CIC IWOM panel：Fudan professor Zou on The new sharing economy powered by online social network

The New Sharing
Economy Powered by
Online Social Network
Deqiang Zou, Ph.D.
School of Management, Fudan University
November 15, 2010
From Social Media to Social Business

© Copy rights reserved, Zou Deqiang
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Movie: Purchase or Rental?

3
WHY Buy When You Can Rent?
• What about extending the idea of share movies via
Netflix and stream music rather than buying CDs to
the idea of sharing a car?
 Car ownership provides great convenience— but at the
price of great inefficiency
 The average American
spends 18% of his income
on running a car that is
usually stationary

4
Underused Assets
• People are growing impatient with “idle capacity”
(i.e., waste)
 On average, a British car is driven for less than an hour a
day but costs about £5,500 a year to own
 Half of American homes own an electric drill, but most
people use it once and then forget it
 The number of drivers using car-sharing networks
increased 117% between 2007 and 2009 in North America

5
Substitutes for Owning / Using Goods
 Drive Own Car  Rent a Car and
Drive it
 Hire a Chauffeur to
Drive
 Hire a Taxi
 Car Pooling
Own a Physical Good
Rent Use of a
Physical Good
Perform
Work Oneself
Get Someone
to Do Work

6
ZipCar: Wheels When You Want Them
• World’s largest provider of car-sharing services
 Customers include consumers, businesses, universities, and
fleets
 Drivers register online and, depending on the service, pay an
initiation fee of about $25 and an annual fee, often $50
 Hourly rates range from $7 to $17, include gas (a credit card is
placed in each car) and insurance
 Largest selection of vehicles, from the Mini Cooper and Mazda 3
($8 an hour) to the BMW 328i ($17 an hour)

7
ZipCar: How It Works?
• Get all the jobs done
 Just with your cell phone
 By mid 2010, 400,000
members, 4,400
locations and 9,000
vehicles

8
ZipCar: Business Performance
• Annual revenues are $130 million, and is growing
about 30% a year
• 80% of the US market share
 About 8,500 companies have signed up for the service,
including Lockheed Martin, Gap, and Nike. So have 120
colleges and universities, such as Carnegie Mellon and the
University of Miami
• Generate about $23,000 per car annually, with each
employee supporting about 30 vehicles
 That’s about double the revenue and efficiency of a
traditional car rental company

9
ZipCar: Consumer Wellbeing
• Customers buy just the amount of car they actually
need
• An average Zipcar member saves more than $5,000
dollars a year compared with owning a car
• “Consumer Philandering”
 Today’s a BMW day, or is it a Volvo day?

10
ZipCar: Social Benefits
• “Let’s use fuel efficient cars.”
 Reduce our fossil fuel needs by 4%
• Each vehicle operated by Zipcar is equivalent to
taking 15~20 cars off the road
• Car sharers report reducing their vehicle miles
traveled by 44%
• CO2 emissions are being cut by up to 50% per user

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What’s Shared?
• Financial / Accounting analysis
• Total Cost= Fixed Cost + Variable Cost
Car purchase
Annual taxes,
fees, etc.
Fuel, Parking
fees, etc.
Car Sharing Ride Sharing

12
Evolution of the Car Market Sector
Car
Ownership
Car
Sharing
Ride
Sharing
P2P Car
Sharing
P2P Ride
Sharing

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Ride Sharing
• Today, 75% of the trips are single-occupancy
vehicles
• GoLoco: share trips with your friends, and friends of
friends
 Join a group or create groups to travel with
 Post your trip for your friends, coworkers, or everyone on
GoLoco to see. Whether you are driving somewhere or
looking for a ride, posting your trip helps you find others to
GoLoco with!
 Receive email alerts about trips to places you want to go

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P2P Car Sharing
• WhipCar (London) and RelayRides (Boston) aim to
get car-owners to rent their vehicles to strangers
when not using them themselves
 Need a car? Borrow cars for $6/hr (RelayRides)
 Own a car? Share it and earn cash
• How WhipCar works?
• Convenience and efficiency as compared to ride
sharing

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P2P Ride Sharing
• OpenRide
 Enables drivers to offer spontaneous
shared rides when already on the
road
 One special feature of is the
openness of its infrastructure
which offers established rideshare
agencies and communities a simple
means of connecting up with
OpenRide and thus gaining a foothold
on the market for mobile ad hoc
rideshare opportunities

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Increased Need For…
Car
Ownership
Car
Sharing
Ride
Sharing
P2P Car
Sharing
P2P Ride
Sharing
Need for IncreasesTechnology Trust
Network
Externality

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1. Technology: Connected
• Technology: more affordable and more convenient
sharing
 Technologies such as high-speed Internet, mobile
broadband and GPS are enabling new ways of providing
value to customers
 Zipcar’s available vehicles report their positions to a
control centre
• Without technology, how would Zipcar’s members know
where the cars were? How would they get access to cars?
How would the system know how long they had the cars and
how many miles they drove?

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1. Technology: Connected
• Technology also streamlines and automates many
back-office functions at Zipcar
 Determinine the best location for a car, utilization trends,
member demographics and spending patterns, or usage
prediction algorithms

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1. A Peek Into Netflix Queues
• Examine Netflix rental
patterns, neighborhood
by neighborhood, in a
dozen cities (Jan. 10, 2010)
• It is predictive
 Self segmentation
http://www.nytimes.com/interactive/2010
/01/10/nyregion/20100110-netflix-
map.html?nl=multimedia&emc=focusem
b1

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2. Trust: Evidence or Confidence
• To ensure that both parties are trustworthy
 WhipCar asks for details of both the rented car’s registration and
the renter’s license, and checks them against official data
 RelayRides only accepts cars that have gone through a safety
check
• Social networks are helping to lower one of the biggest
barriers to sharing—trust
 Couchsurfers, can see at a keystroke what others in the network
think of the stranger who wants to borrow their couch. If he is
dirty or creepy, they need not let him in

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2. Trust: Influentials

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2. Trust: I am My Connections

2~6
About 150
• a store
assistant
• a call center
employee
• the person
who wrote the
online hotel
review
• the person
who answered
your forum
question
• the person
who
commented
on your
YouTube
video
• the person
who you
bought from
on eBay

26
2. Trust: Temporary Ties Works, too

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3. Network Externality
• Break through the critical mass or threshold of
customer base to take off
 iTunes 10: Social network business
 Instantly available to 160 million users: “This is about
talking to people about music”
http://www.apple.com/itunes/ping/

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Integrated Solutions to Sharing
• The mobile, spontaneous sharing opportunities with
the barriers of (1) technology, (2) trust, and (3)
network effect, can be realized by online social
network driven by location bases services (LBS)

32
More than Check-ins and Badges

33
It Can Be Analytic or Predictive

34
Share More, Beyond Car and Ride
• P2P car/ride sharing suggests that consumers could
increasingly make money on the side
• Now here’s one smart phone app that pays you to
use it
• Field Agent shows users a list of task people or
companies want to be completed
 Tasks such as checking the price of a product in a store or
taking a picture of a product on a shelf will put you $2
ahead

35
Micro Entrepreneurs?
• The most popular job
so far:
 Spend 10 minutes on the
couch, listening to and
rating music.
 With enough couch
potato jobs like that,
users can make around
$12 an hour, about 50%
more than the minimum
wage

36
Sharing: New Engine for Economic Growth
• It is good for you, your community, business, and
the planet
• New businesses have emerged to serve this new
market, exploiting the ability of online social network
(esp. LBS) to create networks of shared interests
and trust and to simplify the logistics of collective
use
• Redefine a multi-sided market (e.g., Google) which
may facilitate free economy

37
The Faith
• Access often matters more than ownership, and
technology will make sharing more and more
efficient
• Social networking is a means to an end. You
need to understand what the end is

38
“Creativity is just
connecting things.”
Be A Connectionist

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Social Network: iPad and iPhone

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deqiang_zou@fudan.edu.cn

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References
• Barry, Keith (2010), “Hitchhiking Goes High Tech with Car2gether,”
Wired, September 8.
• Belson, Ken (2010), “Car Sharing: Ownership by the Hour,” New York
Times, September 10.
• Botsman, Rachel and Roo Rogers (2010), “Beyond Zipcar: Collaborative
Consumption,” Harvard Business Review, (October), 30.
• Botsman, Rachel and Roo Rogers (2010), What's Mine Is Yours: The Rise
of Collaborative Consumption, HarperBusiness.
• Economist (2009), The Connected Car, June 4.
• Economist (2009), Wheels When You Need Them, September 2.
• Economist (2009), The Electric-fuel-trade Acid Test, September 3.
• Economist (2010), Teaming Up with the Joneses, April 22.

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References
• Economist (2010), Collaborative Consumption, April 22.
• Economist (2010), “The Business of Sharing,”
Economist.com/blogs/Schumpeter, October 14.
• Fuhrmans, Vanessa (2010), “BMW Plans to Test Short-Term Car Rentals,”
The Wall Street Journal, October 24.
• Griffith, Scott (2009), “Zipcar: Selling cars, one ride at a time,” McKinsey
Quarterly, October 27.
• Keegan, Paul (2009), “Zipcar: The best new idea in business,” Fortune,
August 27.
• Taub, Eric A. (2010), “An App that Pays,” New York Times, April 20.
• Wikipedia (2010), ZipCar, http://en.wikipedia.org/wiki/Zipcar

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