The Industry not yet turned around by Digital Transformation

As it is well established that digital transformation has transformed the way we interact with products and services we interact with. And COVID has only accelerated the pace of it.
While the impact is very much visible in the way we consume services, at the same time the kind of business models this supports will continue to evolve. While some industry players have taken their shot at reinventing business, the profitability and survivability of these businesses depend upon the impact it brings to the lives of customers they are touching.

In this setup, the baseline principles that will drive the growth and sustainability of business still come back to the old principle of listening to the customers.

One such industry that has over the years adopted transformation has been car rental. While we know that some of the biggest businesses (in valuation) for the last decade were created around helping people travel from one place to other, and Uber was the flag bearer of the industry. However, there is an increasing segment of customers who wants the flexibility of traveling in their own car without owning the car.

To cater to this segment, the car rental industry has been slowly adopting digital tools to bring efficiencies and pass on the benefits to customers. However, the commitment to bring real transformation in the way industry operates is still akin to Blockbuster era of video rental industry. Where Blockbuster thrived on every slip customers made in returning the cassettes or DVDs on time.

Today there are multiple options for a customer looking for such services where the industry players are adopting contactless processes to give customers an impression about the freedom of usage without feeling intrusion. But the industry would have to be built around customer-centricity to thrive.

As an example, we can compare the three key services available in Sydney, and their customer centricity.

Carnextdoor:
The service, owned by Uber reflects the organizational ethos ingrained from it’s parent organization, which is well known for considering everything (customer safety and regulations) second to corporate profits.
The service operates as a platform matching the car owners who want to rent out cars to customers. As usually the tactic adopted by a business that wants to grow quickly and make money, the service incentivizes car owners to keep cars on the platform with no downtime. In the process, the company doesn’t follow the basic tenets of customer-focused service. The key aspects are:

Safety:

CarNextDoor doesn’t take any responsibility for ensuring that the vehicles are safe to drive for customers and asks customers to speak to vehicle owners to request for making vehicles safe to use.
In its manner of operation, the service operates more like an unlicensed liquor maker that doesn’t care for the safety of the product offerings and goes out to hunt for non-suspecting customers every day. Our interaction requesting for the action taken by CarNextDoor for a safety issue raised with a vehicle owner has been brushed aside with the corporate smoke screen used by CarNextDoor below:

No Parking:

The service operates without providing any safe parking for vehicles, and exposes customers to any parking fines if the vehicle is not hired by anyone else by the time it gets a parking ticket. This time period is not bound by anything and exposes you to unlimited liability. One of the customers we spoke is getting fines after 40 days of availing the service for parking a vehicle in front of an adjacent house to which CarNextDoor, and they have got two fines thus a single trip costing the family to pay with 4 points on license and over $700, and leaving them vulnerable to unlimited liability if there are more fines for just taking a vehicle for one day.
Thus the service is more like a drug peddler which leaves its customers more vulnerable every time it deals with them. It exposes customers to unlimited liability, and users should be very cautious of predatory tactics adopted by the business.

What’s Customer Service:

The service doesn’t have on-ground support staff, hence if you are stuck with any problem with a vehicle the only way for you as a customer is to ‘hope’ that you will find something that is of any use on their website. As a customer taking a vehicle out on family outing found himself stranded by the road on Sunday morning, shared his experience:
“We got stuck on a road due to a flat tire and didn’t know what to do. So we called CarNextDoor customer care and the call was forwarded to NRMA helpdesk who couldn’t help us because CarNextDoor doesn’t have any corporate tie-up with NRMA, and providing only vehicle number to NRMA isn’t enough information for providing roadside assistance. We had to search for their account number after browsing for 15 minutes, as CarNextDoor operates like a cheap service with no human touch point to help customers in dire need. My heart goes out to someone who might have got stuck at a really inconvenient place after dark as if I were in such a situation with two kids and elderly family members I would have to call for emergency services.”

Having said that all the customer requests go to the chat engine, where there is no guarantee of service support

Vehicles and Pricing:
The vehicles provided by CarNextDoor are ancient, and only the vehicles that don’t have any buyers in the market are registered on the platform. Cars as old as 22 years old are offered, and invariably the mileage is over 200,000 km. For such a vehicle the kind of pricing charged is predatory, and considering that such an old vehicle has to be further insured at over $20 a day by the user to get some peace of mind, it qualifies for a business that customers would want to avoid interacting with unless they have no other option.

One of the user we interacted was charged over $100 eight days after returning the vehicle and closing the trip. His alleged offense was due to him the battery going flat. While all the photos of the vehicle he uploaded at the time of return pointed out that the lights were off, and the vehicle was in good condition at the time of return.

No option to De-authorize your card:

Once you have pre-authorized your debit card on the platform, there is no turning back. You don't get the option to remove authorization on the app. Thus the service can charge you money anytime they want for anything you may or may not have done.

Availability:
The platform has ensured the availability of a large number of vehicles through onboarding vehicles that are not roadworthy. The platform doesn’t provide any guarantee for the quality of vehicles. And the responsibility of CarNextDoor is limited to auto-deducting money from the accounts of users, for a service that is non-existent.

Customer reviews can be found: https://au.trustpilot.com/review/www.carnextdoor.com.au

DriveMate:
DriveMate has a much smaller operations base in Australia, but the service has been launched after much deliberation. The strategy behind the service seems robust as the product packaging is much more simplified for customers.
While the customer still gets an old car (but not as old as CarNextDoor), the car owners are reachable on call and didn’t seem to be shadow owners like other services.
The service is scaling slowly at places where they can offer relatively low risk to customers in terms of parking, as the service still doesn’t have dedicated parking.
The pricing is cheaper than any other service, and the quality of the vehicle is relatively better. We spoke to couple of owners with their vehicle registered on the platform, and also with the users of the platform, and interactions have been positive in general.

The few negatives of the service are, customer service is based outside Australia, so reaching someone from customer care is a challenge. But the users we spoke to were happy with the response vehicle owners provided.

GoGets:
This service is the most professional in the way they have to build the product proposition. The platform takes the ownership of providing a safe vehicle to customers. The premium service is evident from the fact that GoGets offers long-term plans for users, and is confident that they are delivering value to customers that don’t leave them hanging or at risk.
The service aims at reducing the number of uncertainties about vehicle quality for users, and vehicles are relatively new. Thus the rental you end up paying, though higher than other cheap and unprofessionally run services, worth for client.

As one of customer shares, “ I am user of CarNextDoor and GoGets. Initially I thought GoGets services are expensive, but over 4 months of frequent usage of two services, my cost per kilometer of GoGets is 1.5$, whereas cost per kilometer for CarNextDoor is over 4$ per kilometer and 2 points on my license. Add to that the painful interaction with their customer care, where you feel like applying for RTI application to know anything”.

Parking: GoGets has dedicated parking spot, and the helpdesk understands that sometimes the parking might not be available sue to non-authorized users using it. Hence they readily provide guidance to customers on how to handle that situation. Also the customer care is super friendly, and ready to topup your booking free of cost if you are running out of time while searching for parking. This service score 10 out of 10 compared to any other service provider.
Helpdesk: Super friendly helpdesk, that is there to guide you in case you need help. This help can be roadside assistance or any other situation you find yourself in. And helpdesk is empowered to take any steps to help out customers
Vehicles: Owned and managed by GoGets, so they don’t ask you to run after car owners to do their job of ensuring roadworthy and safe vehicles are on platform.

Availability: The platform is in this business for long haul, and knows that customers comes to you for convenience. The range of vehicles available on platform is good, and density of vehicles across locations in Sydney is good.

Conclusion:

We can safely say that there are no leaders, yet, in the car rental market. There are some professional players and some players with predatory practices that are in line with their organizational ethos. However, the market is in a similar phase where the video rental market was and is awaiting the transformation of the business model to be disrupted. There will surely be some bitter-sweet memories of the businesses that will cease to exist in this industry, but surely the customer-focused businesses will be the ones that will stand tall and innovate.