How RelayRides can really put car sharing on the map

By Richard Nieva , written on December 10, 2012

From The News Desk

Airbnb has been hailed as the darling of the new peer-to-peer marketplace, where users sell their own physical things and services to other users. But while Airbnb has experienced success in shaking up the vacation rental space, other industries have not been so open to change. RelayRides, which launched over two years ago, is still in that will-they-won’t-they stage, where it remains to be seen if the company can shake up the car rental market.

The San Francisco-based company, which launched in March 2010, connects car owners with drivers who’d like to rent a car for hourly, daily, or weekly rates. The idea is, when you are not using your car, why not rent it out to make a little cash on the side? The company says car owners make an average of $250 a month, or $3,000 a year, which means renting out your car about 8 days a month. To attract a renter to the company instead of Zipcar or a traditional service, RelayRides is hoping value will be key. Depending on the car, rates are about $8 to $10 an hour, including insurance, or $40 to $60 for the day.

The company is also banking on a convenience factor for renters, being able to rent from a neighbor in his neighborhood instead of going to a car rental business a bit further away.

RelayRides claims that it is about two to three years away from being as popular in its space as Airbnb. So it’s fair to ask what the company needs to do between now and then to get there, if only to use the company as a case study of a player trying to emerge in the peer to peer marketplace.

“It’s not just addressing the business side, it’s changing the attitude as well,” says Andre Haddad, RelayRide’s chief executive. With something as personal as lending out your car to a stranger, it would seem reasonable to have to police the renters more than the owners, because the owners are the ones with so much more to lose after a bad experience. But the company says that, on a customer survey, about 98 percent of owners said they would rent to their renters again.

So the first step in expanding is putting more of the onus on car owners, and creating more of what Haddad calls “viable listings,” that is, listings that would look genuinely attractive to a renter. This involves making the owner responsible for communicating with a potential renter. Since the service relies on a renter’s desired car being available somewhere close to him, a quick response time from a car owner is essential to making RelayRides stand out from others. To that end, an owner’s response time is displayed right on the car listing. The company has also taken to television advertising, which it began last month.

There are certainly other companies in the car sharing space, including the arguably higher-profile Getaround. But RelayRides insists foothold that no one can match because it was the first car sharing site to launch in the US. The company says it has car owners in 1,200 cities in 49 states.

Airbnb CEO Brian Chesky once said in an interview that his company’s breakthrough came in 2008 during the Democratic National Convention in Denver. As people flocked to the gathering in the mile high city – which was even more attractive to attend because of the historical element of extending the party’s nomination to its first black candidate – hotels were booked solid. Convention-goers took to the nascent Airbnb to find any lodging they could, and usage skyrocketed from there.

Haddad obviously can’t anticipate a moment like that to get RelayRides on the map in a big way. But in lieu of a single instance where the stars seem to align, one way to gain traction is making the service so convenient that it’s impossible to ignore. Haddad says the goal is to make it so there is a RelayRide car owner 10 minutes away from anywhere in the country. That would certainly help his cause, but it's a lofty goal, and will take a long time to get there.

[Illustration by Hallie Bateman]