Is car sharing the next version of Uber?
The carsharing or car-sharing system is a model of car rental where people rent cars for short periods of time, often by the hour. They are attractive to customers who make only occasional use of a vehicle, as well as others who would like occasional access to a vehicle of a different type than they use day-to-day.
According to Wikipedia, carsharing services are available in over 1,000 cities in several countries. As of December 2012, there were an estimated 1.7 million car-sharing members in 27 countries, including so-called peer-to-peer services, according to the Transportation Sustainability Research Center at U.C. Berkeley. Of these, 800,000 were car-sharing members in the United States.
As of July 2017, car2go is the largest carsharing company in the world with 2,500,000 registered members and a fleet of nearly 14,000 vehicles in 26 locations in North America, Europe and Asia, followed by Zipcar with 767,000 members and 11,000 vehicles. According to Navigant Consulting, global carsharing services revenue will grow to US 6.2 billion by 2020, with over 12 million members worldwide. The main factors driving the growth of carsharing are the rising levels of congestion faced by city dwellers; shifting generational mindsets about car ownership; the increasing costs of personal vehicle ownership; and a convergence of business models. Carsharing contributes to sustainable transport because it is a less car intensive means of urban transport, and according to The Economist, carsharing can reduce car ownership at an estimated rate of one rental car replacing 15 owned vehicles. More about the concept here.
In February, the car-sharing service Zipcar signed a deal to provide vehicles to Uber, possibly portending additional future cooperation in the field of mobility services. Zipcar parent Avis Budget Group said that it would supply Uber drivers with the opportunity to ferry passengers around in Zipcar branded sedans. Although at the beginning the deal is limited to 20 sedans in Boston, it opens the door for similar collaboration in other cities.
Zipcar provides rent-by-the-hour vehicles to motorists, particularly in urban areas, as an alternative to car ownership. Now, Uber drivers will be allowed to access the fleet of vehicles in Boston to serve their customers at hourly rental rates.
“As the automotive landscape evolves, technology is playing an ever-increasing role in transportation services, and we are well-positioned to meet new and evolving customer needs and demands, as evidenced by this new partnership,” said Andrew Kupiec, a vice president for Avis Budget. “Our quality, well-maintained vehicles, coupled with Zipcar’s technology, will give Uber’s driver partners wheels when they want them.”
This move marked one of the latest in a series of Uber partnerships with car providers, including rental car firms Enterprise and Hertz, and most recently a deal with German automaker Daimler to provide self-driving cars in the future.
Moreover, last year, Uber started a partnership with GM’s Maven, representing a 90 day pilot in San Francisco that allowed the Uber drivers to lease a Chevrolet Cruze, Malibu or Trax for $179 per week (plus fees) with no mileage limit, and included insurance. “This partnership with Maven combines our vast ridesharing network with GM’s extensive fleet vehicles and gives people without access to a car the ability to easily make money driving on the Uber platform,” said back then Rachel Holt, regional general manager Uber, for engaged.com.
Following that, in April, Uber made another important step, by launching Uber Central, similar to the consumer version of Uber, except multiple cars can be ordered at once. The service could be especially valuable for businesses that need to pick up several clients from different places at the same time. Uber Central is part of the Uber for Business platform, which Uber launched a few years ago to help businesses manage employees’ ground transportation needs.
What is even more interesting and different is that passengers don’t need an Uber account or even a smartphone. The business itself manages the rides and all related information from a single dashboard. According to ciodive.com, Uber said more than 8,000 companies participated in the pilot program. The new tool also includes reporting, billing and management features.
Uber’s interest in the sharing cars’ programs and affiliations doesn’t stop here. Only four days ago it was announced that, following the 2016’s 90 days trial with GM’s Maven, the service is available now also in Boston, Phoenix, and Washington, DC, while Baltimore and Detroit are said to be following soon.
“The program is aimed at drivers for rideshare apps like Uber and Lyft, and delivery apps like Postmates, GrubHub, and InstaCart. Someone who’s interested in driving for any of these on-demand services, but doesn’t own a vehicle, can rent a Chevy Bolt through Maven Gig for $229-a-week. The weekly price includes insurance, maintenance, and electric vehicle charging. Maven first launched its gig worker product last May in San Diego and San Francisco. Since then, Maven says its customers have logged 170 million miles driving for various on-demand apps,” wrote The Verge.
How is the digital changing the retail experience
According to “The new digital divide” report created by Deloitte, digital influence has grown from 14% of all sales in 2012 (USD 0.33 Trillion) to a whopping 49% in 2014. That’s USD 1.70 Trillion worth of sales influenced digitally. And the number is rising steadily. Moreover, in 2016, digital influence continued its rapid growth, although at a slower rate than we’ve historically seen. At the time of the last study, USD 0.56 of every dollar spent in a store is influenced by a digital interaction. And when we include the primary source of growth in retail—online sales—the impact of digital influence is even greater.
This survey was commissioned by Deloitte and conducted online by an independent research company April 25–May 5, 2016. The survey polled a national sample of 5,014 random consumers. Data were collected and weighted to be representative of the U.S. Census for gender, age, income and ethnicity. The national random sample, sample of device owners and sample of smartphone owners have a margin of error of plus or minus 1-2 percentage points. Additionally, subsets of randomly assigned respondents were asked to provide information about how they use a digital device to shop for a product subcategory (such as cosmetics or perishables) with a margin of error of plus or minus 7-8 percent. Specific digital behavior data represent consumers who use digital devices to shop.
But even as digital influence has risen, retailers’ ability to influence the purchase journey has decreased. Why? Because the large e-commerce players, as well as digital platforms such as Pinterest, are operating at such scale now that they are shaping customers’ definitions of what a great customer experience is. Not only that, but they are also simply more connected to the customer’s needs than the typical brick-and-mortar retailer.
How did this happen? It’s quite very simple. A single retailer, doesn’t interact very often with its customer more than several times a year and the amount of information it gathers is not very profound in order to provide a meaningfully personalized experience for the consumer. That creates a big contrast to the kind of relationship, trust, and understanding of preferences and purchase intent that a digital platform like Pinterest can create when they interact with that same customer for several hours a day. Therefore, in most of the situations, the customers’ preferred method of locating, buying, and receiving products in-store has been redefined by their online experiences.
In addition, customers today can go to their Internet browser, have it search the broad, fragmented marketplace, and get exactly what they want. No longer do they have to settle for something that is close to what they want; the browser curates the exact assortment they are seeking, far more quickly and easily than a visit to the mall. According to the Deloitte specialists, this dynamic has led to a significant increase in the shift of market share as nimble small and mid-level players collectively steal share from larger, more traditional, at-scale retailers. This fragmentation and volatility in the market is reflected in Deloitte’s Retail Volatility Index. The competition is no longer coming from the big box across the street, but rather from a numerous newer, smaller competitors, most perhaps too small to capture the attention of the big players, but each eating away at market share.
Despite the impact of digital influence continually increasing, the ability of retailers to influence the purchase journey is decreasing. Digital platforms such as Facebook and Google are already hosting real-time interactions with customers for several hours each day. As a result, they are shaping and redefining the customer’s definition of a great experience through constant real time connection.
“Any retailer who thinks they can build their own personalized experience to interact with customers anywhere near the extent of major digital platforms and find success may be disappointed with their results” said Jeff Simpson, principal, Deloitte Consulting LLP and co-author of the study. “Their limited interaction with customers – about six to eight transactions per year – limits their understanding of the ‘moments that matter’ in a personalized experience such as purchase intent and preference. Instead, retailers should more aggressively embrace integration and the native capabilities of the major digital platforms where their customers have already chosen to interact and transact.”
Deloitte’s main advice for stores: Further integrate with those digital platforms. The report states, “Retailers should embrace the native capabilities of their digital touchpoints and integrate with platforms where their customers are already interacting at scale rather than trying to build such platforms themselves.”
According to the study, more than three-quarters (78 percent) of non-millennials are now using digital devices either two or three times throughout their shopping trip. Mobile device usage is no longer as heavily skewed toward millennials. Data shows that the age gap is shrinking as now – across all age groups – customers are turning to their mobile devices before and during the shopping journey.
“The important thing to remember is that most of today’s buying power still remains with non-millennials,” said Lokesh Ohri, senior manager, Deloitte Consulting LLP and leader of customer engagement, content and commerce offerings in the retail practice. “A better idea is to consider all the verifying types of customers, determine how they use digital differently in the purchasing journey and create a broad range of customized experiences for each.”
“It isn’t just what retailers do, but when they do it. Research has also revealed that there are limited windows of opportunity to engage shoppers, with men getting bored after just 26 minutes and women after two hours, so engaging with purchasers has never been more important. By offering a variety of in-store engagement opportunities, mobile users open to an enhanced or incentivised visit will start to feel like their in-store experiences are able to offer them a similar one to those they enjoy online,” wrote Amy Keen for Extreme Creations UK. She also expressed the fact that many major high street players are actively seeking out solutions to this challenge. “Marks and Spencer has adopted ‘browse and order hubs’, Nordstrom has included ‘top pinned’ items in store to show retailers what social users are highlighting as key pieces. See more examples of technology being used by retailers, here. By increasing personalization, retailers are not only nurturing their customers’ interest in their brand, but developing their loyalty. The better the experience, the greater the conversion into purchasing and return custom,” concluded Keen.
Moreover, according to 27% of senior executives, digital transformation is “a matter of survival”, shows Shayla Price on Session Cam. Customers are shopping on multiple digital devices. They learn, compare, and purchase products without leaving their homes. An Altimeter report notes that “digital transformation represents the quest to understand how disruptive technology affects the customer experience.” With increased competition, businesses must differentiate themselves beyond product offerings. And that means mastering how to provide the best online shopping experience to their customers.