The company also runs promotions to current users whereby they can get driving credits for referring friends, thereby directly using its network of users who trust and use the platform to convince new users to sign up. With more users on the road, Zipcar can take advantage of advertising in the form of large car logos that can attract more users. Zipcar users see increased value with an expensive fleet of cars in their own respective communities.
Pathways to a Just Digital Future Watch this tech inequality series featuring scholars, practitioners, & activists Thus, a critical mass is essential for both consumers and the company to reap the optimal benefits of both sides of the coin. With a denser network of cars, Zipcar can take advantage of economies of scale in minimizing costs (e.g., maintenance and cleaning) per vehicle, invest in better app/interface experiences, And with greater demand from users, and subsequent revenues, Zipcar can invest in placing vehicles in arguably more desirable (and expensive) locations. And with a large fleet of cars conveniently located, consumers are attracted to Zipcar. In fact, as the number of users grows, Zipcar can justify placing a denser network of cars in a given city. With close to one million members and presence in over 25 US cities, Zipcar has its teeth firmly in the market. Chief among these elements is network effect.
However, despite stiffing competition, Zipcar’s expansive (convenient) presence, membership model, mobile app experience, web portal, RFID unlocking/tracking, centrally convenient/highly trafficked locations, and value-added services create high switching costs that help maintain loyalty. The barriers to entry in the car sharing space are not incredibly high in fact, a number of competitors including Hertz and Enterprise have launched their own car-sharing models. In turn, through its subscription-based model, fee-for-use rental structure, and ads (on some vehicles), Zipcar captures tremendous value. And of course, a stamp of approval for contributing to less pollution, congestion, and sitting, unutilized cars. No hefty price tag of using a taxi and of course, I got to avoid some awkward taxi convos.Īs a college student on a budget in a big, dense city like Boston where parking is difficult and a car impractical, ZipCar solved the problem of the need for flexible, affordable occasional driving on-demand-with gas and insurance included. I had become a loyal Zipster, using the car to drive my friends and I to late-night parties off campus or make a 1AM run to Star Market for groceries. I signed up through Harvard, got approved, received my handy ‘Zipcard’ in the mail, logged into my account, and voila! I could reserve cars anywhere around the city when I needed. Of course, the bar scene in Boston was fun to experience…but so was the newfound freedom of being able to rent a car to escape campus on my own volition! Enter Zipcar, since I was still 4 years shy from 25 to be able to affordably rent from Avis, Enterprise, and the big rental companies my parents used for road trips and vacations. I was so excited to turn 21 during my senior year of college.