ZipCar Rental Service: a business model

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These slides use ideas from my (Jeff Funk) class to develop a business model for ZipCar. Users can rent ZipCar vehicles using their mobile phones; they simply search for the closest vehicle and then find the vehicle in a prescribed parking space using GPS. This enables them to find vehicles faster than current methods. Zip Car targets people who want to use a vehicle for more than a single taxi trip and who do not live near the rental agency offices.

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ZipCar Rental Service: a business model

  1. 1. MT4002 TECHNOLOGY MANAGEMENT STRATEGY PRESENTERS: GAN JIAN LONG NG HENG CHUNG, JARYL YONG ZHI YUAN, BERNARD FOO CE YAO *DIsclaimer: ZipCars is a registered trademark, all contents used are only for presentation purposes
  2. 2. INTRODUCTION TO ZIPCARS
  3. 3. ZipCar Services Comprehensive payment plan: Petrol, Insurance, parking and usage all included Coverage Car are Widely located What ZipCar provides Flexibility: Pay per use, reserve as last as 30 mins before usage Convenience: Pick up the vehicle as per desired location
  4. 4. How to use ZipCar Locate a Car Near You One Time Registration • Smart Phone App • Internet • Phone Services • Pay Per use • Pre-Pay Membership Car Information & Location is sent to User Upon Confirmation Return ZipCar @ any time after using Unlock Car with ZipCard and Drive Off! • Nearest ZipCarpark • Any other Carparks & inform us
  5. 5. What’s new! Customer Computer Car Rental system Company Car GPS system Car
  6. 6. ZipCar Charges Sedan Car MPV (7 Seater) Free Distance inclusive (Km) Every ½ Hour(minimum usage) S$9 S$12 10 12 Hour S$150 S$200 150 Excessive charges (Per min) S$0.40 S$0.40 ----- Excessive charges (Per km) S$0.40 S$0.40 ----- Parking at ZipPark Free Free ----- Parking at NonZipPark* S$5 S$5 -----
  7. 7. VALUE PROPOSITION
  8. 8. Value Proposition Ease & Convenience Comparable & Competitive Cost
  9. 9. Ease & Convenience ZipCar’s Efficient Technology Platform 24/7 Services Easy to Use -Easy membership sign up -Locate nearest ZipCar with mobile app from -online and wireless anywhere reservations -Keyless vehicle access Extra Convenience -Free parking -No fuel charges
  10. 10. Convenience: Where do people usually looking for Taxi? • Shopping Malls • Neighborhood HDB Areas • Entertainment Areas
  11. 11. Strategic Location of ZipCars Airports & entertainment areas Shopping malls/ Furniture malls. Or events areas like expo Vehicle placement concentration HDB and Housing Estates
  12. 12. ZipCar Placement Locations Woodlands Regional Hub Changi Airport Jurong Regional Hub Changi Business Hub One North Regional Hub Paya Lebar Regional Hub Marina Cruise Center Orchard & Downtown Area Tanah Merah Ferry Terminal Major Transportation Points CBD Regional Hubs Places of Interest Young Estates Matured Estates
  13. 13. Value Proposition  Comparable    & Competitive Cost High Cost of & maintaining a Car Sky rocketed prices of Singapore cars Taxi prices and availability are always inconsistent (GPS in car gets you to your destination at your shortest way possible)   Overcrowded public transports High fixed prices per day car rental companies
  14. 14. Taxi Flagdown Rates Going Up Dated: 22 Oct 2013 “…flagdown rates starting $3.80 … higher than the $3.50 and $3.70….” “…SMRT also brought up flagdown charge from $3.60 to $3.80….”
  15. 15. Cost Comparison Mid Distance: Ang Mo Kio HUB  ION Orchard (10.5KM in about 15Minutes) ZipCar • Half hour cost : $9 • Extra KM cost : $$0.40 • Total cost : $9.40 Taxi • • • • Booking cost : $2.30 Flag down cost : $3.40 Metered Fare : $6.60 (gothere.sg) Total cost : $12.30
  16. 16. Cost Comparison Long Distance: Woodlands  CityHall (26.3KM in about 25Minutes) ZipCar • Half hour cost : $9 • Extra KM cost : $6.80 • Total cost : $15.80 Taxi • • • • Booking cost : $2.30 Flag down cost : $3.40 Metered Fare : $18.9 (gothere.sg) Total cost : $24.60
  17. 17. Value Proposition  Comparable    & Competitive Cost High Cost of & maintaining a Car Sky rocketed prices of Singapore cars Taxi prices and availability are always inconsistent (GPS in car gets you to your destination at your shortest way possible)   Overcrowded public transports High fixed prices per day car rental companies
  18. 18. ZipCar is much more worth it! Cost Comparison ZipCar Other Rental Co. Hours rented on Sat: 12 hours 2 day car rental at Hertz $100/day Hours rented on Sun: 12 hours Insurance $30/day Total no of hours: 24 hours Petrol ~$40/day* No need for Parking Fee Day Parking ~$20/day# Total cost on ZipCar = 2*$150 = $300 Parking Overnight at home $4/night Total Cost $388 * Based on 150 km comparison matching ZipCar’s 12 hour lease # Based on 2 Parkings within the Orchard Shopping Belt
  19. 19. WHY ZIPCAR?
  20. 20. Hourly Rental ZipCar Other Car Rental Co. 24 hours Availability Retail Hours Flexible Rental Timing Fixed Daily Rental Flexible Pick up/ Return Locations Fixed Pick up/Return Location Petrol Included Petrol (Self Paid) Basic Insurance covered Insurance Additional Cost Free Parking* Parking at Own Cost
  21. 21. Point-to-Point ZipCar Taxi Maximum Availability Subjective Availability No Booking Fees Booking Fees No Peak Hour Surcharge Subjected to Peak Hour Surcharge Confirmation upon booking Subjected to wait for booking Cheaper for mid to long distance Expensive for mid to long distance Full Privacy Less Privacy
  22. 22. Amy • Weekend Driver • Loves to Explore New Places • She drives the car maximum for about 12 hours a day • Lives in a HDB estate where parking chargeable
  23. 23. CUSTOMER SELECTION
  24. 24. ZipCar’s Potential Customers Cost Oriented Customers Eg.Public Transport users ZipCar’s Customers Convenience Oriented Customers Eg. Car owners, Taxi Passengers, Car Rental Customers
  25. 25. Point-to-Point Users Mobile Professionals Shoppers Tertiary Students
  26. 26. Daily Users Who Travels At Fixed Timing Working Professionals
  27. 27. Word-of-Mouth Marketing • Customer Referral Benefits – Customers gain $10 Zip-credit for every newly referred sign-up
  28. 28. VALUE CAPTURE
  29. 29. Value Capture FEE FOR SERVICE SUBCRIBTION METHOD OF VALUE CAPTURE ADVERTISMENT
  30. 30. Value Capture Primary Revenue Model Occasional Drivers Preferred Customer Priority Customer •Rates at $9/half hour •Prepaid: 100 hours +$90 free credit •No annual fee •Prepaid: 1000 hours +$1800 free credit •No annual fee •$20 Annual Fee (1st year free) One time $35 membership fees (includes Zipcard and $35 credit)
  31. 31. Tiered Advantages Priority Customers Preferred Customers Occasional Drivers • Normal rates • Least priority in booking • Loyalty discounts • Higher preferential over priority booking than Normal Customers • Most loyalty discounts • Top priority in bookings
  32. 32. Value Capture • Advertising – ZipCar allows external advertisements on 50% of its vehicles. Charges: $650/car/month.
  33. 33. Revenue Stream
  34. 34. SCOPE OF ACTIVITIES
  35. 35. Scope of Activities – Operations Management ZipCar’s Fleet •1000 Owned & •4000 Long Term Rented Car Servicing •Partnered Car Servicing Centers •Maintenance Crew ZipCar Technology Team •Maintain ZipCar Systems & GPS •ZipCar Website and Mobile App •Fleet Management System Frontline Crew •Customer Service Staff •Call Service Center •Car Relocating Team
  36. 36. Scope of Activities – Business Collaborations Car Park Lots Management •Strategizing Car Park Location Areas •Obtain Season Car Park Lots •Rent / Purchase Car Park Lots Malls & Merchants Tie-Up •Entice ZipCar Users to Merchants & Malls •Parking Lot Tie-up •Merchant Discounts etc. Petrol Discounts •Liaise with Petrol Companies for cheaper fuel Insurance •Collaborate with insurance firm for cheaper basic insurance •Allow customers to purchase additional insurance while booking
  37. 37. STRATEGIC CONTROL
  38. 38. Took up huge amount of vehicles Barriers •We would to entry rent up to 60%-70% leasable vehicles in the market Strategic Cost control effective savings •Petrol Insurance: Ability to get lower cost packages High start-up cost Business •Fleet Size: •Maintenance: •Car-parks: Sustainability Amount of cars workshop to of Number One could not be handle the car Car-parks own over short located maintenance around period of time. the Island reduces the cost compared to outsource
  39. 39. Thank you!
  40. 40. Q&A

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