In this model, access, not ownership, is a key. The goal is to provide access to services the customer needs without ownership of the services provided, but the ownership of platform. Consider for instance, that you need a car for a particular business job. There are two ways of going about it: buy it from a car dealer (taking into consideration the tedious processes involved – insurance, registration, taxation maintenance and parking), or you can rent one and only pay for the time you use it and insurance.
From the data collected from a recent study, the average American drives for about 46 minutes daily. The implication here is that the vehicle is used for less than 5% of the day. This is very inefficient, particularly if you went with ownership. The on-demand model operates on the large scale. Having numerous cars to rent out to the residents of a city might prove to be much more efficient than each resident owning their own car.
Turo – On-Demand Economy – Business Model
The great example, Turo, the platform where people can rent the car for the next trip from a private party. The benefits are that the prices are cheaper than regular car rental, moreover, there are a huge variety of cheap and luxury cars that are not available from other rental companies.
Turo solves multiple issues:
- Allows their users to rent cars at cheaper prices.
- Flexibility – the car can be delivered to any city location based on agreement.
- Allows to make money for the users who have an extra car.