There's a new car sharing company in town with cheaper rates and a Somerville address....
It was bound to happen sooner or later.
When Zipcar brought the European car-sharing concept stateside about ten years back, it took a little while to catch on. Once it did, however, it caught on big. Car sharing allowed city dwellers to get rid of their cars and instead easily rent cars, parked about town, by the hour—gas in the tank included. With urban renewal on the rise and growing concerns about the way cars impact our environment, the timing couldn't have been better.
Zipcar soon became the number one name in car sharing. And few have dared to challenge them since. Enter iCar, a 100% woman-owned, fresh face in car sharing that set up its headquarters right here in Somerville. iCar sees room for a competitor—one with a different attitude and approach.
iCar is betting on lower pricers and strong customer service
"We're taking a very reasonable, no smoke-and-mirrors approach to growing this business and staying away from 'the cutesy.' I'll leave it at that," said Jenn Jones, iCar's business development and marketing manager.
Jones holds down the fort at iCar's Somerville offices, located above the U-Save Movers on Prospect Street. Not only is she brimming with the energy required for a start-up like iCar, nearly a decade of marketing management at John Hancock tops off her resume.
"It seemed like an exciting opportunity to work with a start-up, and I get to put my previous experience to good use," she said. Meanwhile, the owners, Jippy Kheel and Nancy Walsh, and general manager have a combined thirty years of automotive-related work between them.
The company sees pricing as a key area to help them break into the market. During off-peak hours, iCar rentals go as low as $5 an hour. The least expensive local Zipcars rent for $7 per hour.
"The types of cars we choose to use will be measured on fuel efficiency before anything else," said Jones. "But they also need to be midlevel, user-friendly cars—nothing too terribly fancy or over the top."
iCar also hopes to compete in the realm of customer service. "Here's an example. I consider this Business Management 101," she said. "As is the case with the competition, there's a $50 penalty for being late when returning a vehicle—standard practice. But what about the inconvenienced customer that didn't get their car at the time they'd reserved it? That's the situation that needs immediate attention. So, we take the fee and credit it to the inconvenienced customer's account. Things like that make a world of difference in how a company is perceived."
Zipcar offers a typically one to two hour driving credit to inconvenienced drivers, as well as taxi reimbursement, waived rental fees and alternate cars. But iCar is hoping that, like lower pricing, a clear-cut compensation plan will give them an edge.
Industry watchers see room for growth and competition
Industry analyst Mary-Beth Kellenberger, sees room for competitors in the market. "Do competitors have a chance? Yes they do, and part of the reason is the strategies that competitors are adopting," said Kellenberger, of market research firm Frost & Sullivan. "The competitors that are most likely to be successful are those that have very focused strategies and very specific geographical regions."
Meanwhile, despite now having more than 400,000 members in the United States, Canada and the United Kingdom, Zipcar itself has yet to turn a profit. But, industry watchers, including Kellenberger, see a path to earnings.
"Does Zipcar have a chance? Yes it does," said Kellenberger. "But it needs to continue to grow and really focus on growing its membership, and membership numbers are not the only thing that will drive growth. It needs usage rates to rise. … And that all takes time. One of the biggest challenges to car sharing is consumer recognition that it's out there."
iCar is already drawing members and corporate contracts
iCar has the advantage of starting up in an area where car sharing is already established and understood. In Somerville, Zipcar now has 58 cars parked around the city. In neighboring Cambridge, the number is 209, and more are parked throughout Greater Boston. But with iCars now parked in Cambridge, Somerville and Allston, members are signing up with the new company.
"Unfortunately my bike won't get me everywhere in Boston, so I joined iCar for those few occasions when I need a car," said Genevieve, an iCar user in Allston, who asked us not to use her last name. "I can bike up to any iCar and book it right on the spot. There are even hatchbacks that my bike fits right into if I want to bring it along."
Other features that Jones said are winning customer approval are the GPS units in most vehicles and the ability to rent by the quarter hour (Zipcar also equips most cars with GPS units, but rents in half-hour increments). For Zipcar member Jody Blackwell of Somerville, those differences are not yet enough to lure her to the competition.
"Zipcar has cars literally three blocks from my house and with a reasonable amount of planning they are always available," she said. "So, I'm pretty happy with them, and if it costs a little more, that's OK."
Getting the word out is key
According to Kellenberger, one inroad iCar could make (and that Zipcar needs to focus on) is to better point out the cost benefits of car sharing.
"In circles where people already know about car sharing—or bike sharing—people are sitting down and have done the math and they're saying, 'Yes, this works for me,'" she said. "But for the average person, this information isn't easily available. They need something that says, this is how much it is, and this is why you should join car sharing."
Jones is ready to take on that challenge, and said iCar is already making progress. She said local interest is growing, clients seem content and the company is in the process of negotiating some important corporate contracts.
"We're just going to essentially continue doing more of the same," said Jones. "It's a question of maintaining priorities; customer service has to stay number one."
All agree, it will just take some time to see how it all works out. "I believe that car sharing is a viable potential business, but there are some things that need to be done to drive its development and growth and it will take some time," said Kellenberger. "We are still a very car-oriented culture. This is North America."