Over the years the Self Storage Industry has seen the entrance and exit of a number of different aggregators. In this article we consider the benefit or pitfalls of aggregator sites.
Different types of aggregators
Some aggregators are contact focused – finding relevant businesses who can offer a service you are looking for – and others are booking sites.
The most common form of aggregator that we have witnessed in our industry are sites set up along the following model: a customer looking for storage enters their contact details and preferred location and the aggregator sends those contact details to self storage facilities within a fixed radius. This is usually done on a no fee basis initially, as the aggregator attempts to build their customer base, but after a certain period of time the Facility is asked to enter an agreement to pay a certain fee or percentage of the booking amount to continue to be listed with the aggregator.
Members’ experiences have been that in many instances these referrals can be for customers looking for storage 50-100 km from the storage facility. Hence the so called ‘lead’ is a waste of the Facility and customer’s time.
Other aggregators give the appearance of representing the Facility, listing the logo and name of Facilities along with pricing in some circumstances. A number of members have been listed on sites based overseas, and in most cases listing information is not accurate. This can result in disgruntled members of the public contacting you for storage as advertised on the aggregator site, only to discover that the price is not accurate or the size not available. Members have reported to the SSAA that in some instances clients have arrived at the facility waving a ‘confirmation of booking’ receipt from aggregators for spaces that do not exists, or at prices so low that the Facility simply cannot honour them. Obviously, it is not ideal for the Facility to have to handle such complaints and negative consumer experience. If you have not consented to such a listing, it is a breach of your IP and you have the right to have the listing removed. Of course, this is more difficult when the website is based overseas.
Who benefits from an aggregator site?
Hands down, the primarily beneficiary in any industry where aggregators have set up is the customer. The other main winner is, naturally, the aggregator. Focusing on the customer, transparency of pricing which necessarily comes with aggregator sites is of significant benefit to customer, and in all industries where aggregator sites have established – car hire, accommodation, flights – has resulted in an overall lower of pricing. The aggregator wins because they take a cut of each sale they make on your behalf. Where aggregators become an indispensable tool for product search in an industry – such as Wotif and lastminute in the accommodation industry – an aggregator may become so powerful that businesses must continue to list via that aggregator or miss out on business – but at what price?
Examining the impact aggregators have had on other industries, what is certain is there is NO evidence that an aggregator site increases overall customer base, and hence does not generate more leads, clients or profit. In other words, everyone is still fighting over the same pie but for less return.
An aggregator stands between you and the customer
Where a potential customer must engage with you to make a booking, an opportunity arises to build a relationship with that Storer, and in addition make ancillary sales. This might mean selling them boxes, selling them insurance or just simply building a more personal relationship with a customer not possible via a pure click and pay model. Earnest and Young recently undertook a study of the UK personal motor insurance market, where 42% of customers elect to buy insurance through insurance aggregators. This means for nearly half of all insurance customers, there is no engaging with the final insurer until after the conclusion of the commercial transaction. EY identified the need for insurers to build on their direct relationship with customers if they are to improve retention rates and profitability.
In a book and pay model, aggregators also ‘take the money and run’. That is, their role in the storage relationship is restricted to the booking, and is over before the customer even arrives at your Facility. What happens when a customer books and pays, arrives at your facility and there is no space available or no record of the booking, and you haven’t yet received a cent? Who do you think the storer will be unhappy with when you insist they need to pay before you can allow them to store? Or when there is no Space available? The faceless online aggregator or the staff member standing at the desk? And even when the booking process runs according to plan, staff are still the ones who may have to scramble to redress problems not expressed or understood when the booking was made. Disputes about condition of the unit, expectations about security, and issues surrounding whether the space is fit for purpose are pushed onto the staff after the commercial transaction has already been executed, limiting the ability for staff to ensure the storer is receiving appropriate information and understands the product they need.
What if once the Storer examines the available Space they decide to cancel? As the booking was made through a third party provider, does the refund come through you or them? And how long will that take? What will your potential (now cancelled) customer think about your business if how it was represented on the aggregator site is not an accurate reflection of your business? Think about car hire –have you booked through an aggregator only to have the vehicle you thought you were booking swapped for another? And when you read the fine print of your agreement with the aggregator you see this was one of the terms and conditions? Who are you frustrated with? The car hire company, right? Applied to self storage, how is that scenario going to play out in social media for your business? And what about the five other customers you have turned away because you thought that Space was sold? Make no mistake, when you hand over the sales process you lose control over important aspects of your business.
How have other industries responded?
In 2010, American Airlines pulled their flights from travel aggregator site Orbitz, asserting this was due to the inability to negotiate a reasonable deal on booking fees. In an extraordinary display of aggregator unity, Expedia changed the way in which American Airline flights were searchable within their own site, making it extremely difficult for customers to view and/or book AA flights. Delta airlines took similar action at the same time, pulling flights from three smaller travel sites, CheapOair, BookIt.com and OneTravel. Why did these airlines take this action? In short, where once these aggregators streamlined the booking process and were of useful assistance to the airlines, the cut the sites were now taking from each booking – reported to be around 10% – was so large that considerable ticket profit was being lost to the aggregator.
And the airline industries are not alone. Similar stories surround the car hire and accommodation industries. What is clear from these industries is that once an aggregator takes hold in an industry, it becomes commercially unfeasible to not continuing listing on the dominant service/s, and almost impossible to wrest control back from an aggregator in any profitable or viable sense.
To date, the SSAA has been successful in keeping commercial aggregators out of the space and hopes to continue to do so.
What can I do?
- Be wary when approached by aggregators offering a ‘non fee’ listing, as this will not remain the case indefinitely
- If you are unhappy with a listing you have not authorised, ask to have it removed. Among other things, the aggregator is contravening your IP by showing your logo and/or using your registered trading name on their site, as well as breaching Australian Consumer Law by holding themselves out as representing your business.