Zipcar Files for a $75 Million Initial Public Offering
About ten years ago, Antje Danielson and Robin Chase thought it would be a good idea to introduce car-sharing to the U.S. After all, it was popular in Europe. The result was Zipcar.
Over time, the Cambridge, Mass. company has transformed the transportation industry, in terms of sustainability, technology and innovative business models. In fact, even top rental car companies -- like Hertz (HTZ), Enterprise and U-Haul -- have entered the car-sharing market.
Under the Hood of Zipcar
Zipcar's motto is "wheels when you want them" and the company boasts 400,000 loyal "Zipsters." On its face, the service is simple. A Zipster can reserve a car by the hour or the day; the rental includes gas, insurance and other costs. Reservations can be made at zipcar.com, or via phone or a mobile application. Customers then pick-up their Zipcar from a reserved parking spot and unlock the door with a ZipCard. When done, they return the car to the parking spot.
According to a study from Frost & Sullivan, the savings for Zipsters can be as much as 70% of total transportation costs (parking, insurance, financing, registration, and so on). Keep in mind that transportation in major metropolitan areas can account for 17% to 20% of household income.
At the same time, there are environmental benefits. The average reduction in vehicle-miles-per-driver is nearly 50%, which means lower CO2 emissions.
So far, Zipcar runs operations in 13 major cities and on over 150 college campuses in the U.S., Canada and the U.K. What's more, the company growth has been rapid. From 2005 to 2009, revenues have spiked from $13.7 million to $131.2 million. Part of this has been the result of several key acquisitions, including West Coast rival Flexcar and London's Streetcar.
And the growth should continue. Frost & Sullivan predicts that the market in the U.S. will jump from $253 million in 2009 to $3.3 billion by 2016.
But what about the competition? Zipcar has fierce rivals, but the company has a variety of strong competitive advantages, including a top-notch technology platform, a large network and a tremendous knowledge base. Perhaps the most important thing is the company's loyal base of Zipsters. After all, about 28% of new customers come through word-of-mouth.