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CIC IWOM panel:Fudan professor Zou on The new sharing economy powered by online social network

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The case is Fudan professor Zou shared during CIC IWOM panel on The new sharing economy powered by online social network. He shared the case of Zipcar to explain the theory of sharing economy is the …

The case is Fudan professor Zou shared during CIC IWOM panel on The new sharing economy powered by online social network. He shared the case of Zipcar to explain the theory of sharing economy is the key cause of the success of social media.

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  • 1. From Social Media to Social Business The New Sharing Economy Powered by Online Social Network Deqiang Zou, Ph.D. School of Management, Fudan University November 15, 2010
  • 2. Movie: Purchase or Rental? 2 © Copy rights reserved, Zou Deqiang
  • 3. WHY Buy When You Can Rent? • What about extending the idea of share movies via Netflix and stream music rather than buying CDs to the idea of sharing a car?  Car ownership provides great convenience— but at the price of great inefficiency  The average American spends 18% of his income on running a car that is usually stationary 3 © Copy rights reserved, Zou Deqiang
  • 4. Underused Assets • People are growing impatient with “idle capacity” (i.e., waste)  On average, a British car is driven for less than an hour a day but costs about £5,500 a year to own  Half of American homes own an electric drill, but most people use it once and then forget it  The number of drivers using car-sharing networks increased 117% between 2007 and 2009 in North America 4 © Copy rights reserved, Zou Deqiang
  • 5. Substitutes for Owning / Using Goods Rent Use of a Own a Physical Good Physical Good Perform  Drive Own Car  Rent a Car and Work Oneself Drive it Get Someone  Hire a Chauffeur to  Hire a Taxi Drive to Do Work  Car Pooling 5 © Copy rights reserved, Zou Deqiang
  • 6. ZipCar: Wheels When You Want Them • World’s largest provider of car-sharing services  Customers include consumers, businesses, universities, and fleets  Drivers register online and, depending on the service, pay an initiation fee of about $25 and an annual fee, often $50  Hourly rates range from $7 to $17, include gas (a credit card is placed in each car) and insurance  Largest selection of vehicles, from the Mini Cooper and Mazda 3 ($8 an hour) to the BMW 328i ($17 an hour) 6 © Copy rights reserved, Zou Deqiang
  • 7. ZipCar: How It Works? • Get all the jobs done  Just with your cell phone  By mid 2010, 400,000 members, 4,400 locations and 9,000 vehicles 7 © Copy rights reserved, Zou Deqiang
  • 8. ZipCar: Business Performance • Annual revenues are $130 million, and is growing about 30% a year • 80% of the US market share  About 8,500 companies have signed up for the service, including Lockheed Martin, Gap, and Nike. So have 120 colleges and universities, such as Carnegie Mellon and the University of Miami • Generate about $23,000 per car annually, with each employee supporting about 30 vehicles  That’s about double the revenue and efficiency of a traditional car rental company 8 © Copy rights reserved, Zou Deqiang
  • 9. ZipCar: Consumer Wellbeing • Customers buy just the amount of car they actually need • An average Zipcar member saves more than $5,000 dollars a year compared with owning a car • “Consumer Philandering”  Today’s a BMW day, or is it a Volvo day? 9 © Copy rights reserved, Zou Deqiang
  • 10. ZipCar: Social Benefits • “Let’s use fuel efficient cars.”  Reduce our fossil fuel needs by 4% • Each vehicle operated by Zipcar is equivalent to taking 15~20 cars off the road • Car sharers report reducing their vehicle miles traveled by 44% • CO2 emissions are being cut by up to 50% per user 10 © Copy rights reserved, Zou Deqiang
  • 11. What’s Shared? • Financial / Accounting analysis • Total Cost= Fixed Cost + Variable Cost Car purchase Fuel, Parking Annual taxes, fees, etc. fees, etc. Car Sharing Ride Sharing 11 © Copy rights reserved, Zou Deqiang
  • 12. Evolution of the Car Market Sector Car Car Ride P2P Car P2P Ride Ownership Sharing Sharing Sharing Sharing 12 © Copy rights reserved, Zou Deqiang
  • 13. Ride Sharing • Today, 75% of the trips are single-occupancy vehicles • GoLoco: share trips with your friends, and friends of friends  Join a group or create groups to travel with  Post your trip for your friends, coworkers, or everyone on GoLoco to see. Whether you are driving somewhere or looking for a ride, posting your trip helps you find others to GoLoco with!  Receive email alerts about trips to places you want to go 13 © Copy rights reserved, Zou Deqiang
  • 14. P2P Car Sharing • WhipCar (London) and RelayRides (Boston) aim to get car-owners to rent their vehicles to strangers when not using them themselves  Need a car? Borrow cars for $6/hr (RelayRides)  Own a car? Share it and earn cash • How WhipCar works? • Convenience and efficiency as compared to ride sharing 14 © Copy rights reserved, Zou Deqiang
  • 15. P2P Ride Sharing • OpenRide  Enables drivers to offer spontaneous shared rides when already on the road  One special feature of is the openness of its infrastructure which offers established rideshare agencies and communities a simple means of connecting up with OpenRide and thus gaining a foothold on the market for mobile ad hoc rideshare opportunities 15 © Copy rights reserved, Zou Deqiang
  • 16. 16 © Copy rights reserved, Zou Deqiang
  • 17. Increased Need For… Car Car Ride P2P Car P2P Ride Ownership Sharing Sharing Sharing Sharing Network Need for Technology Trust Increases Externality
  • 18. 1. Technology: Connected • Technology: more affordable and more convenient sharing  Technologies such as high-speed Internet, mobile broadband and GPS are enabling new ways of providing value to customers  Zipcar’s available vehicles report their positions to a control centre • Without technology, how would Zipcar’s members know where the cars were? How would they get access to cars? How would the system know how long they had the cars and how many miles they drove? 18 © Copy rights reserved, Zou Deqiang
  • 19. 1. Technology: Connected • Technology also streamlines and automates many back-office functions at Zipcar  Determinine the best location for a car, utilization trends, member demographics and spending patterns, or usage prediction algorithms 19 © Copy rights reserved, Zou Deqiang
  • 20. 1. A Peek Into Netflix Queues • Examine Netflix rental patterns, neighborhood by neighborhood, in a dozen cities (Jan. 10, 2010) • It is predictive  Self segmentation http://www.nytimes.com/interactive/2010 /01/10/nyregion/20100110-netflix- map.html?nl=multimedia&emc=focusem b1 20 © Copy rights reserved, Zou Deqiang
  • 21. 2. Trust: Evidence or Confidence • To ensure that both parties are trustworthy  WhipCar asks for details of both the rented car’s registration and the renter’s license, and checks them against official data  RelayRides only accepts cars that have gone through a safety check • Social networks are helping to lower one of the biggest barriers to sharing—trust  Couchsurfers, can see at a keystroke what others in the network think of the stranger who wants to borrow their couch. If he is dirty or creepy, they need not let him in 21 © Copy rights reserved, Zou Deqiang
  • 22. 2. Trust: Influentials 22 © Copy rights reserved, Zou Deqiang
  • 23. 2. Trust: I am My Connections 24 © Copy rights reserved, Zou Deqiang
  • 24. • a store • the person assistant who • a call center commented employee on your YouTube • the person video who wrote the online hotel • the person 2~6 who you review bought from • the person on eBay who answered your forum About 150 question
  • 25. 2. Trust: Temporary Ties Works, too 26 © Copy rights reserved, Zou Deqiang
  • 26. 3. Network Externality • Break through the critical mass or threshold of customer base to take off  iTunes 10: Social network business  Instantly available to 160 million users: “This is about talking to people about music” 27 © Copy rights reserved, Zou Deqiang http://www.apple.com/itunes/ping/
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  • 30. Integrated Solutions to Sharing • The mobile, spontaneous sharing opportunities with the barriers of (1) technology, (2) trust, and (3) network effect, can be realized by online social network driven by location bases services (LBS) 31 © Copy rights reserved, Zou Deqiang
  • 31. More than Check-ins and Badges 32 © Copy rights reserved, Zou Deqiang
  • 32. It Can Be Analytic or Predictive 33 © Copy rights reserved, Zou Deqiang
  • 33. Share More, Beyond Car and Ride • P2P car/ride sharing suggests that consumers could increasingly make money on the side • Now here’s one smart phone app that pays you to use it • Field Agent shows users a list of task people or companies want to be completed  Tasks such as checking the price of a product in a store or taking a picture of a product on a shelf will put you $2 ahead 34 © Copy rights reserved, Zou Deqiang
  • 34. Micro Entrepreneurs? • The most popular job so far:  Spend 10 minutes on the couch, listening to and rating music.  With enough couch potato jobs like that, users can make around $12 an hour, about 50% more than the minimum wage 35 © Copy rights reserved, Zou Deqiang
  • 35. Sharing: New Engine for Economic Growth • It is good for you, your community, business, and the planet • New businesses have emerged to serve this new market, exploiting the ability of online social network (esp. LBS) to create networks of shared interests and trust and to simplify the logistics of collective use • Redefine a multi-sided market (e.g., Google) which may facilitate free economy 36 © Copy rights reserved, Zou Deqiang
  • 36. The Faith • Access often matters more than ownership, and technology will make sharing more and more efficient • Social networking is a means to an end. You need to understand what the end is 37 © Copy rights reserved, Zou Deqiang
  • 37. Be A Connectionist “Creativity is just connecting things.” 38 © Copy rights reserved, Zou Deqiang
  • 38. Social Network: iPad and iPhone 39 © Copy rights reserved, Zou Deqiang
  • 39. 40 deqiang_zou@fudan.edu.cn © Copy rights reserved, Zou Deqiang
  • 40. References • Barry, Keith (2010), “Hitchhiking Goes High Tech with Car2gether,” Wired, September 8. • Belson, Ken (2010), “Car Sharing: Ownership by the Hour,” New York Times, September 10. • Botsman, Rachel and Roo Rogers (2010), “Beyond Zipcar: Collaborative Consumption,” Harvard Business Review, (October), 30. • Botsman, Rachel and Roo Rogers (2010), What's Mine Is Yours: The Rise of Collaborative Consumption, HarperBusiness. • Economist (2009), The Connected Car, June 4. • Economist (2009), Wheels When You Need Them, September 2. • Economist (2009), The Electric-fuel-trade Acid Test, September 3. • Economist (2010), Teaming Up with the Joneses, April 22. 41 © Copy rights reserved, Zou Deqiang
  • 41. References • Economist (2010), Collaborative Consumption, April 22. • Economist (2010), “The Business of Sharing,” Economist.com/blogs/Schumpeter, October 14. • Fuhrmans, Vanessa (2010), “BMW Plans to Test Short-Term Car Rentals,” The Wall Street Journal, October 24. • Griffith, Scott (2009), “Zipcar: Selling cars, one ride at a time,” McKinsey Quarterly, October 27. • Keegan, Paul (2009), “Zipcar: The best new idea in business,” Fortune, August 27. • Taub, Eric A. (2010), “An App that Pays,” New York Times, April 20. • Wikipedia (2010), ZipCar, http://en.wikipedia.org/wiki/Zipcar 42 © Copy rights reserved, Zou Deqiang