ZIP CAR BRIEF INTRODUCTION

Founders are two entrepreneurs, Robin Chase and Antje

Danielson
Took the idea of a car-sharing concept from Europe
They began operations in January of 2000 with
US$50.000 of capital and only 12 leased cars.

ZIP CAR OPERATIONS

Share cars in a convenience cost-effectiveness relation
for users who drive less than 6.000 miles per year
They have operations in four countries (US, UK, Spain
and Canada)
75% of coverage in US (39 states)
Shortage of capital investments was the major issue

ZIP CAR NEED OF THE TIME

Organized car sharing was the coordinated use of vehicles
byvarious subscribers in succession andIndependently
ofone another.
Member can reserve any car in thenetwork
Urban Locations had Large number of potential users where
there is expensive Parking and Need to drivelimited distance
College-educated individualwere themost receptive to
theproposition

ZIP CAR CONCEPT

The customers can pick upa car anywhere and
gowhereverand whenever they like making them more
of an owner than a renter.
Zip carhas very cleverly opted formore accessible and
convenient parking lots in malls and other such urban
facilities.
Zip car has both webbased andmobile interfacein its
business process.

ZIP CAR REVENUE

Zipcar is a typical example of a revenue model with
multiple revenue streams.
The multiple revenue streams in this model include

revenue from an annual membership fee,

application fee for new members,
security deposits
variable income in the form of charges per mile and hour.
Additional revenue heads include late fee charges.

ZIP CAR COST DRIVERS

The main cost drivers in this business model are in the form
of
Corporate overheads and
Cost of goods sold such as lease costs per car, fuel, insurance and
maintenance for the cars along with parking and equipment
charges for each car.

There are additional variable costs in the form of

Fee for consultants and software developers for developing the
wireless technology system for the business but these would be
non-recurring costs since they only have to be incurred till the
development is complete.

ZIP CAR BUSINESS MODEL

ANALYSIS
Wireless technology platform which would allow members to
make online reservations and access cars at designated parking
spots through specific zip cards
The system was to capture information about the car in the
form of usage per miles and hours which was then sent to a
central location for billing.
The initial plan in Dec 1999 was to charge $25 as the nonrefundable application fee along with $300 as a fully refundable
security deposit from each member along with annual charges
of $300 per member. The original charges per hour were
decided at $1.5 and the per mile charge kept at $0.4.

ZIP CAR BUSINESS MODEL

ANALYSIS
Customers found the $300 annual deposit too high and
it had to be reduced to $75 per year.
To balance the revenue stream , the hourly rate was
raised from $1.50 to approximately $5.5.
a $44 per day maximum daily rate was also introduced
as a means of appealing to daily rentals.

ZIP CAR- BUSINESS MODEL

ANALYSIS
With an additional revenue stream in the form of more members
in the next five years, the business would see an increase in
revenue stream and would become self-sufficient with lesser
dependency on additional funds.
Currently the business has to take care of additional set-up
expenses in the form of the wireless system and fees for its
consultants and software developers. Further advertising and
research would also need to be done and all this needs additional
funds which have to be generated in the form of a loan .
The business does seem to have a regular cash flow and revenue
stream for now and this would help in paying back the initial
investment .

RECOMMENDATIONS
Leverage brand- shouldcontinue grass-roots
marketingcampaigns by exhibiting at urban street fairs and
similar venues.
Expand IT investment
Engage complimentors
Expand further into P2P sharing
Advisory Board
Pricing more on daily rentals and decrease its free miles
Association with parking company
Customer Feedback

KEY TAKEAWAYS
Financing the plan lack of research ( free parking &
willingness to pay) and multiple revenue streams are
important part of startups.
Technology not delivered on time doesnt help to
accompalish companys goals.
Cost drivers are an important part of the overall
business model. It is very important that cost drivers
are fully understood and that options are explored to
help keep them as low as possible.
In order to be successful navigators of a new business,
each founder must agree to set the business as a top

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