Analyzing The Potential Venture And The Progress Chase Has Made
Robin Chase, CEO of Zipcar aims to implement a car-sharing service in Boston and then expand to other US cities. The service targets urban dwellers for whom, due to the high burden of car ownership, have forgone it in favor of public transportation, but would still like access to a car on a weekly to monthly basis for shopping or other trips that are difficult with public transportation.
The size of the market is fairly large, Chase estimates about 15,000 Bostonites (or .5% of the population) as the potential market. Looking at the 15 largest US metropolitan areas, predicting .1 to .4% would be interested the potential market is 58-233,000. These will probably be young, tech-savvy city-dwellers, with high variability in willingness-to-pay based on whether their lack of car ownership is due to the expense or life-style choice.
While there is nothing particularly proprietary about the technology or business model, there are strong first-mover advantages. A city is unlikely to be able to support more than one such service, and occupying well-located parking spots will be key to attracting customers. Moreover, dense network effects are necessary for the firm’s word-of-mouth advertising strategy. That said, these advantages only work on a city-by-city basis, so it will be important for Zipcar to expand into new markets quickly.
The question of customer acceptance is still up in the air at this point. This…