The problem of the Zipcar is in the sustainability of its growth in the long term. The reason is, at first, that the company hasn’t posted a profit yet, mostly because of the cost of its fleet. Fleet operations are considered as Zipcar’s most important expenses, namely lease expenses, depreciation, parking, fuel, insurance, repairs and maintenance among other costs. In addition, it is concerned about the end of its potential market due to the fact that Zipcar’ US car sharing market amounted to 80% and 50% among all car sharing members in the world. Working to protect the future memberships, the company hopes to keep the fashion on the Zipsters, because globally the issue of “green movement” appeared.
Zipcar was created in 2000 by two women, who devoutly believed that car rental could help to reduce the harmful effects of transport on the environment. Zipcar is based on the principle of joint ownership. Members of Zipcar on the internet or with a smartphone are looking for a car nearest to them (they are located at gas stations, parking lots, and t.). Book it at least for a year or at least a minute before getting behind the wheel. The club member picks the car personally: everyone has a special electronic key that unlocks any car of Zipcar only at the time at which it is reserved. A crucial peculiarity of the company’s product is the in-house technology developed to allow simple access for consumers without compromising the security of its vehicles. The radio frequently identification technology offers driver authentication. Also, the company provides with fleet management. Its software platform is licensed on a monthly basis to both public and private organizations that manage their own vehicle fleets.
The potential of transport and car possession is changing currently and will keep on modifying. Companies encounter growing energy expenses, an aging transport infrastructure, improved population growth in metropolises and a raise in the applying mobile technology. Mentioned factors will keep on generating better awareness for options to personal car possession (Kilcrease, 2011). Concern has also been raised over the potential for profitability as annual operational cost per vehicle was reported to be approximately $15,500 in 2010 – almost double the annual estimated cost of car ownership in the USA, indicating that Zipcar is not yet enjoying economies of scale.
Zipcar’s sustainable competitive advantage is the culture of innovative service, namely green idea. In 2010, Zipcar has launched a pilot project with hybrid cars in San Francisco. The company is popular among the Millennium generation (18-34 years old), who are aware of the environment problems of and even call themselves Zipsters (Rifkin, 2011).
With the spread of renewable energy and the development of infrastructure of the third industrial revolution the parking of sharing networks like Zipcar vehicles will produce green electricity in place for charging electric vehicles plug into an outlet (NASDAQ, 2012). Community car sharing will likely significant alternative to the traditional model of the acquisition of autos on the market, especially in densely populated urban areas, where the cost of keeping a car for occasional trips is too high. The business model for collective use of cars is a breakthrough change in the nature of mobility – the transformation of individual vehicles in the collective transport, and individual practice – in enterprise based on cooperation.
Another competitive advantage can be seen in low cost and word-of-mouth marketing. According to the conducted research it was found that 28% of new members used company’s services due to recommendations from existing clients. Zipcar takes a local approach to marketing, posting ads on buses, bus stops and subway stations in the neighborhoods of potential members as well as sending “street teams” to market block by block. The company markets its car sharing services as more than just a mode of transportation.
The solutions to the problem are to provide financial reports in time and attract investments. The solution of issues of sustainable development raises the level of profitability, thereby protecting the interests of shareholders. Numerous new studies and data supporting this hypothesis have not yet helped to attract the attention of investment analysts and other parties that may affect the capitalization and value stocks to sustainable development. However, the situation may change as the circle of those, who understand what inaction or lack of attention to issues of sustainable development can turn and the impact they have on the supply chain, business continuity, the ability to attract and retain staff, reputation and even the right to engage in activities, develops.
The next measures should be applied with the aim of attraction of investors:
- In addition to an impressive number of different business incubators, investment funds and private investors, a lot of themed events appeared. Their format enables companies quickly get the necessary feedback, talk with experts and acquire useful contacts and links.
- Provide with necessary documentation.
- Give accurate directions of funds’ allocation. It is important to focus on finding the optimal financial model and redirect funds for advertising and promotion.
References
Kilcrease, A. (2011). A conversation with Zipcar’s CEO Scott Griffith. Retrieved December 5, 2011 from https://gigaom.com/2011/12/05/a-conversation-with-zipcars-ceo-scott-griffith/
NASDAQ (2012). Zipcar’s Emerging Competitive Advantages. Retrieved July 27, 2012 from http://www.nasdaq.com/article/zipcars-emerging-competitive-advantages-cm151454
Rifkin, J. (2011). The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World. London: Macmillan Publishers Ltd.
