Read the case below and answer the following questions (listing the cons of zipc

Question

Read the case below and answer the following questions (listing the cons of zipcar):

1- Do you think zipcar will encounter any challenges with renting their cars?

2- If so, what do you think the root problem will be?

3- How can they fix their root problems? What should be their goal?

4- What advice would you give to the CEO of Zipcar to better the company?

Zipcar is an answer for customers who want to rent a car for a few hours in their home city rather than for a few days from a traditional rental agency. Car reservations are for a specific pickup time and location around the city, often in neighbor- hoods so the customers need only to walk to pick up their reserved car. Customers apply for a Zipcard, which enables them to reserve a car online and unlock their car when they arrive at its location.

The company operates with a very small staff compared to traditional rental agencies. Very little human interaction is required between the customer and Zipcar for a transaction. A customer reserves a car online, enters into the reserved car by waving the RFIDenabled Zipcard against the card reader mounted behind the driver’s side windshield, returns the car to the same location, and is billed on the credit card already on file. The customer can check all rental records and print receipts from the online reservation system. The system also has a colorcoded time chart showing the availability and location of all rental cars in the vicinity. This transparent information exchange allows a customer to pick the car he or she wants, if avail- able, or delay the reservation until that car is returned by another customer. Zipcar also created and installed a GPSenabled wireless device in each car, which allows members to find and reserve a vehicle nearby using a cell phone. Customers also can use an iPhone or Android app on their iPhone or Android mobile device to find and reserve a Zipcar on a 24/7 basis. Zipcar sends text alerts near the end of the rental period, and customers can text back if they want to extend their rental time.

All cars were outfitted with patented wireless technology. Zipcar’s proprietary IT platform carries information flow bet- ween customers, vehicles, and the company. It is used to monitor car security, fulfill reservations, record hourly usage, and maintain mileage information. The platform also relays vital technical information such as battery voltage and fuel level. It even informs the central system if a customer forgot to turn off headlights, which can quickly drain battery power.

This business model provides unique advantages over traditional car rentals. Customers do not have to stand in line or fill out papers to rent a car. They know exactly which make and model they will be getting. Unlike most offairport rental agency locations, which are open only during business hours, Zipcar locations are open 24 hours. The company’s rates also include the cost of gas and insurance as well as reserved parking spots at some locations.

Additionally, the company uses social networking technologies to develop an online community of Zipcar members— Zipsters. It encourages Zipsters to talk about their Ziptrips (i.e., share their personal experiences with Zipcar).

Thus, information technology is not only the key enabler of this business model but also a facilitator in creating a buzz and encouraging community development around the concept. Zipcar changed the rules of the rental car industry by bringing the new Web 2.0 mindset of focusing on automation, customer empowerment, transparency, and community. Zipcar is very successful; as of August 2015, its Website boasts over 900,000 paying members and renting over 10,000 vehicles in 30 major metro markets in the United States, Canada, and the United Kingdom, as well as 400 college cam- puses and 50 airports.

Explanation / Answer

This is an interesting case which tells us how technology can be used to solve a key market requirement - self drive cars.

Q1. In my opinion, Zipcar will not face major challenges with their current approach to renting cars. They have already started maximising the use of technology in their business model, and the amount of human interaction is very less. The only challenge I see is that there might be disputes between the customer and Zipcar: For example, if I have rented a car, and after using it for a day I return it. Later, Zipcar finds there are a couple of scratches on the car. However, I as a customer am sure that it was never banged into any obstacle during my time with the car. Since there is no manual inspection during handover of the car, this leaves a grey area where there might be disputes between the customer and Zipcar. However, this can be solved if they have a comprehensive insurance policy.

Q2. As eluciated above, the root problem might only be damage to the fleet, and no solid method to detect it at the source. If a customer takes a car and drives recklessly, causing damage to the car, there is no physical check before and after returning the car. Hence, the health of the car is not ensured at all times. You might have reckless drivers who take little care while operating these cars, and these might result in exorbitant repair costs (as insurance might not cover the cost of all parts). This could be one prime reason why Zipcar could face issues

Q3. Zipcar should try and either have one human touchpoint - this is not just to ensure that cars are taken and returned in a good condition, but human interaction always helps. Customers sometimes like human interaction. If Zipcar wants to completely avoid human interaction, one way to tackle this problem is to ensure that the customer uploads photos before and after use of the car. These should be digitally matched, and any issues (extra scratches/dents) should be recovered from some form of a nominal security deposit/billed to the customer's credit card.

Q4. I would encourage the CEO to continue going the technology way  - he has sent an excellent precedent for the company by relying on maximum and intelligent use of technology. This ensures that everything is transparent, and resources are effectively utilised. I would only ask the CEO to ensure that the health of the cars are not taken for granted, and another key piece of advice that I would give the CEO would be to take data security very seriously, as Zipcar depends heavily on customer credit card details. If there was to be a breach, it could result in severe loss of trust worldwide. Otherwise, I would recommend that the CEO continue his technology driven approach towards business. It is a fantastic approach.

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