Uber vs Zipcar How Uber turbo-charged the sharing economy business model and why it can can achieve much faster growth than on-demand business models (Zipcar)
Feb 07, 2017
Uber vs Zipcar
How Uber turbo-charged the sharing economy business model
and why it can can achieve much faster growth than on-demand business models (Zipcar)
Zipcar Uber
On-demand (=pay-per-use) business model
Sharing economy based business model
Photo credit: http://www.freestockphotos.name/Economic benefits of not owning a car: • Average cost of ownership of a car per year in US: $8,558 ($23 / day) • Cars are utilised only 5% of the time (72 mins / day) • Economic benefit for consumer of $6.8b (in the US) in 2015 from Uber alone
Image credit: https://digitalsynopsis.com/wp-content/uploads/2014/06/supercar-wallpapers-bugatti-3.jpg
Zipcar Uber
Zipcar uses an on-demand business model
It owns assets (=cars) that it rents out as demanded by
their customers
Uber also provides an on-demand service But the more important aspect is that it utilises already existing assets that are owned by others This is a characteristic of the sharing economy
And Uber make use of it even if they do not embody the original spirit of the sharing economy
The value proposition is different but partly overlapping (on short distance, short term usage)
Zipcar
Uber
Using a car from 1 hour (minimum) up to 1 day
Get picked up and dropped off
Value propositions are not the same but similar
Zipcar avoids having to check the car after each ride and pushes some other costs onto the user (avoiding operational costs that a classic car rental incurs)
Zipcar
Uber Zipcar
Keeping clean + fuelling up Driver User
Fuel costs Driver Zipcar
Parking (at car’s home base) Driver Zipcar
Maintenance costs Driver Zipcar
Depreciation Driver Zipcar
Purchase costs + cost of capital Driver Zipcar
Core transaction costs (server, app) Uber Zipcar
But Uber pushes all operational, maintenance, depreciation & capital costs to the driver
Don't miss the forrest for the trees: Uber’s massive growth would never be possible without this
Zipcars located in Lower Manhattan where I have to pick
them up myself
Uber cars near my pick-up location (w/ real-time
updates) come to me
Distribution model
Safety, insurance, liability
Ensure safety
Provide appropriate insurance
Uber
Use technology to further improve safety
Uber
https://newsroom.uber.com/feedback-is-a-2-way-street/
Real-time feedback about drivers means Uber can correct for issues big and small – while ensuring that only the best drivers stay on the road. We take this feedback seriously – depending on the circumstances, rider feedback may lead to deactivating a partner from the system or serve as validation that the driver is providing great service.
An Uber trip should be a good experience for drivers too – drivers shouldn’t have to deal with aggressive, violent, or disrespectful riders. If a rider exhibits disrespectful, threatening, or unsafe behavior, they, too, may no longer be able to use the service.
Have partner drivers been deactivated for consistently poor ratings? You bet. Have riders been given a temporary cooling off period or barred from using the app for inappropriate or unsafe behavior? Yes. The system works to make sure the most respectful riders and drivers are using Uber. For example, in San Francisco only 1% of trips have a low rating of 1 or 2 given to a rider or a driver.
Also check out: https://www.uber.com/en-AU/legal/community-guidelines/us-en/
P2P platforms: manage “human interaction risks”
Uber strives to add value to the community (possibly to improve their image)
Uber
People trust brands they know Sharing economy companies can use their capex and revenues to
build a brand and acquire customers at turbo pace
http://www.nielsen.com/au/en/insights/reports/2015/global-trust-in-advertising-2015.html
Build and buy trust
Transaction cost = $0 (well, not quite but much leaner than classic car rental)
Zipcar
Offer convenience
Remove barriers: register to first ride ~10 mins
Zipcar
Uber
Measure customer experience and improve
Puts traditional taxis experience-wise on the backseat
Uber
Sharing economy ideals do not really align with hyper-growth and profit-seeking.
As sharing economy business, understand your impacts on: - Incumbents - Existing workforce - Environment - Community - Public opinion - Laws
Source: Bloomberg
1. Economic benefits 2. Asset ownership model 3. Demand-vs-supply management (e.g. surge pricing, market place) 4. Intermediated audiences (peer-to-peer, business-to-business,
business-to-crowd) 5. Self-regulating elements (driver/rider rating) 6. Predominantly mission or profit driven (alignment with user benefits) 7. Governance model (corporate or a collaboratively governed) 8. Asset management model (operational, maintenance costs) 9. Product/service distribution model 10. Transaction costs 11. Customer experience & quality management approach 12. Localisation 13. Footprint/impact on existing businesses, workforces, environmental
impacts, legal risks 14. Growth, funding and critical mass
Important elements of sharing economy based business models
On-demand business model Sharing economy based business model
Zipcar has a fleet of 12,000 cars
(despite being around a good 10 years longer than Uber)
Uber commands a fleet of 1,500,000 cars
Majority of capital to be invested in fleet acquisition
Opex goes into operating & maintaining fleet, depreciation, …
Investment in fleet = $0 (except some self-driving test vehicles)
Much lower operational costs
Underpins the potential of sharing economy based business models, but …
More capital available to invest in turbo growth
• Many of the early sharing economy based businesses (2009-) have failed for various reasons …
• They didn't get some part of the business model right, e.g. sufficient benefits for the user, trust, value proposition, customer experience, the platform …
• or it was not good enough without smartphones and dedicated apps to get to a critical mass …
• Like the dot-com boom-bust cycle, many of first wave sharing economy based businesses have failed, but there are massive opportunities waiting for those to get it right
Conclusion
Click here to get this presentation and other related downloads:
www.InnovationTactics.com/uber-sharing-economy-presentation-pdf
Feel free to share around the web. But please don’t alter any of its contents when you do.
Dr Murat Uenlue, PgMP, PMP