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“ZipCar”
ZipCar - BUSINESS MODEL:
ZipCar represents an “exemplar” service business model in the automotive industry that mobilizes location
technology and cardkey technology.
The model connects (1) a network of cars located in densely populated residential areas with (2) drivers who
want to rent a car. Bookings are made in advance by telephone, through the website or the app. The service
mobilises location-based technology by helping customers and ZipCar locate the vehicles, cardkey technology to
unlock vehicles and smartphone technology allowing customers to alter their booking from their mobile device.
The complementary aspects of the business model include web-sites, customer lists and member’s driving
history.
HISTORY – The exemplar firm and others:
Founded in Cambridge, Masseteuses by Antje Danielson and Robin Chase, ZipCar debuted its first cars on the
streets of Boston and Cambridge in June 2000 after raising an initial US$75,000.
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In December 2002 ZipCar raised US$4.7m in a series B round.
In November 2006 ZipCar opens a London office as part of a European expansion effort at the same time
as a venture round of US$25m.
In 2007 ZipCar merged with Seattle-based Flexcar.
In June 2009 the Zipcar iPhone app is announced so users can locate Zipcars, check on their availability,
reserve them and even unlock them.
In April 2010 Zipcar buys Streetcar, the largest British car-sharing company for about US$50 million.
In December 2010, Zipcar raises US$21 million from Meritech Capital Partners and Pinnacle Ventures.
In April 2011 Zipcar goes public, earning a market valuation of more than $1 billion, though in the
months to come its stock price will fall from a high of more than $28. On Dec. 31, 2012, it will trade at
$8.24.
ZipCar revenues in 2012 were US$186m.
In January 2013 Avis Budget Group purchases ZipCar for US$500. The logic behind the Avis acquisition
is they saw a synergy for fleet optimisation since their vehicles are used mainly during the week, whilst
ZipCar’s are used mainly at weekends.
By January 2014 Zipcar has 850,000 members, more than 700 employees and 11,000 cars available in
the U.S., Canada and Europe.
Although ZipCar has bought several competitors in recent years, other competitors do exist including Business
to consumer services like Car2Go and DriveNow, peer to peer services to RelayRides, and people transport apps
like Uber.
CUSTOMERS - who are they:
ZipCar is for people, usually city dwellers who need occasional access to a car, but who prefer not to carry the
expense and burden of owning one. Members must be 21 years or older, unless they are affiliated to a ZipCar
university when they must be 18 or older.
The business model enacted by ZipCar offers slightly different packages to three principal groups:
Written by Stephen Newbury under the direction of Prof Charles Baden-Fuller, Cass Business School, City University London (c) 2014;
support of Building Better Business Models funded by EPSRC (EP/K039695/1) and partners gratefully acknowledged. Reproduction only
with permission.
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(1) the Public, (2) Businesses, and (3) Universities.
ZipCar now operates in over 50 cities in the US, Canada, the UK and Spain, but predominantly in the US.
ENGAGEMENT – value creation proposition (including network effects):
The principal value proposition to the user is access to a range of cars 24-hours a day without the burden of
ownership. ZipCars are available only to ZipCar members, chargeable by the hour, include fuel and insurance, are
bookable in advance and collectable from a convenient location typically in densely populated residential areas.
ZipCar own the cars and agrees with city councils and universities to provide dedicated parking spaces, so
ZipCar members can see through their website or the app, where cars are located. The cars are named to add
personality to the service, but are not heavily branded so members can drive a ZipCar as if it was their own car.
ZipCar provides an online, mobile and a telephone booking service. Cars are booked and paid for by the hour.
The cars are fitted with technology that enables the cars to be unlocked by a ZipCard, which each member has,
or by a smartphone. Once inside the car, the ignition keys are found within the glovebox. A refuelling card is
provided should the vehicle need refuelling during use, and a book is provided to record any damage found on
the vehicle or caused during use. After the vehicle is used it is returned to the same location with a minimum of ¼ tank
of fuel onboard.
DELIVERY - the value chain:
The ZipCar service and the product relating to that service includes a website and app that connect members to
the service offer. After the member has booked a car in advance, they use their ZipCard by placing it on a sensor
in the windscreen to enter the car. When using the car if the member wants to return the car earlier or later,
they can access their booking and amend it subject to availability. For occasional drivers it is much cheaper to
use ZipCar than pay to own your own car. ZipCar also provides different kinds of vehicles so depending on your
journey you can book a specific vehicle.
Local councils will typically provide dedicated and free parking spaces for car club vehicles because they reduce
local community congestion, and universities are also interested in finding ways to provide less parking, which
again reduce congestion as well as infrastructure investment and maintenance cost.
“Each car club vehicle can result in taking 24 private vehicles off the road and the low carbon vehicles used typically emit approx 33%
less CO2 than the average car. This is why we are supporting the continued growth of car clubs across the country”.
UK Transport Minister, Norman Baker
Tracking technology within the vehicle has been developed in-house by ZipCar engineers, enables ZipCar to
track vehicles in-use, find vehicles should they be stolen, and collect data on member usage.
MONETIZATION – value capture:
In the UK, members either pay an annual fee of £59.50 plus a minimum £5/hr when using a vehicle, or they pay a
monthly fee of £6/month for 12 months plus a minimum £5/hr when using a vehicle. ZipCar limits the journey to
40 miles/day and then charges a fee per extra mile driven. Package discounts are provided to universities.
Written by Stephen Newbury under the direction of Prof Charles Baden-Fuller, Cass Business School, City University London (c) 2014;
support of Building Better Business Models funded by EPSRC (EP/K039695/1) and partners gratefully acknowledged. Reproduction only
with permission.