In a Harvard Business Review blog post, Professor Arun Sundararajan explains Avis‘ acquisition of Zipcar as a means for Avis to enter the sharing economy. He argues that the sharing economy will continue to be a disruptive force across industries in 2013.
Excerpt from Harvard Business Review:
Avis has taken an interesting (and bold) step by acquiring Zipcar, absorbing an innovative but struggling competitor at what is likely to be seen as a bargain price while acquiring a small but desirable customer base and gaining a foothold in the rapidly growing world of collaborative consumption.
Sadly, the Zipcar culture may not survive the merger. But in the world of new “sharing economy” models that generate efficiency gains, theirs is just the tip of the iceberg. True, they pioneered the creative use of technology to open up flexible new ways of renting a car. However, although their members can rent the (more urbane and green) Zipcar fleet by the hour and pick up their vehicle at a local parking space using a smartphone app, this is still a dedicated fleet, still inventory that the company has to acquire, manage and monetize. Under the hood, the business model is fundamentally not very different from that of a traditional rental car company.
Contrast Zipcar with RelayRides and GetAround, both genuine peer-to-peer car rental marketplaces which tap into the existing (and massive) installed base of cars that people already own. These marketplaces don’t need to carry inventory. Their business model advantages are clear — the “fleet” renews itself naturally, there are no parking or logistics issues, geographic expansion and scaling is more seamless. Reputation systems and active supplier screening maintain quality, and the need for insurance keeps customers from bypassing the marketplaces.
Read the full article at hbr.org