Zipcar Expands Zipvan Service in North America
The car-sharing company Zipcar Inc. (NYSE:ZIP) has recently begun to further expand its Zipvan cargo van services in North America. The company is currently the world’s largest car sharing network, although a number of competitors have recently emerged, including Hertz on Demand, Enterprise’s WeCar and City CarShare.
A pilot program for the Zipvan service was started in London last year with a fleet of just six cargo vans. It has since expanded into the San Francisco, Toronto, Chicago and Washington D.C. regions. The business has seen rapid growth, racking up over 12,000 reservations since initiation.
In a recent press release, the company announced that it is beginning the Zipvan service in Los Angeles, Philadelphia, Portland and Seattle, and plans further expansion over the next twelve months. [1]
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The move signifies the company’s intent to diversify from its core car-sharing business and also to disrupt the market for light cargo transport, similar to how the Zipcar service offers customers an alternative beyond car ownership and traditional car rentals.
The Zipvan service provides members with cargo vans which can be rented on an hourly or daily basis at reasonable rates, which includes fuel, insurance and roadside assistance. The target market includes individuals who are looking to shift apartments or are shopping for large items which cannot be fit into an ordinary car. It also targets small businesses looking to transfer supplies and deliver goods to customers.
We believe that the Zipvan service provides the company with a promising alternative source of revenue growth. The business provides higher average revenues per customer relative to the Zipcar service, as well as a new and distinct market which means a larger customer base. The company also has a unique advantage in this domain relative to future competitors since it is the first of its kind and has already established itself through its growing membership base.
We currently have a Trefis price estimate of $11 for Zipcar, which is around 32% above the market price.
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Notes:- Zipcar Announces Plans to Expand Zipvan Cargo Van Service Across North America, Zipcar Press Release, August 2012 [↩]