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In recent years, the world we live in drastically changes due to the
influence of the constantly growing sharing economy platforms (Ramirez, Ohlhausen, & McSweeny, 2016). The innovation of
the digital technologies is bringing more and more benefits, gains, and
opportunities to both the consumers and suppliers (Ramirez, Ohlhausen, & McSweeny, 2016). Peer-to-peer
companies like Zipcar, Uber, and Airbnb, are expected to grow even more in the
future, providing a huge platform for transactions and changing how the world
operates (Ramirez, Ohlhausen, & McSweeny, 2016). For instance, in
2013 Zipcar announced income of $296 million, and year after year the company’s
revenues are growing with more than 6% (Key, 2015).
The prolonged growth of the sharing economy platforms raises more and more
arguments regarding the lawmakers, and regulators, and how they try to confront
and improve regulatory issues (Ramirez, Ohlhausen, & McSweeny, 2016).

The aim of this paper is to observe whether Zipcar plays a significant
role in the growth and transformation of the digital economy. Furthermore, the
paper will define claims regarding the company’s contribution to the sharing economy.
There is no direct definition of what the “sharing economy” is exactly, but we
can give a simple description. Therefore, what is meant by “sharing economy” is
borrowing or lending goods and services through a digital platform (Investopedia,
n.d.),
such as Zipcar. The phrase is known since the 2000s due to the Great Recession
when a lot of new business organizations were developed (Sharing
economy, n.d.).
It is said that the concept of the “sharing economy” existed long before the
term was created and the first to use it was Professor Lawrence Lessig in 2008
at Harvard Law School (Homestay is the origin of Sharing Economy, 2014).  

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According to Stephany (2015), the
previously mentioned economy is not only about sharing cars with other people
but, nowadays, it is more about sharing everything from luxury and expensive
goods to cheap and not so valuable one. Digital platforms made it easier for
people to communicate and share physical goods in the peer-to-peer rental
market (Investopedia, n.d.).

Taking into consideration the many opportunities the sharing economy is
providing us with, the research is looking into the study of Yaraghi and Ravi
(2017), who investigated in-depth the topic about the “sharing economy” and
gave reasonable explanations regarding the future growth of the sharing economy
as well as the challenges behind the regulatory issues. According to Yaraghi
and Ravi (2017), the flexibility that is provided with the buying and selling
of services online is more or less one of the biggest trump cards of the
sharing economy platforms.

The new era of the technology and the digital platforms make it cheaper
and easier for people to exchange goods as services (The rise of the sharing economy, 2013). It is less
expensive for the consumers and it is also good in terms of goods that are not
used in every-day-life to not be discarded. Moreover, sellers can set their own
price and earn extra money. According to a research, it is forthcoming that the
sharing economy is going to grow from $14 million in 2014 to an expected amount
of $335 billion in 2025 (Investopedia,
n.d.).
This is an extremely large expected growth for 11 years, which means that
digital technologies are developing at an inexplicably high-speed.

However, despite all the favorable arguments for the sharing economy and
the firms currently operating in it, there are also specific concerns about
violated regulations. The paper will focus on unlicensed individuals and errors
which, although hard regulated, will always exist and affect the population. It
is known that certain complaints have been made towards car-sharing companies
regarding the avoidance of regulations, namely that it is creating a lot of
costs for the traditional drivers (Yaraghi & Ravi, 2017).

The analysis and the research of this paper aim to examine the current
state of Zipcar and to further evaluate the reasons why the company is a good
example of the sharing economy. Over and above, to study the potential factors
that are causing the growth of the sharing economy and to answer the question: How is
Zipcar contributing to the sharing economy? A literature review will be used to answer the research
question. The literature review consists of articles and other types of
secondary sources, which are making a huge contribution to the topic.

In order to answer the question, first and foremost, we need to resolve
the economic benefits that Zipcar is providing to the sharing economy. To
determine what is meant by “economic benefit”, we need to emphasize on a
certain topic, however, the broader definition of such benefit are advantages
in the form of money (Business
Dictionary, n.d.).
To answer the question, this research will dig deeper into the history of the
company and the digital technologies that are responsible for the
correspondence of buyers and sellers. It will evaluate and think through what
is meant by the “dark side” of the sharing economy and it will debate on the
specific features of Zipcar that make the company beneficial to the people who
use it and to the economy as a whole. Further claims from previous studies are
going to be involved to support the arguments and context of this essay.

The content of this essay is designed as follows. In the first section,
the theoretical framework of the company will be described and analyzed. Thus,
this part will be emphasizing on the main characteristics and core activities
of Zipcar, the relationship between supply and demand and the digital platforms
that are used. Furthermore, it will be argued on how the company contributes to
the sharing economy and how successful is the company. The second section
provides arguments on the contributions of the company to the sharing economy
and the regulations that it may violate. The third section will be focused on
the research and hypothesis. Last but not least, the paper will provide
conclusions based on the analysis and observations. The research will be
focused on the U.S. and some of the European countries.

 

Theoretical Framework

 

The Theoretical Framework of this paper will provide information about
Zipcar. As a beginning, the core activities of the company- what is it about,
who is making use of it etc.  Secondly, a
brief history will be included on why it was founded, when and by whom.
Further, the paper will proceed with the company’s contribution to the sharing
economy and the company’s success.

To begin with, Zipcar is a type of car-sharing company that was
established in America and is named as a subsidiary of Avis Budget Group, who
purchased the company in 2013 (Zipcar,
n.d.).
Avis Budget Group, Inc. is a worldwide breadwinner that provides car rental
services (Company
Information , n.d.). Avis Budget Group is currently
operating mostly in North America, Europe, and Australia and has very
differentiated brands, which are responsible for meeting consumer’s needs at
the highest level possible (Company
Information , n.d.). Zipcar is, at present, one of the
leading networks in this type of market that has around 10,000 automobiles and
is operating with more than 1 million members from all over the world (Zipcar, n.d.).

The company was first founded in the year 2000 by Antje Danielson and
Robin Chase, who got the idea from other already existing companies in Germany
and Switzerland (Zipcar,
n.d.).
The Washington, D. C. office of the company opened its doors in 2001 and shortly
after that in 2003, Robin Chase was replaced as CEO. In addition, in 2006 the
market in Toronto became the most rapidly growing market in history by then,
which resulted in a lot of new opportunities for Zipcar, or we can even say
that facts speak for themselves when for less than 1 year Zipcar opened 2 brand
new offices in London and Vancouver (Zipcar,
n.d.).
Avis Budget Group’s bought the company in March 2013 after Scott Griffith
resigned as CEO (Zipcar,
n.d.).

The whole matching of supply and demand happens through the company’s
mobile app, which can be used both for Android and iPhone mobile phone (Zipcar, n.d.). When you become a
member of the company, you are able to check of different opportunities to
reserve self-service cars if you need immediately or even a year in advance for
a one-time application and annual fee (Zipcar,
n.d.).
After becoming a member, the company provides you with an access card with a wireless
chip, which gives you an automated access, because it is the card that is
actually unlocking the doors of the vehicle (Zipcar,
n.d.).

As we all know, the sharing economy and the digital platforms are
growing rapidly year after year. Every day they are dramatically expanding and
the sharing economy is one of the leading sectors in generated growth (Eckhardt & Bardhi, 2015). According to
Eckhardt and Bardhi (2015), the sharing economy is more like an “access”
economy because when you pay someone to rent his/her car you are gaining access
to it for a certain period, or in other words, it is like an exchange market.
If we do think about this, we realize that in real life we think more about the
cheap prices and the good service rather than getting to know other people we
make transactions with (Eckhardt & Bardhi, 2015).

Henceforward, as an answer to the question of how Zipcar is contributing
to the sharing economy, we will first have a look at the collaborative
consumption. As stated by Botsman (2015),
collaborative consumption is everything connected to renting, lending, sharing,
and gifting that is happening over the Internet and through digital platforms.
The most important benefits of the collaborative consumption are lower costs
and the act of being environmentally friendly (Botsman & Rogers,
Beyond Zipcar: Collaborative Consumption, 2010). Therefore, Zipcar
reduces the costs of monthly payments, fuel, and parking fees, which are not
cheap, and every owner of a vehicle knows and can elaborate on that. The
car-sharing company is super convenient and provides access to vehicles all
over the world at any time of the day (Zipcar, n.d.).

Not to mention, people do not need to buy cars anymore.
Instead, a huge amount of costs can be reduced and invested in something else.
Zipcar, as a two-sided market, offers correspondence between buyers and sellers
at a low-cost while at the same time encouraging trust in people (oxfordmartin.ox.ac.uk,
2015).
On the other hand, as a new business model Zipcar is minimizing polution and
traffic jams, because with the car-sharing services, sales of automobiles are
decreasing (oxfordmartin.ox.ac.uk,
2015).  Sharing assets and the whole collaboration
between people makes economic sense and because of that industrial capitalism
is developing to a collaborative economy (Chase, 2015).

The main idea of Robin Chase, the CEO of Zipcar, was to build a platform
that is getting the most out of the sharing economy and to create value with
the process of sharing of assets (Robin Chase: Excuse me, may I rent your car?, 2012).  Short after Chase got the idea and developed
Zipcar in 1999, the company started to gain popularity and became successful. A
successful business is one in which not only wealth is generated, but success
is mostly measured by the value the company creates for customers. Zipcar is
with no coincidence the leading company in the car-sharing economy, and this is
because it creates value for the people who are making use of it. In fact, if
we look from a social point of view, Zipcar is making significant changes to
the society with its convenient services and low prices. In addition, through
all these years the company managed to stay in the competitive business and
grow even more.

There are several reasons why Zipcar is making a contribution to the
sharing economy and why the company should continue to operate in the
car-sharing business. Firstly, Zipcar is effectively succeeding in the value
creation to both sellers and buyers along the value chain. Not only that unused
goods come into use, but individuals are also making a profit. On the contrary,
it is cheaper for buyers to use Zipcar than to travel with their own cars. Thus,
it is a win-win situation. However, Zipcar can cause troubles to traditional
taxi businesses, because the demand for taxi drivers falls with companies like
Zipcar and Uber (Reisch & Thogersen, 2015).  

Secondly, Zipcar reduces the ownership of cars, which was one of the
main goals of the company itself. With the increased use of old but still
productive cars, it can be said that Zipcar aims for sustainability, a better
future of the economy and less air pollution. Instead of buying new cars, people
are able to use the old one which, therefore, results in lower ecological
impact (Reisch & Thogersen, 2015). However, there are
not enough studies to elaborate more on the sustainability of Zipcar.

Another reason for Zipcar’s contribution is the social network of the
company. With the exchange of cars, people have the opportunity of a social
connection not only with the person on the other side but also to other people.
Every smart and communicative person would take this opportunity as an advantage
and search for better pricing and additional feedback. Over and above, buyers
and sellers can easily ask questions if something is not exactly clear. Yet,
most of the times, people involved in the transaction do not actually meet or
are eager to meet the other party.

While most of the people see the sharing economy as very promising,
sometimes peer-to-peer network industries can also have a bad impact on society
and the labor market.  The owners of
private vehicles working in the car-sharing business are paying fewer costs
than the licensed taxi drivers (Malhotra & Alstyne, 2014). This is due to the
fact that private car owners do not purchase medallions or insurance and in
that way licensed taxi drivers are not able to withstand the competition (Malhotra & Alstyne, 2014). It is also known
that Zipcar discriminates against younger people under the age of 25 from
poorer areas of London and does not give the opportunity for them to use the
company’s services, while at the same time youngsters at the age of 21 who are
living in better areas of London are allowed to rent a car (Smith, 2016).
This type of discrimination is a common case in the car-sharing network as well
as the sharing economy as a whole, and companies should work on resolving the
problem.

There are certain limitations, because of which a more detailed answer
cannot be provided. The topic about Zipcar sustainability is not really
researched and because of that, the paper cannot elaborate on whether or not
Zipcar is a sustainable company. Moreover, there is not enough information
about the rules and regulations violated by the company. These two issues need
to be addressed to a greater extent in order to answer the research question
more fully.

Given the above argumentation, the paper will provide the hypothesis
about the relationship between the variables. A hypothesis is a specific
statement of prediction that aims to translate the question into expected
outcomes (Prasad, Rao, & Rehani, 2001). Because this paper
is a literature review and no actual research has been made, it cannot be said
whether the hypothesis will be accepted or rejected. As a result of the current
research question: “How is Zipcar contributing to the sharing economy?” Hypothesis
H1 is stated as follows: If Zipcar creates value for society then the company is
making a contribution to the sharing economy.

 

 

Conclusions

 

The purpose of this essay was to analyze and evaluate how Zipcar
influences today’s sharing economy and the competitive business environment in
the United States and Europe. Digital technologies and the sharing economy
continue to grow with each passing day. Zipcar, as the biggest car-sharing
network, has a significant impact on the sharing economy and the society.

As part of the collaborative consumption, Zipcar is reducing a lot of
monthly costs which may otherwise be quite high. Additionally, Zipcar is
operating all over the world and that makes the company very convenient for
customers. The company is successfully managing to create value for both for
buyers and sellers and at the same time minimizes the air pollution and traffic
jams. So far the company is operating in a very successful way and is one of
the leading companies in the sharing economy. The reason for its success is mainly
because Zipcar is making significant changes for the society when people are
provided with a bigger choice and low costs.

Similarly, Zipcar is providing a social network where people are given
the opportunity to search for more information about prices or feedback.
However, it is known that on the other hand companies like Zipcar can also have
a bad influence. Licensed taxi drivers usually pay more than the owners of
private vehicles and that results in the loss of jobs. Likewise, Zipcar and the
companies in the sharing economy tend to discriminate between people of
different income situations or age.

In conclusion, on average Zipcar has a positive impact on the sharing
economy although there are some things that the company should focus on in the
future. It is not clear, how Zipcar or the sharing economy will develop and
influence the society in the time to come. Whether car-sharing prices will
remain lower or will become higher, whether car-sharing will replace taxi
driving or whether the sharing economy will provide even more opportunities and
better value are questions that even if we ask ourselves, we will hardly answer
them now. The idea is to monitor the process.

 

References

 

(n.d.). Retrieved from Investopedia:
https://www.investopedia.com/terms/s/sharing-economy.asp

(n.d.). Retrieved from Business Dictionary:
http://www.businessdictionary.com/definition/economic-benefit.html

(2015, November). Retrieved from oxfordmartin.ox.ac.uk: https://www.oxfordmartin.ox.ac.uk/downloads/GI_215_e_GesamtPDF_01_high.pdf

Botsman, R. (2015, May 27). Defining The Sharing Economy: What Is
Collaborative Consumption-And What Isn’t? Retrieved from Fast Company.

Botsman, R., & Rogers, R. (2010, October). Beyond Zipcar: Collaborative
Consumption. Retrieved from Harvard Business Review:
https://hbr.org/2010/10/beyond-zipcar-collaborative-consumption

Chase, R. (2015). Peers Inc: How People and Platforms are Inventing the
Collaborative Economy and Reinventing Capitalism.

Company Information . (n.d.). Retrieved from Avis Budget Group:
http://www.avisbudgetgroup.com/company-information/

Eckhardt, G. M., & Bardhi, F. (2015, January 28). The Sharing Economy Isn’t About
Sharing at All. Retrieved from Harvard Business Review : https://hbr.org/2015/01/the-sharing-economy-isnt-about-sharing-at-all

Homestay is the origin of Sharing Economy. (2014, March 11). Retrieved from
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https://www.prnewswire.com/news-releases/homestay-is-the-origin-of-sharing-economy-249415791.html

Key, D. (2015, January 7). Retrieved from Market Realist :
https://marketrealist.com/2015/01/avis-budget-groups-zipcar-is-a-going-concern

Malhotra, A., & Alstyne, M. V. (2014, November 01). The Dark Side of the Sharing
Economy…and How to Lighten It. Communications of the ACM. Retrieved
from Communications of the ACM:
https://cacm.acm.org/magazines/2014/11/179830-the-dark-side-of-the-sharing-economy-and-how-to-lighten-it/fulltext

Prasad, S., Rao, A., & Rehani, E. (2001, September 18th). Developing
Hypothesis and Research Questions. Retrieved from
http://www.public.asu.edu/~kroel/www500/hypothesis.pdf

Ramirez,
E., Ohlhausen, M. K., & McSweeny, T. P. (2016). The “Sharing” Economy:
Issues Facing Platforms, Participant and Regulators. Federal Trade Commission.

Reisch, L. A., & Thogersen, J. (2015). Handbook of Research on
Sustainable Consumption. Edward Elgar Publishing.

Robin Chase: Excuse me, may I rent your car? (2012, December 17). Retrieved from
YouTube: https://www.youtube.com/watch?v=SsqlpgMKjyU

Sharing economy. (n.d.). Retrieved from Wikipedia:
https://en.wikipedia.org/wiki/Sharing_economy#cite_note-Stephany-18

Smith, S. (2016, October 30). ‘Snobbery’: Car hire firm Zipcar accused
of refusing cars to youngsters from poor London postcodes. Retrieved from Standard.co.uk:
https://www.standard.co.uk/news/london/snobbery-car-hire-firm-zipcar-accused-of-banning-youngsters-from-poor-london-postcodes-a3382326.html

Stephany, A. (2015). The Business of Sharing: Making it in the New
Sharing Economy. Palgrave Macmillan UK.

The rise of the sharing economy. (2013, March 9th). Retrieved from
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https://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy

Yaraghi, N., & Ravi, S. (2017, March). The Current and Future State of the
Sharing Economy. Booking India IMPACT Series No. 032017.

Zipcar. (n.d.). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Zipcar

Zipcar. (n.d.). Car sharing. Retrieved from Zipcar.com:
http://www.zipcar.com/carsharing

 

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