5 Things to Consider when Picking a City to Launch Free Floating Carsharing
After 11 years of developing and implementing solutions for carsharing projects around the world, we’ve realized that certain questions systematically come up when planning the launch of a one-way or free-floating carsharing service. From choosing the number of cars to roll out at first to figuring out adequate insurance policies or a best-in-class marketing strategy, there are a lot of decisions to be made.
Perhaps the most obvious and glaring interrogation, however, is “Where to launch the service?” The answer, unfortunately, isn’t one-size-fits-all, as there are many variables to factor into the equation.
1. The Potential User Base
Perhaps the most obvious and glaring interrogation, however, is “Where to launch the service?” The answer, unfortunately, isn’t one-size-fits-all, as there are many variables to factor into the equation.
To provide a guide to potential operators, we isolated what we believe are the most important drivers in the success of free floating carsharing projects. Here they are:
The number of potential users in a city and the demographics (average age, occupation and income level) are both among the top things to be on the lookout for. For this purpose, it should be known that the average age of members typically ranges between 30 and 35.
In addition to population and demographics, there is a third factor to consider, which we will call “Free-Floating Readiness”. In a nutshell, will the average person be willing and able to use a one-way service immediately? The answer to this question will considerably impact marketing spend for the project.
As opposed to a reservation-based service, one-way carsharing typically means users can instantly access a vehicle. Our experience shows that these services typically have much faster uptake than reservation-based round-trip services. However, new services must still account for an educational period — a non-recurring portion of the marketing budget — when entering a market. This period typically involves a mix of on-street initiatives and online promotions. Obviously, the longer the education period, the larger the marketing spend.
2. Is the City “Free-Floating Compatible?”
The first thing to look at is population density. Simply put, the higher the density, the better. After that, other characteristics come into play. For example, a city with three universities will typically yield more users than a city known for being a tourist haven.
Finally, look at parking availability to determine whether a city could become a good home for a fleet. If there is a lot of available parking, then it should make it easy for users to park the cars, making the service more convenient and desirable.
3. Competitive Landscape
It should first be said that it is extremely unlikely that mobility would become a winner-takes-all market. It never has been and most likely never will be, especially not in cities.
The obvious competition to a new entrant would be an existing carsharing service or e-hailing service such as Uber or Lyft. As mentioned earlier, a few services co-existing in a city could actually end up benefitting a new entrant, notably by reducing the education of potential users.
The biggest competitor to carsharing is individual car ownership. A survey of free-floating carsharing members in Seattle revealed that 14% of them had given up a vehicle since joining a service and half of them confirmed that the availability of free-floating cars played some part in that. Again, the combination of three or four services would augment coverage of a city, most likely increasing the users’ reliance on the services.
4. Municipal Support
Regulation and support from the city comes in different forms, most important of which is parking. Ideally, a city will agree to provide parking spots to a carsharing operator either for rent or for free (under certain conditions). In any event, municipal support can be a major contributor to the success of a project, or an important obstacle if lack thereof.
Public infrastructure is even more important for a fleet of electric vehicles. Cities can encourage charging station operators, as is the case in Copenhagen where Green Mobility users can park at charging stations. Alternatively, they can place the burden on the carsharing services operators themselves to manage their own charging stations, as is the case in Madrid for emov.
5. Synergies
If a carsharing operation is tied to an existing organization that sells X, Y and Z products or services, it is important to determine whether a given city offers cost advantages. For example, a network of car dealerships can benefit from operational synergies from service and parking locations for no incremental cost.
In addition, every subscriber to a service represents an additional pair of eyeballs that can be marketed to. If a given market is more strategic on that front, then it should be moved closer to the top of the list.
We at Vulog are passionate about building technology for carsharing. Our goal is to provide solutions that enable operators to truly improve mobility options in their selected cities. Our end-to-end technology offers countless possibilities so that our partners can tailor a solution to their local needs and launch more of world’s most successful services. It’s just another way that Vulog allows you to go the extra mile…or kilometer.
Originally published at www.vulog.com on April 20, 2017.
