project, he says, purchasing the freezer outright for $20,000 may not sit well within the lab’s expense budget. In many other cases, Lanoue adds, companies often look to rent instead of buy equipment to avoid having to worry about the cost of maintaining it, or to try it out before leasing it long-term or purchasing it.
Expanding beyond the Midwest
More than a year ago, Mayfield started offering equipment rentals to complement its services, but the new business line took off slowly. The company, based near St. Louis in the southern Illinois town of Bethalto, didn’t pull in much rental business from its core market of serving several states from Iowa to Indiana, Lanoue says.
Then it began selling through an online marketplace, Kwipped Inc.’s Kwipped.com, which specializes in business and industrial equipment rentals to customers ranging from universities, science labs and restaurants to technology organizations like the National Aeronautics and Space Administration and aerospace companies SpaceX and Northrop Grumman. “Our rental business didn’t really take off until we started with Kwipped,” Lanoue says. “Now we get leads from all over, beyond our core markets, and we have the opportunity to explain to new customers our products and services that differ from other suppliers.”
He added, “It’s looking to be a major portion of our business, and a major contributor to our future growth.”
As potential customers on Kwipped clicked to request to rent a piece of equipment, the marketplace forwards the request to suitable suppliers, who then bid for the transaction. Once a customer accepts a supplier’s offer, Kwipped collects the payment and forwards the proceeds to the supplier minus a commission.
For some product categories, such as ultra-low temperature freezers, Mayfield is experiencing a high conversion rate for turning leads on Kwipped into rental contracts. And in “probably better than 50%” of overall equipment rentals, the contracts serve as trial periods leading into a rent-to-own or lease arrangement, Lanoue says.
Different from eBay and Amazon
Mayfield has also listed its services on eBay.com and Amazon.com, but has found that they tend to attract bargain hunters, rather than the typical Mayfield and Kwipped customers who are looking for long-term relationships for an ongoing business need covering equipment services. “On Kwipped, customers are looking for assurances that they’re getting a quality piece of equipment,” Lanoue says. “We can assure people that we bring products that are calibrated, serviced and inspected. We have skin in the game as they’re renting; if the equipment fails, it immediately falls back to us.”
Lanoue says Mayfield also benefits from being on a marketplace, which he figures serves as a destination where customers can find the equipment they need from other suppliers if Mayfield doesn’t have it available. Visitors to Kwipped.com can find and rent equipment completely through self-service, including applying for credit to cover purchases if they don’t opt to use a credit card or other payment method, or they can interact with sales reps who can help them find the equipment and suppliers that suite their needs, says Robin Salter, Kwipped’s chief marketing officer. He notes that the marketplace has “nearly 1,000” suppliers that serve 35 industrial categories.
In addition, Kwipped provides analytics on marketplace activity, showing demand for particular types of equipment. Lanoue says Mayfield accesses a Kwipped online dashboard to view such data in anonymous aggregate form for all site visitors, but also can monitor histories of the transactions tied to its own customers.
Kwipped also provides a supplier-approval process designed to meet the needs of buyers, such as hospitals and other medical facilities, that can only rent equipment from suppliers that meet their standards. “If a customer’s procurement department has a contract application process to become an approved supplier, Kwipped signs that contract, so all of our suppliers become approved,” Salter says.
Kwipped doesn’t release its revenue figures, but since it launched in 2015, the marketplace generated 300% year-over-year growth, Salter says.
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