What software does a circular rental business need to succeed?

Running a circular minded rental business can be a complex, crazymaking process. But with the right support and software, integrated well, it can really help. Drawing from our recent conversation with Ryan Atkins of Supercycle, you’ll find a great deal of insights, resources and paths forward in this regard. 

Supercycle flexibly enables companies to offer the same product as a rental, resale, subscription, membership or direct purchase item, using the robust and well resourced Shopify platform. It simplifies logistics, frees up money that would otherwise be spent on platform development and enables the unification of where and how people do business with you. 

When we asked Ryan what he saw the tech stack beyond Shopify was to best enable such a business to operate and thrive was, he broke it down like this:

On logistics:

“I think it's all of the rest of the operations of a e-commerce business. Someone needs to receive the order, go and find what shelf that's on in the warehouse, pick it up, put it in a box, and send it out to the customer. Now, that in itself is a lot more complicated than it sounds when you have multiple different shipping locations, different inventory in, different inventory out.

Some merchants, typically when they're a bit smaller, can basically do all their back office operations just from the Supercycle interface, just from processing orders in Shopify, creating the shipping labels there and doing their pick and pack from there.

As you scale up, typically, merchants want to outsource this. They want to partner with a company that has a huge warehouse that looks after many, many brands and does all of their pick and pack and operations for them. 

Now, that becomes a little bit more complicated because a lot of their businesses aren't set up to receive the product, clean it, inspect it, grade it, you know, all those additional circular requirements. Now there are some that excel at that, so people like ACS in Glasgow. And a number of 3PLs are leaning into circular. So we've seen some really impressive stuff from people like Bleckmann, DHL, and in regards to supply chains, GXO.

So what we want to do when we go to merchants is to say, Look, you can do the fulfilment operations yourself. You can send your stock to one of our specialist circular first 3PLs. Someone like ACS, someone like Maven in the US. You're with a GXO, you're with a DHL supply chain. They can provide the operations, but there's some integration required. And we have a really kind of comprehensive integration platform that allows us to then integrate into their existing 3PLs.”

However, beyond that, some businesses choose to do their own operations across the board, in an existing or new warehouse, at scale.

It’s a more involved process, but one with greater assurance that each aspect is done in optimum fashion. Such is the case with premum baby equipment rental company Baboodle, who HappyPorch has supported across the spectrum in that regard. From helping them best manage the physical flow of goods - picking, packing and dispatch through to returns and cleaning - to having tighter, more unified integration between software and hardware. And where needed, we can create custom resources, using development tools that enable us to swiftly iterate and efficiently realise what’s needed. 

On accounting:

The accounting for such an operation gets more complex and requires a deeper level of software integration, which we can help with. However, as Ryan shares below, it can yield additional value from the same product. 

“When you're selling not new inventory, there's a big advantage to keeping that inventory on your balance sheet. Because if you own the item, when the revenue happens, it stays as an asset on your balance sheet. And if it's an asset on your balance sheet, you can start to do things like depreciating the asset over time. And actually the benefit of keeping it on your balance sheet is you can almost get an additional 20, 30% of value from the item by depreciating the asset. Now, sometimes you need to reset that depreciation if you then resell the item for more than what you depreciated that asset down to.

But again, that starts to get complicated just on the logic of how you do that. But then certainly how you get what those prices are over to NetSuite. And then from NetSuite over to HMRC. Again this is really relying on that kind of really sophisticated and connected integration layer that we have. 

Now, these are all things that are very difficult to do when you have low volume. And I would say a lot of circular vendors struggle with a scale of opportunity to justify all of this hard, complicated integration work to be done. Again, you work on the Shopify ecosystem, that problem's been solved. So you're adding 5% on top of an ecosystem of integrations and setup, which is already done - it's a marginal deviation. 

It's everything you've done there just with the extra concept of the state of the item and, you know, serialisation for that specific item. It's a small deviation.”

And what else?

“So logistics, accounting, I think the other thing is there might be multiple customer touch points for the same item, customers purchase an item, and then want to trade that product back in. 

Now, if they buy it and trade it in, that's essentially turning a purchase, from a purchase into a rental, essentially they've incurred a cost to have an item for the period of time that is useful to them. Or they might rent an item, fall in love with it, and then decide they want to keep it. In which case you're converting a rental to a purchase. People might subscribe to an item, decide they want to keep it, and then change the original transaction model to a new model.

Now that sounds like a support nightmare. And that sounds like lots of ‘Oh, I need to cancel that, recreate this, create a spreadsheet, track what happened here.’ It certainly used to be incredibly painful. But it's all just the products coming in, coming out and payments happening at various different points along the circle. So we try to build it in a way which provides the full flexibility. We've certainly architected the platform to skate to where the puck's going, and have an understanding of these cycles of a product rather than specifically rental, resale, products of service (in isolated categories)”

The value of partners:

While Supercycle covers a wide range of a circular minded rental company’s software needs, seeking to be a Swiss Army Knife in that regard, Ryan sees partners as vital to get into the finer details:

“There's incredible partners, HappyPorch included, building out those really unique back office processes, because (for instance) receiving a pram and working out what checks you need to do against it and how you authenticate it, each of these processes are gonna be very unique to each business. And they might be running different hardware and different RFID tags and yes, we'll provide a set of tools, but I want to be able to continue on the journey with them as they iterate their way to scale. 

And I want to provide the tooling. I want to provide the pipes, the Stripe, the Shopify. But how that blunt tool is then used to create something that's an incredible customer experience, something that really works for the merchant, I really wanna hand over to partners. ”

How specifically can HappyPorch support your unique software needs?

Overall, we can help all your systems to communicate with one another. Beyond that, we can:

Build out your customer communication. In a realm where trust, speed and timely support are paramount, having a system in place where your customers can let you know if there’s a problem, or they’d like to return an item early, or perhaps convert it into a purchase, is essential.

Create KYC (Know Your Customer) systems.. Having a simple, rapid way to assess whether who you’re renting to will pay, and return what they’ve rented, ensures your inventory’s integrity, and gives you peace of mind. 

Optimise your picking, packing and dispatching process. Knowing where, when, and to who to send your products to in an expeditious manner is key.

Returns management. Perhaps the most important, hands-on aspect of such a business, our software will give you a central, actionable core of information about the condition of your inventory, and whether it needs cleaning or repair. 

Putaway and restocking. Having your inventory ready to go back out in the world as quickly as possible is the crux of optimising its profitability. 

Reports and KPIs: Each business’s needs are unique in this regard, and discerning points of opportunity or challenge can lead to improvements, both on your end, and for your customers.

And this is by no means a comprehensive list. You can find out more about what we bring to the table in this regard, and begin exploring the possibilities together with us here. 

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If you’d like to delve into the full conversation that Ryan’s insights were drawn from, you can find it here. And you can read about customer cannibalism and other surprising reframes on circular business here.