Zipcar - The business of sharing
Why buy when you can rent? This question is the foundation of a growing number of businesses. Renting is not a new business, of course. Hotel chains and car-hire firms have been around for ages. However, the Internet has created a new momentum for renting. Some have labeled this trend “collaborative consumption”. For example, in the U.S. car-sharing is booming even as car sales languish. Zipcar, an American firm, has 400,000 members who pay an annual fee and can then rent cars by the hour. The members log on the web site to find out where the nearest Zipcar is parked, and return the cars after use, to a parking bay in a city, such as Boston, Chicago, London and New York. Zipcar is based on four simple steps: join, reserve, unlock and drive. Anyone with a credit card can join by filling an online application in minutes. After approval, usually within 24 hours, members can use a phone or web site to reserve a car for a couple of hours or for a whole day.
The reservation could be done using mobile device applications for Android and Iphones. One could search for nearby cars by time, model, make or price. One could reserve within minutes or months in advance. Then just walk to the car point your Zipcard toward the windshield and the car doors will open.
When a client gets to the car, she/he waves a membership card over a sensor on the windshield. The sensor reads the card using the near range RFID wireless standard. The sensor triggers a wireless query back to the company’s database. If the response from the database confirms reservation, the car’s doors are unlocked electronically and the member drives off. The communication between database and sensor occurs via a long-range wireless system such as 3G of 4G/LTE (Long Term Evolution) wireless system. WiFi signals are used for medium range distances. As the member travels around, the car’s location is tracked via GPS. If an accident or breakdown were to occur, Zipcar would know where the vehicle is located. When a car is dropped off, the member’s account in the database is updated, and from there the web site can get information.
The keys are in the car for you to drive. During the trip the ignition key is always kept in the car. The Zipcard is used to lock and unlock the car. Anytime you drive a Zipcar vehicle your gas and insurance are covered. Close to the end of the trip, a text message alert is sent to the Zipcar user. If she/he wants to extend the trip, she/he will text such a request to the Customer Service desk. After a trip the car has to be returned to its designated parking location. The details of a Zipcar trip are available online for customer to view within hours after the car has been returned.
Zipcar believes that car sharing will change transportation. But its car-sharing community seeks only people who will obey some rules. These include the following: Keep the car clean; do not smoke; report any damage; keep pets in baskets; fill car up and return the car on time. If you are late, you will get charged a late fee. You can call the desk or text to see if your reservation can be extended. Clients have to leave have at least 1/4 tank of gas in car when they drop it off. A fuel card is kept in the car for refilling the car.
The U.S. market also has other collaborative businesses. Netflix, a film-rental firm, made $116m in 2009 by making it easy to hire movies by mail. CouchSurfing connects people who have a spare sofa with travelers who wish to sleep on it, on the tacit understanding that the travelers will do the same for someone else in the network some day. Social networks are helping to lower one of the biggest barriers to “collaborative consumption”—trust. Couchsurfers, for example, 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. There are 2.3m registered couch surfers in 79,000 cities worldwide. ThredUP specializes in exchanging children’s clothes, but also has exchanges for everything from make-up to video games. Freecycle helps people give things away so that they do not end up in landfills: its website has 7.6m members. People are renting things they never used to rent, such as clothes and toys. Bag Borrow or Steal, enables women to avoid “the emotional and financial sacrifices” of “the endless search for the ‘right’ accessory” by providing them with posh bags to rent.
There are various explanations that have been put forward to justify collaborative consumption. Rachel Cole attributes it to changing social attitudes and decline in materialism among the younger generation. They view sharing as being green, urbane, and postmodern. Younger consumers seem to have a different attitude about privacy and trust. They write about what they are doing (on Twitter), what they are reading (on Shelfari), what they are interested in (on Digg) and whom they know (on Facebook). This enables them to more easily trust persons that they meet online. Mary disagrees. She believes that the reason why collaborative consumption works is because of the products themselves -the products are single use items that have very high purchase costs. Larry Paine thinks that this phenomenon is driven by the fact that more people in society are more materialistic and more interested in consumption than ever before. Renting enables them to consume more than they could ever afford to buy. Who is right?
Case Study Questions: [Refer to: Integrative Framework for Business Requirements Analysis]
1. What is the business of ZipCar?
2. A major business driver that was covered in the case is Service Operations Excellence. What are some of the information requirements that are associated with the business driver?
3. Which kinds of information systems and information technologies were used to accomplish/satisfy the information requirements?
4. How does all of this use of hardware benefit customers?
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Compiled by Prof. N. Dedeke. http://www.economist.com/node/17249322 Oct 14th 2010 | adapted from Economist, Zipcar’s web site and public sources.