The Water Delivery Company – Industry Comment
The Water Delivery Company were asked to comment on the arguments for sale and rental options for water coolers – and our summary was published in the April/May 2010 edition of cooler innovation.You can view the original version by clicking on the link – the-water-delivery-company-cooler-innnovation-may-2010.
“In the light of coolers becoming cheaper to buy, how can the rental business retain an ‘added value’ service and what factors must rentals companies focus on to maintain a foothold in the cooler market?”
The water cooler business in the UK is definitely showing signs of maturity. Customers have options between bottleless and bottled water coolers, drinking water fountains are growing in popularity and companies are increasingly having to deal with customers who are significantly more educated regarding pricing and service options by comparing water cooler companies online.
UK water cooler companies that simply look to protect their rental income streams will struggle and ultimately fail in the future. The Water Cooler industry needs to adapt to a changing environment and look to build long term service relationships, with both purchase and rental customers, that ensure long term protected revenue streams.
It must also be remembered that customers don’t purchase water coolers simply because they are cheaper to buy. Many choose to use capital budgets for equipment such as water coolers and therefore rental options are simply not applicable. This is especially true of the customers who use our specialist website – www.drinkingwaterfountains.co.uk. Drinking Water Fountains are often installed in buildings during a kit out and therefore fall in capital budgets. So which ever way you look at it rental water cooler businesses need to provide purchase options for customers, and given the way there are increasing options online for purchasing these rental companies need to provide competitive pricing.
When I first came into the industry seven years ago rental companies would often only be offering limited purchase options and these were priced at extreme markups – and I can almost guarantee that these were offered to persuade people that rental was the cheaper option. With transparency of pricing online this simply does not stack up. The water cooler industry must adapt itself to normal retail margins as there will be significant amount of “box shops” who will compete at these levels. More importantly they will also survive as businesses with these margins.
If water cooler companies look to building long term service relationships with both rental and purchase customers they are also able to build a business with long term revenue streams. As long as margins are right we can therefore build businesses with the trained engineers and well paid staff can support the customers’ water cooler experience. So adapt to the perceived “threat” of water coolers for sale, and then structure the pricing and service options within your business carefully – there will always be certain products with higher margins than others.
For these reasons and many, many more the water cooler industry needs to nurture innovation and weave the ability to adapt into the very fabric of its being. There are water cooler companies in the UK which have already embraced this.