“Car sharing doesn’t work – it’s never worked.”
At first glance that’s a surprising statement to fall from the lips of the CEO and founder of a car-sharing (or to be more precise, journey-sharing) venture. But far from giving up on the concept, Tony Lynch believes that he and his team at UK-startup Faxi have come up with a formula that will gain traction in the UK market. Last week the company announced deals with 10 local authorities to promote a form of journey sharing aimed at clearly defined groups.
Mixing and matching drivers with travellers seeking to get from A to B in the most cost-effective way possible has become one of the most high-profile battlegrounds in the sharing economy. Activity in the UK ranges from the US-based operator Uber (offering what is essentially an alternative to taxi services in urban areas) to Europe’s rapidly expanding ride-sharing venture Blablaba.
But Lynch – who in 2012 sold his Mobcast online book delivery business to Tesco for £6m - sees a problem with existing models and it is this. Ride share companies such as US operator Sidecar and Blablabla put travellers in touch with each other via online marketplaces that allow an individual to post a journey plan and hook up with a driver heading in the same direction. Splitting the journey costs in this way is undoubtedly cost-effective, and possibly also environmentally friendly, but it’s an arrangement that requires a willingness to spend perhaps hours on the road with hitherto unknown travelling companions. “And many people simply don’t want to share with strangers” says Lynch.
Companies such as Blablabla – which has nine million European members – might dispute that statement but it would be hard argue that mistrust of strangers, or at least good old fashioned inhibition, doesn’t represent at least a brake on growth within the car share market.
Flipping that argument on its head, Lynch also argues that informal and reciprocal car sharing arrangements between groups of people who do know each other are also problematic. “What you often find is that 20% of the people do 80% of the driving and there is a certain amount of embarrassment involved because drivers and their passengers find it difficult to talk about how the costs should be split.”
20 Million Journeys
But Lynch sees a potentially lucrative market in facilitating journey sharing for people who both know each other and who share a common interest,social group or activity. He cites examples such as rugby clubs, choirs and school runs where fifteen, twenty, thirty or hundreds of people will typically be meeting at given locations on a regular basis. “What we set out to do was give people the chance to create ‘closed group car sharing networks’,” says Lynch.
For a group or organisation, faxi.co.uk provides the means to post and administer car sharing opportunities within the safe and trusted community of a group of people who are already interacting with each other at some level. Equally important, by administering the ‘share’ online, Faxi removes the politics of organising journeys face to face. Members can see what is available and make a choice as to whether they want to take part.
As such Faxi is aiming to tap into the 20 million regular journeys that Lynch says are occurring every day and he cites a survey by Ford saying 50% would share, it they knew the other parties. “The average journey is 7 miles at 4 pence a mile,” says Lynch. “We will allow drivers to profit from that through while taking a small commission.”
Turning Journeys Into Cash.
Ultimately Faxi plans to monetise those journeys through micropayments but building up a profitable network of closed groups is a long-term objective. In the shorter term, the company has signed deals with UK 10 local authorities, including Camden, Kent, Darlington and Durham, who have agreed to promote the Faxi model via their websites and communications channels to groups, such as people attending evening classes. “Local government has an interest in cutting congestion and pollution, so they are aligned with what we’re doing,” says Lynch. “And what we’ve found is that local authorities are prepared to pay us to use the Faxi platform on a software as a service basis.
In focusing on essential journeys and closed groups, Faxi is hoping to carve out its own niche in car-share market while also deferring to the inhibitions of those who would otherwise be deterred by the prospect of riding with a complete stranger. Success will ultimately depend on the succeeeding in signing up sufficient numbers of consumers.
In the meantime, the company illustrates how new business models are being woven into the evolving ‘sharing economy’.