Sunday, March 30, 2008

Zipcar and Competition

I spotted this article about Zipcar in today's Boston Globe. Apparently the old staid behemoths of car rental have noticed that, surprise, surprise, Zipcar is actually doing exceedingly well in the car rental market.

Ed. Note: In the interest of disclosure, my wife and I were members of Zipcar for a little over a year in 2006 and 2007. I thought it was an excellent alternative to the hassle of owning a car...especially since we lived in Brookline which is exceptionally car-UNfriendly with obnoxious and expensive overnight parking restrictions. Even so, don't kid yourself - if you need a car on a regular basis (as I often did) then Zipcar is no substitute. I was glad to have the option, but I sure wished I could've afforded to own my own car, and had I lived three blocks away in Brighton, I probably could've afforded it given what I was paying each month for Zipcar.

Okay, back to the article: if you've ever rented cars or trucks from places like Hertz, U-Haul or Enterprise (or any one of three dozen other major renters) then you know exactly why Zipcar does so much better: Zipcar's customer service is so much better than anyone else's that it's laughable. Whereas with Zipcar I have cars within a few minutes' walk of my location, and I can choose exactly which car to rent, and I can do it with about five minutes (at most) notice and effort, and no interaction with any obnoxious, unhelpful "customer service representative" whose sole purpose is to try and upsell all sorts of insurance and crap I don't need? Gee, no wonder I prefer Zipcar!

In fact, the sole reason I routinely used Enterprise for longer (weekend) trips was because of Zipcar's maximum of 125 miles per day included in the rental. If you go over that, the extra per-mile fees add up incredibly fast. I suppose Zipcar is trying to discourage renters from going far away from "home base" (and thus risking expensive solutions if the car has an accident or breaks down far away) but besides those fees, it was really no more expensive to go with Zipcar for a weekend rental. Hell, if it weren't for the fact that Enterprise had a rental location in my office's building, I probably wouldn't have used them...that was the only way they could "compete" with Zipcar in terms of convenience and that was just sheer luck.

I think Zipcar will have a problem of sorts with this, but not for quite some time. Car rental companies typically earn substantial revenue by screwing the customer...or at least I assume they must, because they never miss an opportunity to force me to come to them and then stand around waiting in their office while they try and upsell insurance and all sorts of other crap on me. The entire operation is a demonstration of how little they trust and respect me as a customer.

Not to mention a giant pet peeve of mine: you have pretty much no choice whatsoever as to what car you get. Oh sure you can choose "economy", "midsize" or "full"...the difference between each is minimal and it's really just a way to get you to pay a few bucks more per day. And really there's no promise at all you'll get even the size car you chose. Half the time there's nothing "available" in that size, so you get something else instead...usually a bigger car that sucks down more gasoline. Or the car you get isn't really a "midsize" car, despite the's really a subcompact.

With Zipcar, I get EXACTLY the car I picked. I really liked that: if I wanted the sporty Mazda 3, I got it. If I needed a minivan, I got the Mazda 5. If I needed to haul cargo, I got the Honda Element or the Toyota Tundra. Granted it sometimes meant traveling out of my way to get the exact car I wanted, but usually it wasn't too bad.

And with Zipcar, instead of nickeling-and-diming me on different "classes" of cars, I basically paid the same rate for any car I wanted, period. Man, that was nice.

The bottom line is that Zipcar works on a model of trust; the company actually respects and trusts its customers to do the right thing. All the other car rental companies are, at best, an adversarial relationship. It will take a long, long time for the culture at these other companies to change enough to truly be "competition" to Zipcar...and the article mentions this: the initial attempts by U-Haul and Hertz were pathetic blends of their existing service and halfhearted attempts to copy Zipcar, instead of a careful analysis of why Zipcar is so popular with its members and then a serious attempt to launch a service that actually competes.

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