HERE’S How Zipcar Makes Money in 2022 [Full Business Model]

Have you ever spent a lot of money on car rentals and wondered if there is a better option? You would be happy to hear that there is Zipcar – a USA-based car-sharing company that has emerged as the best alternative to car rental services.

Antje Danielson and Robin Chase always wanted to provide affordable rides. And with this in mind, they founded the company in 2000 and started an exciting journey to success.

Zipcar makes money by selling its premium membership services and renting cars to get around the city! 

Today, Zipcar offers a cost-effective alternative to car rentals in nine countries. Users can reserve the car for their ride and pay by the minute, hour, or day. There are monthly and annual subscription options for Zipcar membership.

And to use this company’s services users need to buy a membership plan.  

Robin Chase had served as the CEO for one year after founding the company, and Scott Griffith replaced him in 2003. His decisions helped the company grow by leaps and bounds. And within just a decade, it became one of the leading car-sharing companies. 

In 2013 Avis Budget Group bought Zipcar for US$500 million and Mark Norman became the new president of the newly acquired company.

Today, Zipcar has more than 500 employees and over 10,000 vehicles, and it serves customers in more than 500 cities! 

Continue reading to learn about Zipcar Business Model and how this company makes money! 

zipcar business model

What is Zipcar?

Zipcar is a car-sharing company with innovative technologies and methods to provide cost-effective transportation solutions. This company encourages people to use alternative solutions instead of driving their vehicles. The ease of booking cars has made Zipcar the best platform of its kind.

People, who own no vehicles, use Zipcar time and again to reach their destinations conveniently. It has made car-sharing simpler for customers and created jobs for numerous car owners. 

The company claims that it not only offers comfortable rides but plays a role in taking care of the environment. Zipcar helps reduce pollution and congestion, two of the main externalities in urban areas. 

Because the company expanded so rapidly, it reached new territories, where traffic congestion is a big issue.

Zipcar’s business model has become a perfect example for competitors who want to reach the same level of success. Therefore, many companies follow Zipcar’s journey. 

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Zipcar History

Antje Danielson and Robin Chase cofounded Zipcar in 2000. Swiss and German companies offering similar services inspired the duo to initiate a startup with similar solutions in Boston, Massachusetts. And it paid off.

In Boston, the response from users was great and got the founders thinking about other possible destinations. After its initial success, Zipcar opened branches in Washington D.C. and New York City in 2001 and 2002 respectively. But no success comes without challenges.

Even though the company was expanding its services to new regions, it failed to secure funding. Therefore, the board decided to replace Robin Chase with Scott Griffith, who became the CEO of the company in 2003. This decision was a big step forward and helped the company secure a $10 million investment in 2005.

Zipcar continued its journey to success, and just after a year opened the first international branch in Toronto in May of 2006. The same year the company got $20 million in lease line financing from General Electric’s Commercial Finance Fleet Services.

The company grew so rapidly in Toronto that it encouraged the management to go beyond the continent and cover the European markets. Zipcar established its first European office in 2006 in London. It merged with Flexcar in 2007, and took over all the offices.

After its memberships doubled, it emerged as a major alternative to car rentals in the USA, Canada, and London. The company was serving more than 225,000 members by 2008, just after eight years since Danielson and Chase first founded the company!

Zipcar announced its official mobile app at the Apple World Wide Developer Conference. What it did was to allow users to unblock some Zipcars and honk the horn. Scott Griffith had served Zipcar for more than a decade to make it a successful venture.

And he stepped down as the CEO of the company when Avis Budget Group acquired the firm.

Once the acquisition had been completed, Mark Norman became the president of Zipcar. Later Kaye Ceille replaced him before leaving the president’s post to become the managing director of Avis Budget Group International, Australia.

Tracey Zhen, the current president of Zipcar, joined the firm in 2017. She had served TripAdvisor before joining the company, and her tenure is still not over.

Zipcar used to be a small startup in Boston, but today it inspires many car-sharing companies. Even more, it competes with the best car rentals and ride-sharing firms in some of the busiest cities across the globe.

Many people want to know the answer to the burning question: how does Zipcar make money?

How Does Zipcar Work?

Zipcar has the potential to bring some revolutionary changes to the lifestyles of modern car users. People are already struggling with traffic congestion, and, in addition, many want to reduce their carbon footprints. Riding personal cars is getting more and more difficult in urban areas.

This is what a typical day looks like: First, people deal with the traffic and then struggle to find an empty parking spot. Growing fuel prices are also making it tougher to drive a car! Zipcar offers a simple solution to all the issues people face when driving their cars.

Users need to sign up for Zipcar’s premium membership service if they need to use its services. This company offers monthly and annual membership packages.

The user must be 21 years of age or 18 years of age (if a student) to sign up. The company requires a valid driver’s license with a debit or credit card. It may also ask for some additional eligibility criteria during the signup process.

Once the users provide all the details and documents, they can create accounts and start using car-sharing services. And now, users can even use the official Zipcar website or mobile application to book cars.

The company provides a Zipcard that users need to activate to access the car. As the user opens the app or visits the website, he/she can book the ride and get the location of the vehicle. The car will have the key, and users can use the application to unlock it.

Once the vehicle is unlocked, the ride is on, and users can ride it hourly, throughout the day, or book a round trip. It requires the user to park the car in specific locations. Zipcar provides the parking location, and users need to keep the key inside the vehicle.

This company offers a comprehensive guide on how to use its services. Users can watch the video or read blogs to learn more about it.

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How Does Zipcar Make Money?

Zipcar has a network of cars. The company has placed its cars in densely populated areas. People living or working in urban regions of served countries can use those cars.

This company makes money by providing cars for easy rides in urban areas. It earns profit by selling membership and also through car rentals.

Users can call Zipcar, and use the mobile application, or the official website for the advance book of the car.

The service provider finds the nearest vehicle for the customer and guides him to reach the location. Once the user finds the car, he/she can use the card key to unlock the vehicle and ride it.

Zipcar provides rides on an hourly basis, or users can also book the car for the day or a round trip. They can use their debit card or credit card to pay rental charges. And these charges include the cost of insurance and gas up to 180 miles.

The company serves over 800,000 registered users, many of them use Zipcar daily. They pay charges for the ride, and it increases the company’s profit. It is earning money by selling premium membership and also through car rentals.

Who are Zipcar’s customers?

Zipcar targets adult users to sell its subscription and car-sharing services. Users looking for affordable car rides across the serviced city can join this platform. The minimum age criteria for students is 18 years, and other users must be 21 years old.

If the user meets the age criteria and provides a valid driver’s license, he or she can be a Zipcar customer. This company also targets people who do not want to bear the financial burden of owning a car. They can become members and get cars to ride across the city.

Zipcar provides all kinds of vehicles: from comfortable sedans to large size SUVs – users can get the car they want and drive around. Each car contains enough fuel to offer an easy ride within a 180-mile area. But users can also refill gas and drive longer if they want.

Customers pay hourly, for a day trip, or a roundtrip. They can choose a convenient payment option to pay the bills.

This company is adding more services to allure more customers and gain more profit. Its rapid expansion proves that consumers love Zipcar’s premium services. Therefore, it is making a good profit. 

How Does Zipcar Attract New Customers?

This company serves millions of people across nine countries. It got registered users who frequently book cars and ride them. How does Zipcar attract new clients? Does it use various promotional channels to market its product?

This company has consistently improved its services. It adopted new technologies and innovative methods to make vehicles readily available. Comfort, convenience, security, affordable transportation alternative, and 24-7 availability of vehicles are the reasons that attract customers.

People like the idea of driving a car without owning it. Besides, they get fully maintained vehicles and can change them whenever they want.

An eligible member can demand any available car and the company provides it! That’s the main advantage of being a Zipcar member, so people are happily buying affordable memberships. 

Some users may presume that they will have to afford fuel prices while driving a Zipcar. That is a misconception because this company provides the fuel and insurance!

Cars are available in multiple locations, and users can choose to drop the vehicle at any suitable place. Therefore, there is no headache in finding parking or guarding the car.

Only authorized users can unlock the car once they reserve it for a ride. This company offers a ZipCard to unlock the vehicle. Suppose the client is not carrying the ZipCard he or she can use the smartphone app to unlock the car.

The car’s ignition keys are always inside the glovebox. Users also get a refueling card. They can use it to pay for the gas if the vehicle is low on fuel. Suppose users spot damages inside or outside the car, they get a book to record them and inform the company.

Users need to return the vehicle to the same location where they had picked it up. The fuel in the tank should be 1/4th of the tank’s capacity.

Users follow these conditions to enjoy cost-effective rides. The growing user dependence on car-sharing is also good for the company’s profit.

Conclusion

Zipcar has raised $107.7 million in funding. The company is making over $161.6M per year! It is competing with companies like Share Now, HyreCar, GIG Car Share, and Getaround. Experts believe Zipcar is the most profitable one among other companies.

And it may soon reach many new countries to entertain more customers seeking affordable rides without owning a car!