Zipcar Business Model

Summary

Zipcar is a new commercial membership-based car-sharing company that provides convenient on demand means of transportation to its members. Zipcar was founded in 1999. The company represents a great opportunity and fills a real need between rental car service and taxi service. Members can reserve car based on their need, for couple of days to as much as couple of hours. This case mainly describes how Zipcar works and what are the critical factors for company.

Analysis

Operations Strategies:

Customers have to pay annual fee to become member. Apart from annual fee, members have to pay usage fee based on their usage, time or mileage. After becoming member, one can view car availability and reserve car via the internet or telephone. Members can reserve car as much as a year in advance or minutes before they need car. Members don’t have to pay parking fee, insurance fee, gas charges or other additional fees. But, they are responsible to pay parking tickets, tolls, and returning car to designated parking area at the end of the reservation.

Target Market:

Zipcar’s target market is focused on dense urban residential areas, where millions of people that do not own a car, as they are put off by congested, accident-prone infrastructure, sky-high parking fees, vandalism, high maintenance costs, and other nuisances. Zipcar also captures those customers, who do not need to travel for long distance. Another target market for Zipcar is students, who are studying in colleges and universities.

Advantages:

Zipcar provides a service to their member that differs from other car rental companies. The key difference is the user experience. Zipcar offers the convenience and the experience of driving own car. Hence it can easily compete against other mass transportation services (and specifically taxi cabs), where customers’ needs cannot be easily met with other transportation options. Needs such as errands (shopping, driving to school and back), short trips to the country, etc. are not provided by other services. Even if they do then it costs a lot compare to Zipcar.

Being a service company, both its growth and future is tightly coupled with the service experience and operational efficiency as well as its ability to maintain its customer base.

Moreover, members find it as a convenient, easy to use option. They can also get rid of hassled ownership.

The other advantages it has