An Introduction to Car-sharing & Zipcar
Back in 2000, in lieu of overcrowding in the US car rental market, Zipcar implemented a blue ocean strategy and established its car-sharing business as the dominant alternative to car ownership. Compared to car rentals firms that charge users on a per day basis, Zipcar offers users the flexibility of deciding the number of hours and distance of car usage. In addition, unlike car rental firms which require customers to pick up the cars from their offices, Zipcar allows members to pick up a car from their nearest parking lots located at strategic points throughout metropolitan areas. The added convenience over the traditional car rental business model, coupled with Zipcar’s first mover’s advantage in the US market, led Zipcar to be the largest car-sharing company in the world, with a total of 570,000 members and 8,000 cars. Zipcar’s Service Proposition – 4 Simple Steps to Driving a Zipcar Firstly, new users are required to apply for a Zipcar membership which costs about USD60 annually. Secondly, users proceed to reserve a specific car model at their preferred nearest location, via phone, online or the Zipcar mobile application. Thirdly, users proceed to their reserved cars and unlock their cars by having an RFID scanner located on the car’s windscreen scan their assigned Zipcards. Lastly, users return their cars to designated parking lots and will be subsequently billed on a per-hour basis, without having to pay for fuel or insurance costs. Zipcar’s Four Market Segments
The bulk of Zipcar’s operations is located within the US, although it does operate in selective cities of Canada and the UK. Its revenues come from the following four market segments. Individual Membership
| Servicing individuals who prefer car-sharing to urban car ownership due to significant cost savings
| Working with universities to address the lack of parking lots by providing car-sharing to staff and students and reducing the number of cars on campus
| Businesses & Government
| Working with businesses and local governments to meet environmental goals by providing employees access to Zipcars and encouraging car-pooling
| FastFleet System
| Selling its proprietary and trademarked car-sharing management systems to organizations interested in implementing an internal car-sharing program
| Opportunity for Zipcar to Enter the Growing European Car-Sharing Market In 2006, the European Union (EU) announced plans to drastically reduce greenhouse gas emissions and the carbon footprint across European nations. Under the new EU energy policy, European nations are required to report their annual carbon dioxide (CO2) emissions. As such, given their ability to reduce the cars on the road and consequently the greenhouse gas emissions and carbon footprints, car-sharing services flourished in Europe. According to Frost & Sullivan, the revenue from car-sharing in Europe is likely to hit $2.6 billion EURO ($3.4 billion USD) by the 2016. This figure even exceeds the projected US car-sharing revenue in 2016 of $3.3 billion USD. Given that the European car-sharing market is likely to be more lucrative than the US one, Zipcar should not miss out on the opportunity to expand its operations to Europe. Our Recommended Goal for Zipcar and Reasons for Recommending It Despite lacking a first-mover’s advantage, we recommend that Zipcar sets its sight on penetrating the European car-sharing market, specifically Germany and Switzerland, and seizing market leadership in the long run. Our group proposes the use of creative collaboration strategies as a workaround to Zipcar’s lack of first-mover’s advantage when entering the aforementioned markets. These strategies will be further elaborated upon in Component #2. Our recommendation of seizing market leadership in Switzerland and Germany is based on the following reasons. Firstly, Zipcar’s acquisition of UK car-sharing market leader (Streetcar) in addition to its...
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