From Zipcar to the Sharing Economy
By Arun Sundararajan, Associate Professor of Information, Operations and Management Sciences, NEC Faculty Fellow & Doctoral Coordinator
If your business relies on a model of consumption that is inefficient for your consumers, chances are that there's already a new sharing economy marketplace that is looking to streamline it for them.
Sadly, the Zipcar culture may not survive the merger. But in the world of new "sharing economy" models that generate efficiency gains, theirs is just the tip of the iceberg. True, they pioneered the creative use of technology to open up flexible new ways of renting a car. However, although their members can rent the (more urbane and green) Zipcar fleet by the hour and pick up their vehicle at a local parking space using a smartphone app, this is still a dedicated fleet, still inventory that the company has to acquire, manage and monetize. Under the hood, the business model is fundamentally not very different from that of a traditional rental car company.
Contrast Zipcar with RelayRides and GetAround, both genuine peer-to-peer car rental marketplaces which tap into the existing (and massive) installed base of cars that people already own. These marketplaces don't need to carry inventory. Their business model advantages are clear — the "fleet" renews itself naturally, there are no parking or logistics issues, geographic expansion and scaling is more seamless. Reputation systems and active supplier screening maintain quality, and the need for insurance keeps customers from bypassing the marketplaces.
Read full article as published in the Harvard Business Review.