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Business case for zipbike

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The attached PowerPoint presents the business case for Zipcar to support a Bike-Share and Bike Parking business in San Francisco. …

The attached PowerPoint presents the business case for Zipcar to support a Bike-Share and Bike Parking business in San Francisco.

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  • It is a pleasure for us to be here, presenting a new business concept to the executive committee and board of directors of Zipcar.
  • Today, our goal is to encourage the Zipcar Board to support launching a Bike-Share and Bike Parking business in San Francisco - a project that we call Zipbike. Our goal is to profitably create a convenient, economical mobility alternative that connects people to the places they want to go. Oh, and by the way, while making a profit, we will also reduce pollution, decrease congestion, and improve health ---------- Zipcar is in a solid position to launch a bike-sharing service. The company can side step into bike sharing by leveraging its existing capacities in shared-car service. It’s existing network, management know-how and IT infrastructure reduce the cost of expanding the scope of Zipcar’s business while delivering a high customer experience standard, both prerequisites of sustained financial viability.
  • From Europe to Asia, to the Western Hemispher, over 125 known bike-sharing programs are currently operating today.
  • Transportation options, from Montreal to Melbourne, from Barcelona to Beijing have been transformed by bike-sharing programs. The City of Huangzhou, China is expanding their current system to 50,000 bikes, more double the size of the current largest bike-sharing program in the world, in Paris. Dublinbikes launched on September 13, 2009. In little over a month, 11,500 Dubliners signed up for annual subscriptions. Expecting fewer than half this number of subscribers in a year, the program ran out of RFID cards. Cleveland launched a small bike rental program this year. What does it say about San Francisco, or about demand, when Cleveland, Ohio starts a bike program And, the programs are becoming more sophisticated Samba, a bike-sharing program in Rio de Janeiro's Copacabana neighborhood, is activated by cell phones. Bicinittà, an Italian company with bike-shares in Genoa and Monaco, offers pedal-assist bicycles to help uphill riders. Bike sharing give people a clean, efficient, healthy alternative to connect to the places then want to go. It has become an important component in the complete transit system. It has had noteworthy results. Bike-sharing in some cases has led to a doubling of the number of trips by bike. (Mode share (a percentage of all transport trips which are made by cycles). Barcelona measured its cycle mode share in 2005 (before bike-sharing) and in 2007 - cycle mode share jumped from 0.75% to 1.76% (Source). In Paris, cycle mode share increased from about 1% in 2001 to 2.5% in post-launch 2007. While this may sound small, these percentages equate to tens of thousands more cycle trips each day) It has increased use of private bikes, and improved the bicycle’s image. No longer is it a toy. It is a sensible tool for transport.
  • People are using bike share programs for several reasons. Convenience: Bike parking locations, like car locations will be within a few blocks walk from customers’ residences and destinations. The smart bike stations are easy to use and will fit nicely with Zipcar’s current car system. Races between bikes, public transit and vehicles have been staged in many cities. Guess who always wins? Security: More than 1.5 million bicycles are reported stolen every year in the United States, and fear of bicycle theft is recognized as a significant deterrent to bicycle use. There are over 35,000 bicycle parking spots in the city, not including meters, benches, street posts and trees. However, there is a demand for secure parking. Demand, for the limited number of secure bike lockers at the Caltrans stations, for example, has created waiting lists. Flexible: bike sharing helps complete a city’s transit system, connecting customers to various modes of transport. Economical: Renting a bike is more economical (insert cost comparison). Limited supply of expensive parking. These choices are in demand. When surveyed, American’s indicated that they would spend 22% of total transportation funding on bicycle infrastructure Any guesses on how much is spent now? 1% (Transportation for America) Rob will now explain how Zipbike suggests to operate in San Francisco.
  • The team has considered several options that are currently being used around the world today. Each model has its advantages and its drawbacks. The most prevalent system now is ad supported. This is the way Velib in Paris works. The drawbacks for ad supported system: first, relies on ad revenue, which is in decline. Second, the media companies have little incentive to opperate the system well. We believe that a for profit model, is more feasible.
  • Let’s bring this back home. Our vision is to develop a shared transport network that links people to public transit, the community, and to each other while enriching the human and natural capital of the communities we serve. Our ultimate success will be built on enabling people to choose the style of shared transportation that reflects their individual needs and lifestyle, while connecting them to the larger community: Heath: I have a road bike at home, but don’t want to use it going to get a haircut, or to go to the store. Happily, one block from my house is a Zipbike stand. I rent a bike, and ride to the store where I can check the bike back into a secure parking space. Kelly: I have a city bike that I love, but I am worry about parking it in a secure spot. Fortunately, there are Zipbike parking stations at many of the places where I ride. I feel much better leaving my bike at a Zipbike station than locked to a bench. Darcy: My friend and I want to take our mountain bikes out of the city for the day, but neither of us have a car. We can easily reserve a car with a bike rack from Zipbike for the day. Rob: I’d like to go to Sacramento to addend a lecture, but I don’t want to drive. Two blocks from my house is a Zipbike rack. I can hop on a bike, take it to Caltrans and take a train to Sacramento. I can’t wait until Zipbike launches in Sacramento next year. Each of us describe our personal anecdote.
  • To accomplish this, we envision a network of bicycle parking stations located conveniently throughout the city connecting people to the places that they want to go and/or to the transit options that will take them farther. Using the principle of 1 bicycle for every 150 people and five stations per every square kilometer, a San Francisco bike sharing network should have over 5300 bicycles at over 600 stations. Access to well-maintained bikes at starting points is only half of the solution. Zipbikes would have to provide adequate space for bike parking at destinations – shopping streets, supermarkets. Each station will both rent bikes and provide secure parking for privately owned bikes.
  • Such a program will impact many people and groups. Reinforcing Community Ecosystem linking everyone together.
  • This is how it will work. Our team has evaluated several options for bicycle parking/renting and believe that the Bixi system employed by Montreal, London and Boston is the most complete and advantageous. Zipbike Members would access their Zipbikes via the same card system used to access reserved Zipcars. Like similar bike share systems Bixi is an automated system, capable of accepting payments from credit cards or swipe cards, and whose activities can be monitored from a distance. Bixi offers unique benefits and features that we find advantageous: For Zipcar, the advantages of Bixi include Portability: It doesn't require the excavation and consequent damage to the urban environment). As a benefit, preparation costs are lower and the time required to get a system up and running is shorter. Easier to install, repair, remove. Adjustability: The modular features of the system allow it to be quickly expanded, reduced or moved as demand trends change. Secured Parking: The front end protector of the bike dock serves as an anti-theft mechanism and can accommodate privately owned bikes (for a fee, of course). Solar-powered, to avoid creating any emissions and the use of non-renewable energy sources and to eliminate the need of hooking up to the community's energy grid, thus reducing associated costs and excavation requirements as well as installation time. Uses wireless communication to avoid the need of hooking up to the community's telecommunications grid, thus reducing associated costs and excavation requirements, as well as installation time. Integrated IT systems to better control bike and parking space rental Number of bike docks and bikes at any location Functional status of any bike Status of solar panels and electronics anywhere in system Traffic and usage patterns of stations and bikes Order virtually immediate redeployment of stations, bike docks and bikes Locate in real time every station and any given bike
  • There are significant advantages for our customers that incude: Consult Web site to find station nearest them and their destination Find out in real time number of bikes and parking spots currently available at any station Rent bike at any station of their choosing - Return bike to any station of their choosing Choose bike they wish to rent - not have one assigned by system Rent bike for any length of time Pay for rental in various forms: credit card and BIXI key Notify system at bike dock of any damaged or defective bike and choose another quickly and easily
  • We are encouraged that a bike share program will enhance Zipcar’s financial bottom line and strengthen their brand equity.   New vertical for Zipcar, tested business model. For example, a privately operated bike-share program has recently launched in Boston.  The initial investment for 2500 bikes and 290 stations was reportedly $13 million with a five year anticipated return.  The scale of the San Francisco network would be comparable.  A detailed feasibility study, however, would need to be undertaken.   The revenue model is straight forward. Zipcar currently earns revenue from membership fees.  An affiliated bike-share program gives Zipcar’s target market an additional incentive to become members by enhancing customer choice and expanding access to multiple modes of transportation.    Partnership and leveraging viral marketing to reach customers. Expanded choice has value on its own, but we also propose to enhance the value to customers through relevant affinity programs.   Examples of community and business partners can include: BARTSF Muni, Caltrain, ) T rader Joes, Whole Foods, Safeways, small business and others.   We are keen to explore corporate client memberships, we envision a company like Kaiser purchasing Zipbike memberships for its members on the grounds that bicycling improves health.    It has appeal in other areas: Humana Inc., one of the U.S.'s largest health care providers, launched “Freewheelin”, a bike sharing program for its 8,500 Louisville employees. (slide: highlighting Humana)   Fixed costs will be spread across more revenue streams.    New revenue stream increasing operating cash flow.  In addition to expected increase in membership revenue, sales will be generated from bike rental, rental of bike parking, rental of bike/ski racks for vehicles, and advertising.  .
  • Using a SWOT analysis, let me highlight the following:   Strengths (expand) o   Zipcar’s site negotiation experience, location planning and car-share operations expertise will translate well to bike-sharing. o   Zipcar has an established, trusted brand.  Zipbike will benefit from and complement the brand recognition o   Growing Awareness of Sustainability   Weaknesses (expand) o   Bike Share Proposals on the table   Threats (expand) o   Competition from small shops and Blazzing Sadles   Opportunities (expand): o   Citywide injunction against improving bicycle infrastructure are set to be lifted. o   A bike-share program connected to Zipcar will takes advantage of economies of scope by adding new services to an established network and IT system. 
  • Zipcar’s vision is to reduce the number of cars on the road, enable simple and responsible urban living and to redefine the way people think about transportation. (slide)“We will deliver on-demand mobility while leaving a small footprint on the environment—providing a great timesaving service that frees up space in our cities and puts more money in consumers’ wallets . Our leading brand will be synonymous with fun, honesty, clever innovation, and social good.” (note: yes this is too many words for a slide – we will use graphics to focus the audience’s eyes on the key words) Expanding Zipcar services to include a bike sharing option fits well within their mission and values.
  • Congestion More people are now living in cities for the first time in human history. In 2003, congestion caused 3.7 billion hours of travel delay and 8.7 billion liters of wasted fuel, costing more than $63 billion for the year. 50% of car trips taken are fewer than 2 miles long A four mile journey in Central London takes 40 minutes by car, 22 minutes by bike 7-12 bikes can be parked in one automobile space Half of the trips in America can be completed within a 20-minute bike ride, and a quarter of trips are within a 20-minute walk. Yet, the vast majority of these short trips are taken by automobile. The average American motorist now drives about 15,000 miles a year. The average traveler now wastes the equivalent of a full work week stuck in traffic every year. Investments to encourage increased bicycling and walking can reduce miles driven in three ways: 1) Because a majority of car trips are short, bicycling and walking can often be as fast and convenient as driving. 2) More car trips can be shifted to public transportation when well-integrated networks of bicycle and pedestrian infrastructure provide convenient access to bus stops and rail stations. 3) Investments to make communities conducive to bicycling and walking promote a richer and denser mix of residences, businesses and amenities, leading to shorter trip-distances even for those who drive. Environment Car emissions produce 60-70% of urban air pollution. Bicycle produce 0 Commuters waste 2.3 billion dollars per year in traffic jams. Bicycles waste 0 “ Americans’ private cars and trucks burn 40 percent of the oil consumed in the United States, equivalent to 10 percent of world demand. Each gallon of gas burned produces 19.4 pounds of CO2 (nearly a pound per mile driven). Cars, the fastest growing significant source of GHGs, are responsible for about 20 percent of the United States’ CO2 emissions A bicycle commuter who rides five miles to work, four days a week, avoids 2,000 miles of driving a year—the equivalent of 100 gallons of gasoline saved and 2,000 pounds of CO2 emissions avoided (Calculations based on data from www.fueleconomy.gov ). Health Kids 6-11 from 1960 to 2002 have grown 11 lbs (63 to 74 lbs) Men over 20 have gained an average of 24 lbs. Women in the same age category have also gained an average of 24 lbs. Bicycling Burns 500-700 calories per hour. Driving burns 5-20 Modest increases in bicycling and walking for short trips could provide enough exercise for 50 million inactive Americans to meet recommended activity levels. Roughly 300,000 premature deaths per year in the United States are caused by being overweight. In 2005, more preventable diseases and deaths occurred from excessive weight than from cigarette smoking The annual medical costs of physical inactivity have been estimated at $76 billion,(46) or close to 10 percent of all medical expenses. General Motors: $286 million in medical expenses per year due to obesity Medicare: 15 percent more expenses for obese beneficiaries Absenteeism: Obese employees miss 12 times more work days than their normal weight colleagues
  • There is a solid sustainability case for increasing bicycle ridership. We are encouraged that combining Zipcar’s resources with growing demand for bicycling, profit can be achieved. Move forward we seek board support for three actions Frist, we propose that our team to produce a detailed business plan and feasibility study. Second, we believe that continued negotiations with potential supplier shall be held Third, we would like to begin negotiations with city government and other stakeholders. Thank you for your attention. Do you have questions?
  • Transcript

    • 1. Are you ready for a ride?
    • 2. Kelly James Case for Sustainability bike
    • 3.
      • Profitable for Zipcar and its partners
      • Convenient & economical for its users
      • Reducing pollution & congestion; improving health
      Bike-Sharing & Bike-Parking Business C ONCEPT Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 4. B IKE S HARING Over 125 Known Bike-sharing Programs Worldwide
      • Doubling of the number of trips by bike,
      • Increased use of private bikes, and
      • Improved the bicycle’s reputation.
      Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 5. B IKE S HARING Over 125 Known Bike-sharing Programs Worldwide
      • Doubling of the number of trips by bike,
      • Increased use of private bikes, and
      • Improved the bicycle’s reputation.
      Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 6. Over 125 Known Bike-sharing Programs Worldwide
      • Doubling of the number of trips by bike,
      • Increased use of private bikes, and
      • Improved the bicycle’s reputation.
      B IKE S HARING Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 7.
      • Convenient
      • Secure
      • Flexible
      • Economical
      B IKE S HARING Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 8.
      • Bike Sharing Models
      • Government Owned & Managed
      • Quasi-Government (Transit Authority)
      • Non-Profit
      • Ad Supported
      • For Profit
      Z IPBIKE Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 9. Bike-Sharing & Bike-Parking Business Z IPBIKE Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 10. To link people to public transit, the community, and to each other. Z IPBIKE Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 11. Z IPBIKE Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009 Community Ecosystem Bicycle Riders Commuters Local Employers Affinity Partners Neighborhood Businesses Advocacy Groups City Government Transit Authorities Investors Customers
    • 12.
      • Operational Advantages
      • IT Integration
      • Locations
      • Negotiating Power
      + Z IPBIKE Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 13.
      • User Advantages
      • IT Integration
      • Multiple Locations
      • Convenient Return
      • Choice of Payment
      Z IPBIKE Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 14. B usiness C ase Revenue & Profitability
      • Membership Fees
        • Choice
        • Affinity Programs
      • Bike & Parking Rental Fees
      • Bike/Ski Racks Fees
      • Advertising
      • Economies of Scope
      Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 15. Challenges
      • Competition
      • City Plans
      Opportunities
      • Citywide Bicycle Injunctions
      • Growing Sustainability Awareness
      B usiness C ase Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 16. B usiness C ase for S ustainability Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009 “ We will deliver on-demand mobility while leaving a small footprint on the environment—providing a great timesaving service that frees up space in our cities and puts more money in consumers’ wallets . Our leading brand will be synonymous with fun, honesty, clever innovation, and social good .” Zip Mission
    • 17. Congestion C ase for S USTAINABILITY Environment Health Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009
    • 18. C ONCLUSION Team 12: Robert Coombs, Heath Cox, Darcy Heppenstall, Kelly James November 20, 2009

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