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RelayRides: Why they won't make it.

03 Jul 2010  |  Tags:

A few weeks ago I was at a seminar for new web startups, and one in particular caught my eye: RelayRides. It’s a person-to-person car sharing service, much like Zipcar… without big-brother managing the vehicles themselves.

Basically, take Zipcar, and subtract the provided vehicles. You drive your friend’s (or a complete stranger’s) car for an hourly rate.

Much like Zipcar, fuel and insurance are included at no-charge. Also, rates start at just $6/hour. The biggest difference is that if you own a vehicle, you can rent it to others by having a transponder installed in your car. They’ll provide a $1-million insurance policy and up to $4,500-8,000 per-year in your pocket. (apparently)

However… I don’t think this idea is going to go anywhere.

Aside from the fact that if one could afford to buy a car (of any cost), they probably wouldn’t be purchasing a car expensive enough that they would need to recoup some of that cost through a service like RelayRides in order to afford it. And, I don’t know if I would want a complete stranger driving my car (or even some of my friends, for that matter) considering the amount of comprehensive damage that could occur and go unnoticed. Not to mention maintenance requirements.

That aside, the business model is flawed in a number of ways as well:

  1. Lack of “initial push” … WHERE are the cars they’re offering right now? Unlike Zipcar, which through investments was able to place cars all over the place and lure in customers who didn’t particularly desire owning their own car or who travelled a lot, RelayRides relies on those same customers to provide reliable vehicles for their other customers. This is fatally flawed and unless the company is planning on growing extremely slowly, they will have to turn a lot of customers away… customers they need.
  2. Lack of on-car advertising … One benefit to using someone else’s car through RelayRides is that it’s not blasted with Zipcar stickers everywhere and marketed as a car that can be shared. However, this is also an obvious downfall for the company. The sheer amount of marketing dollars required to reach the same audience that Zipcar has actively reached with a few pennies worth of vinyl-lettering (on each vehicle) is staggering. For one, I will admit that I probably wouldn’t have learned about or considered Zipcar in the first place if I hadn’t seen their distinct vehicles driving around Boston from time to time… and become curious!

So, aside from the number of liabilities for customers (both driving and renting), there are number of serious roadblocks for a company like this to grow to the point at which it’s both interesting and sustainable. I just don’t think it will ever get there.

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