WhipCar and RelayRides – More than Zipcar 2.0
I was impressed when my son told me about Zipcar.Â He needed a rental company that serves drivers under 25, but we both thought the business model â Zip is a car sharing organization that Â uses public parking areas as it's rental lots â was promising.Â Now come WhipCar and RelayRides with an idea that's a whole lotÂ more than just throwing up a capital letter in mid-word because they couldn't find the space bar.Â These upstarts plan to run car rental companies using your cars, and mine.
The new kids on the car rental block plan to function as exchanges, connecting owners willing to rent a car that's not in use with drivers who need one.Â The car owner sets availability and the âaskedâ rental fee.Â Early data has the fees coming in well below traditional rental company rates.Â Guess the individual owners just try harder than Avis.Â They are early adopters in what may become a shift to a world of microentrepeneurs (wake up and join the 21st century spell check, microentrepeneurs has got to be a word).Â When you consider the value locked up in idle assets generally, this business model may be a big step toward sustainability! The exchanges get 15%.Â The exchanges don't just provide a link between owner and driver, a rental contract and a payment mechanism, they vet the parties, provide insurance and temporary replacements for accident damaged vehicles.Â RelayRides goes a step further, with a safety check and key card locks, so that the rental transaction can be completed with no face to face, a la Zipcar.
Could this actually work?Â I'm thinking yes, despite someÂ reservations.Â Suburban lots are filled with cars that sit idle all day while the owners work.Â Â Thanks to unemployment, telecommuting and home based employment more people are staying home, with occasional demand for a car.Â If people accept the exchange system, thenÂ the market on both supply and demand sides is potentially massive.Â There seems to be no significant financial risk or barrier to participation, but: 1) How do the drivers get to the cars?Â 2)Â Will owners feel comfortable trusting their baby to strangers?
Zipcar is already dealing with a variation on the first issue.Â It's a problem, which gets more serious as you get further from decent public transport, but it doesn't seem to be fatal.Â The second issue will be less of a barrier than expected.Â Many families have two or three cars.Â Usually only the newest is truly beloved.Â Â People may be slow to jump on board, but once there's a busy grapevine of success stories they will think â why not pick up a few extra bucks with the old wagon, it's not like we're renting out the Porsche.Â If anything, the massive supply may drive the rentalÂ fees way down â WhipCar and RelayRides can always up their percentages to stay in the black and, after some bumps, the market will find equilibrium.
So, cloud computing, car exchanges, what's next?Â I've got space available in one freezer, artÂ I wouldn't mind rotating out for a while, room to let for a large garden in back and a piano no one has played for thirteen years.Â Sustainable business with low financial risk, I'm not betting against it.
Photo credit: bojacobson