Last May, skip price comparison website Skipandbin.com was launched by entrepreneur AnyJunk founder Jason Mohr. Andrea Lockerbie finds out more about the business and the future of skip hire
Whether you are looking for car insurance or a new savings account, the use of price comparison sites to find the best deal is now common practice. Jason Mohr, founder of man and van clearance company AnyJunk, decided to introduce the concept to the skip hire sector last year in the form of Skipandbin.com.
His motivation was to make the skip hire market more efficient for both people who hire skips and skip companies wanting to find new customers. “Allowing people to quickly find their nearest and cheapest skip providers saves them time and money. Equally, providing skip operators with low cost instant access to lots of local customers, saves them marketing spend, builds a customer base close to their depot, and allows them the flexibility to offer temporarily low prices to better match demand with capacity,” he says.
“I also like the fact the site helps reduce fuel miles by effectively encouraging people to use their nearest skip provider,” he adds.
Mohr explains the site is primarily designed for people who do not hire skips frequently and so do not already have a good understanding of who the main providers are in a region and what represents a fair price. “However, I expect it to attract more and more trade customers as they use it to check the rates they are being charged by their existing supplier are competitive,” he says.
His mission “is to make Skipandbin.com the first place people go when they want to hire a skip”. The short term plan for the website is to exceed 50,000 searches a month and 1,000 listed suppliers by May 2014. “The site currently receives between 10,000 and 30,000 searches per month and we have more than 500 suppliers listed – so we are definitely on track,” Mohr says.
AnyJunk provides a rubbish clearance service, finding reuse or recycling outlets for the materials it collects, while Skipandbin focuses on skip hire. Mohr believes the two businesses complement each other. “Although I’m naturally a huge fan of Anyjunk’s man and van service, there are definitely plenty of situations when a skip is a more suitable solution. Rather than ignore that fact, I thought it would make more sense to embrace it. So Skipandbin not only presents an exciting commercial opportunity, it provides the AnyJunk team with a great insight into the skip market, and if we ever get asked by a client to organise a skip, instead of saying no, we now have a pretty comprehensive database of providers from which to choose,” he says.
Skipandbin recently conducted a skip price survey, which found that skips in the north are significantly cheaper than the south, with London the most expensive place to hire a skip. The research found that hiring a 6 cubic yard ‘builder’s’ skip in the capital costs an average of £253, compared to £130 in Glasgow. Mohr says: “At a local level, prices being offered by the most expensive and the cheapest skip operator in each region varied by as much as 40%. In other words, it pays to shop around.” He believes the national price variation can be attributed to three cost reasons and three tactical reasons (see box).
According to Mohr, the skip market needs to rationalise. “Skips are essentially a commodity service. Provided the skip turns up when it is supposed to, the only thing a customer really cares about is the price. In other words, skip operators that can run their businesses at a cost lower than their competitors and therefore offer lower prices to customers should in the long run succeed and those that cannot, will fail,” he says.
“Lower running cost is down to size of operation and management talent - everything else can be purchased - so I would expect over time the number of skip companies to reduce significantly and larger, regional market leaders to emerge with access to the strongest management teams and the capital required to invest in the most efficient disposal processes.
“At the same time, assuming availability of recycling and reprocessing facilities becomes more uniform across the UK, I expect price differences will reduce and also for prices to become more sophisticated – so that they more directly reflect proximity to a skip provider’s depot and also the mix and weight of material being collected.”
He believes that as these changes take effect, skip users will look to segregate their waste more at source “so they maximise recycling opportunities and reduce their costs”.
Founder Jason Mohr explains Skipandbin.com
What is Skipandbin.com?
Skipandbin.com is a price comparison site for skip hire. It is a bit like GoCompare but for skips.
How does the site work?
Users enter their postcode, choose a skip size, and click ‘Go’. The search results show skip companies covering that postcode, ranked in order of their price for that skip size. The user clicks on a supplier to view its phone number and book direct. There is no charge to the user for the service and no requirement for them to enter any personal information.
What is the business model?
We earn revenue from charging skip companies a small fee whenever a user clicks on their name to get their contact details. The standard click charge is 50p. Our costs are managing the website and building traffic to it through web marketing, social media and commercial partnerships.
Mohr on why skip prices differ so much
The reason one skip company charges less than another operator is because its costs are lower or it chooses do so for tactical reasons. This can be broken down into three cost reasons and three tactical reasons:
Lower transport costs - the closer a customer is to a skip company’s depot, the lower that skip company’s logistical cost (fuel and driver pay). So, a lot of skip companies offer zone based pricing with their cheapest zone being the postal districts nearest to its depot. In areas with high congestion like London, skip prices tend to be higher across the board to reflect higher transport costs.
Lower disposal costs – a skip company able to process waste at a lower cost than its competitors can offer its skips at a lower price but still make the same margin. Costs of disposal will vary regionally depending on the waste treatment/recovery options available. So in areas with limited waste processing options, skips will on average cost more.
At a local level, skip companies with more efficient transfer stations and/or better deals negotiated with buyers of recyclable materials may well also have significantly lower disposal costs than competitors.
Lower ‘other’ costs – apart from transport and disposal, the main other costs incurred by a skip operator are depot rent, insurance, office and depot staff, and truck maintenance and depreciation. These will vary regionally, but also locally with larger operators normally better placed because of economies of scale.
Excess operational capacity – skip companies with excess capacity (ie lorries standing idle despite insurance, maintenance and rent having to be paid) will sometimes drop prices temporarily to minimise the costs of not utilising their fleet fully.
Weak local demand – will drive down prices in the short term, just as unusually high local demand will drive it up. Over time a market will adjust in size to reflect these changes in demand and prices revert to what is normal for the costs of operation in that region.
Management desire to win market share – skip companies keen to expand may as a short term tactic offer lower rates than competitors to attract new business.
Whilst the last three factors are more short term in nature, all six contribute to why prices can vary quite dramatically in a market comprising around 1,500 local operators.