The early bird may get the proverbial worm… but at what cost? When it comes to retail sales, the first movers may not always benefit from being first, especially due to high research and development costs and substantial marketing costs associated with educating target market segments about a good or service. In some cases it is the second-movers that benefit most from a first-mover firm’s penetration of a market. The second-moving firm can focus its time and capital on manufacturing a superior product or leveraging its resources to better market itself. The result: the second firm builds a better mousetrap and is able to capture more of the market share.
Residents of large metropolitan areas, including Madrid, Berlin, London, are moving away from traditional public transportation systems and car ownership to get to their next destinations. In fact, car ownership alternatives are growing in popularity worldwide and can thank technology for connecting their products with customers. Reservations for these alternatives can be made with mobile devices (i.e.: smartphones and tablets) and paid with a credit card – no customer service interaction required.
United States’ Zipcar and Germany’s Stadtmobil may be global leaders for car clubs, but that is not stopping clones from launching using their business models. Emerging markets, especially BRIC nations, are key targets as these global leaders and clone start-ups seek to meet the growing demand for ownership alternatives. In fact, three car club companies have already launched in India in the last two years and provide services starting at $.73 USD per hour.
Zoomcar is the most recent entry into India and looking to appeal to the rising younger generation of workers to drive sales. And the interesting part? It’s an Indian start-up with non-Indian founders! With increased traffic congestion and car ownership costs, car-sharing services provide the benefits of personal transportation without the annoyance associated with car maintenance. In fact, the car-sharing cost is about a third of traditional rental car costs, due to nearly 95% of these cars coming with a chauffeur.
In just 18-months, Zoomcar’s business has hit the fast lane by expanding its fleet of Ford Motor’s Figo hatchbacks from seven cars to more than 300, with expectations of adding another 200 hatchbacks before the end of 2014. And how many bookings are reserved per month? More than 5,000 according to Zoomcar.
It may be too early to declare second-mover advantage success for Zoomcar. Myles, another car club in India, recently partnered with India’s Tata Motors to promote more affordable solutions and wider selection of models to choose from. For a similar price of Zoomcar’s Ford hatchback rental, Myles patrons can rent Tata’s Nano Twist, a city car that resembles a Smart ForTwo.
With India boasting a population of 1.2 billion, there will be many opportunities for these car club start-ups to make an impact with customers. As technology grows and is adopted by India, these start-ups can adapt their strategies to hit their target markets and see which one emerges as a market leader.
What are your thoughts on car sharing clubs? Will this concept work in India or are there too many alternatives available? Let us know in the comments!