Wednesday, October 1, 2014

RelayRides Growing, Evolving in Nascent Collaborative Transportation Category

The idea of borrowing a strangers’ car or taking a ride with an unfamiliar person would have seemed unimaginable just a few years ago. Today, many of us are doing this regularly via collaborative economy transportation services such as Zipcar, Uber, Lyft, Sidecar and RelayRides.

I have plenty of experience as a consumer of this new category of service, but I wanted to get a view from the inside of one of these companies. I had the chance to do an email interview with Steve Webb, Director of Community and Communications at RelayRides, and we covered topics ranging from rising competition to differentiation to risk protection to the future of car- and ride-sharing.

RelayRides is a bit like Zipcar but differs in a couple of key ways. Unlike Zipcar, RelayRides is not just a collective consumption model but is truly peer-to-peer. While Zipcar rents its own cars, RelayRides connects people who own cars with those who need transportation. Car owners can earn a bit of money from their automobile during periods it is idle, and those without cars can get access to their neighbors’ vehicles.

Another way RelayRides differs from Zipcar is that, although the company started as a competitor to Zipcar’s rent-by-the-hour business, RelayRides tweaked its business model last year to offer daily rather than hourly rentals. As a result, the company is now focusing more on airport rentals, where people arriving on trips may make arrangements to meet someone who is making their car available to rent. In San Francisco, RelayRides even operates its own parking lot where local residents may leave their car as they depart so that arriving travelers can rent it, thus saving car owners from parking fees and converting their unused car into cash.

The competition is heating up among transportation companies in the peer-to-peer economy. This is quite evident, as Uber and Lyft snipe at each other about unethical business practices and San Francisco reports the number of taxi rides has plummeted 65% in just 15 months.

In this crowded space, RelayRides competes by being “the only nationwide peer-to-peer car rental marketplace,” says Webb. “We are in 2,300 cities nationwide, including every major metro area besides NYC--we had to halt business there because of certain unique aspects of NY State insurance law.”  In one of many legal challenges to the P2P car- and ride-sharing industry, New York’s Department of Financial Services demanded that RelayRides suspend operations in the state until the company submits a business plan to the DFS that is consistent with state law.

RelayRides is striving to compete with others by making trust and safety a focus.  “If our members are not completely safe and protected, our marketplace doesn't work,” notes Webb. “This is why from the very beginning we have provided members with a $1 million insurance policy. Additionally, we have put great emphasis on pre-screening drivers to ensure only the best drivers are on the marketplace."

As with others in this space, RelayRides is growing.  “We have grown from being in just two cities and zero airports in 2012 to being in 2,300 cities and 300 airports this year.”  Its biggest challenge right now is awareness, notes Webb; “We will continue to raise awareness about the marketplace and continue to work on increasing customer delight.”

The benefits to car owners are evident, but I was surprised to hear how much money RelayRide owners are making. “Our average owner earned $360 last month, “ says Webb. He adds that renters are also enjoying benefits: “The average renter saves 35 percent versus traditional rental companies”

RelayRides is also proud of the benefits the company is bringing to the environment. According to Web, “We are helping to reduce people's carbon footprint--each shared car takes 13 off of the road, encourages more biking, walking and use of public transportation." The company recently produced an infographic to spread the word on RelayRide’s positive impact on the planet (see below).

The future will bring many changes, challenging traditional auto manufacturing and sales and changing the collaborative transportation market.  I speculate that self-driving cars may undermine many transportation companies in the decade or two to come, but Webb feels “It is impossible to speculate what these technologies changes will bring.” Whatever happens, Webb says that RelayRides “looks forward to innovation and feel strongly positioned to evolve with technology.”

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