Why Zipcar Is Not the “Sharing Economy”

by cv harquail on January 9, 2013

“The Sharing Economy Has Come Of Age.”

So proclaims Steve Case, a major investor in Zipcar, on the news that this “car sharing” company has been acquired by Avis for $500 million.

Case and many others are celebrating the Zipcar sale as proof that a “sharing economy” is an economically viable business proposition. In the sharing economy, customers own less and share more, not only disrupting the ownership economy but also disrupting recreating the relationships between the business, the customer, the goods, and the community.

But there is a big problem with treating Zipcar as proof of the sharing economy.  

That problem? Zipcar isn’t a car ‘sharing’ business. Zipcar is a car rental business that simply calls itself a sharing business.

If we want to grow the sharing economy, we can’t count on businesses like Zipcar that streamline the experience of renting by eliminating human interaction. Instead, we need to focus on building profitable businesses around the social actitities of real sharing between real people.

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Renting is not Sharing

First, we need to understand that renting is not the same as sharing.

Zipcar sells itself as a car sharing business.  Zipcar’s “sharing” is more branding than reality. In form, function and feeling, Zipcar is an efficient, convenient, short-term car rental business. It’s a business model that marketing scholars call “Access-Based Consumption” (Durgee and O’Connor, 1995).

Zipcar has been distupting the balance between renting a car and owning a car, largely by centering the rental experience around the individual customer. Customers can pick up and drop off the rented car right in their neighborhood. Zipcar’s smartphone and web-based reservation system bypasses the hassles of rental counters and kiosks, and requires no person-to-person interaction.

But while Zipcar’s systems have minimized the hassels of renting, their systems have done nothing to build the person-to-person relationships at the core of real “sharing”.

Sharing is a Person-To-Person Social Activity

Renting is about “me” using the item when I want it, maybe with “you” using it some other time. Sharing is about “us” each using the item in turn, with respect for the item and for each other.

Although “taking turns” is part of sharing, it’s not what makes sharing different from renting. What makes sharing different is that it involves taking turns using items among people who pay attention to each other, within a system of shared valued, social relationships, and community. (Belk, 2010)

In short-term rental businesses, there are few if any social relationships among customers. Renters interact with the rental company, and they use the item being rented. Renters themselves are anonymous to each other and outside each others’ awareness — and it’s this way by design.

Think about the kind of interactions you have when you’re renting a hotel room. Do you even want to think about the people who slept in that room before you or who’ll sleep in that room after you, much less want to know their actual names?

Now think about the kinds of interactions you’d want to have– and you’d need to have — if you were to share a room in your apartment for a night. You’re likely to care at least a little bit about who that person is, what you thought of them, and what they thought of you.

In a sharing economy, we think about other people. We think about the people who might be affected by our use of a shared item.  We recognize that other people are depending on us to care about them and their future use of the item when we ourselves use that item.

“Sharing is Caring”

You’ve chuckled when someone has used that phrase to pry away a forkful of your dessert. But that joke tells us something that is deeply true about sharing.

Sharing requires that we care about other people.

Sharing requires that we care about the people from whom we borrow and the people to whom we lend.

Sharing requires that we care about what others think of us, whether others trust us, whether we can trust others, and whether we all can act responsibly. Sharing also requires that we each act differently, and demonstrate a ‘pay it forward to others/ pay it back to others’ orientation. Sharing requires that we put aside self-interest and focus instead on shared interests and reciprocity.

When we share, we create relationships with other people. These people might start out as strangers to us, but as we sharing with them we create relationships with them. These relationships, in turn, create a larger sense of community.

Real Sharing Means Creating Customer-to-Customer Relationships

To create a business based on real sharing, organizations need to create relationships between and among customers.

Zipcar and other short term asset rental businesses like Marriott Hotels work hard to create a relationship between themselves (the business) and their short-term users (the customer). They use their business systems and processes to create a conventional system of engagement, business to individual customer, that encourages consumers to trust the company.

For rental businesses, relationships between customers and among customers are irrelevant.

However, for sharing businesses, those customer-to-customer relationships are a core business asset.

These relationships are part and parcel of what the sharing business offers, and they are a significant reason why customers choose that business.

So, smart sharing businesses do more than build business-to-customer relationships. They develop systems to create and sustain customer to customer relationships.

Designing Customer-to-Customer Relationships to Create Real Sharing

Customer to Customer relationships are literally designed into the processes and systems of a sharing business.  For example:

  • Zipcar has systems to build customers’ trust in Zipcar, most of these designed to fit the individual customer’s needs for friction-free access (Bardhi and Eckhardt 2011). In contrast, the apartment-sharing company AirBnB has systems to build customers’ trust not only in the company itself but also to build trust between one customer and another. Their aim is to create a trusting and trustworthy community.
  • Zipcar shares information about its rates and policies with users but them nothing about the people who just returned the car or the people who need to use the car next.   In contrast, AirBnB collects and shares information about each and any AirBnB member. AirBnB requires users to create authenticated personal profiles, so that potential hosts or guests can ‘meet’ each other. Members then use this information to decide which other members they want to have sharing relationships with.

Reputation, Social Capital, and Reciprocity

Sharing businesses have systems that help sharers develop their reputation and social capital. These might include systems for users to rate each others’ treatment of the shared item, to create local networks among folks renting the same items, to evaluate users’ real-life social networks, or even to leave notes and treats for the next user.

Sharing business also have systems that build norms or reciprocity by holding users accountable to each other for meeting the terms of the sharing.

Consider that when a Zipcar renter returns a car late, she’s assessed a late fee that’s paid to the company. The late fee punishes the tardy renter, but does nothing for the person whose rental of that car has now been delayed.

In a real sharing business, that late fee would be paid to the next person in line. The fee would not simply punish the tardy user; it would compensate and apologize to the other car-sharer who has been inconvenienced.

Building a Community of Sharing

Sharing businesses may have digital platforms to make scheduling and payments more efficient and convenient, just like Zipcar does. But also, sharing business will have tools and forums that make it easy for sharers to communicate with each other, to raise concerns with the group of sharers, to alert each other, and to create a sense of community.

To its credit, Zipcar has tried to create a sense of community among its renters. Zipcar sends chatty company newsletters, encourages members to honk at each other when they see another Zipcar, offers members Zipcar swag, and reaches out to customers in an effort to build community.

Yet despite these efforts to build community around the rental process, consumer research consistently shows that Zipcar users choose the service for its cost effectiveness and convenience. Virtually no one chooses Zipcar because they want to participate in a sharing community. (Bardhi and Eckhardt 2011)

Zipcar disrupts the need for ownership. It does not create the context for sharing.

Real sharing businesses make it easier and more cost-effective to share items rather than owning them.

And, real sharing business build processes and customer experiences that support the person-to-person relationships that build community.

We can hope that  Zipcar’s acquisition signals a change in consumers’ tastes and interests. It would be terrific if Zipcar can generate consistent profits by making it easy for consumers to access goods on an as-needed basis. This could help move us towards an economy where we care less about ownership and less about “stuff”.

However,  Zipcar and other rental businesses can’t be expected to move us towards an economy where we also care more about each other.

To make the move to a real sharing economy, we need to support and celebrate companies — like AirBnB, like Streetbank, like Snapgoods — that are creating businesses

– Where we consume what we need, when we need it, in a way that respects what others need

– Where we earn positive reputations and build social capital by using shared goods in ways that build relationships with each other

– Where economic activity is less about ”me” and more about “us” 

We’ll arrive at the sharing economy not when we own less and rent more, but when we calculate less and care more.

 

References:

Bardhi, A. and Eckhardt, G. M. (2011) Access-Based Consumption: The case of car sharing. Journal of Consumer Research, Vol. 39 (4): 881-898.
Belk, R. (2010), “Sharing,” Journal of Consumer Research, Vol. 36 (1): 715–734.
Durgee, J. and O’Connor, G. (1995), “An Exploration into Renting as Consumption Behavior,” Psychology and Marketing, 12 (2), 89–104.

 See also:   

Scale Positive Behaviors by Designing Them Into Social Software
5 Ways to Expand How We Think About Value in a Boost Economy
5 Ways That Systems of Engagement Bring Out Our Full Social Selves

 

{ 1 comment }

Tim February 8, 2013 at 3:40 pm

Zipcar interests me because, like a number of other recent startups, it is less a well rounded business and more a division within a business or a feature. Instagram, for example, is the classic case of a feature in search of an application. In both cases, these businesses appear to be more about the founders and funders cashing out by finding the right company to buy them. It’s similar to free agency in football or other sports.

More interesting would be for rental cars to be owned in common by a group of people in a geographic area. And/or individuals renting their cars they way they might rent their homes. Either would be far more of a social business than Zipcar.

Great article and insights, thank you!

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