

E-commerce project: CarAway Rand 60415 Aya Al Jalabi 59604 Tahani Nasir 39589 Joudat Waleed 50031
Introduction Have an extra car? Going away for the holidays? You want to make money? Rent your car. CarAway is a fresh idea where ordinary people can rent their cars and those who need a car avoid the hassle by reducing their search cost. Cars would be available and chosen based on their specifications. Looking at two successful unicorn companies (Careem and AirBnb) businesses enabled CarAway to develop an inspired business model. This includes charging customers a % of the total price, payments online only, how to keep customers satisfied, and how to attract customers to such a concept through marketing. These two reference companies allowed for an estimation of the budget needed to turn this into a successful business. Having a UAE based start up such as Careem helped in understanding the UAE market in where CarAway hopes to operate in.
Mission To change the car rental business and make it a place of convenience, speed, and cost by bringing individual’s and business together to meet their needs. The aim is to enhance customer experience through a user-friendly website and application, which
provides them with all the information they need. Help other’s make money and save money. Building a strong customer relationship by gathering information to make future transactions smoother.
Market Space As of 2017, The United Arab Emirates has been ranked the second safest country in the world (HarpersBazaarArabia, 2017). This entitles it to attract investments and making it a nurturing home for start up companies such as the one and only CarAway. United Arab Emirates is not only a great country to conduct business because of how safe it is, but also for the economic growth that is witnesses every year. Especially for a new concept such as CarAway, individuals in this country have cars that are constantly left idle. This new business would give people that have more cars than they require, or those who do not know what to do with their cars a chance to earn extra income. Also, car rental companies that are failing to become online and would like to earn extra revenue would be able to put their cars up for rent on our website. At the same time, with the growing number of tourists, it provides a hassle free online process of renting a car during your stay.
SWOT analysis: Strengths 1)Unique opportunity and benefits for both tourists and expats: Large target audience Clear competitive advantage and a unique concept for both tourists who are visiting the UAE for a certain period of time and expats who leave the country to go back home in the summer or go on vacation to other countries. Expats account for around 50% of the population in the UAE, and the statistics also show the increasing number of tourists coming to Dubai over the few past years.
2)Clear business model (Based on service fee) Transparency and costs are clear to both hosts and users, creating a stronger bond with our customers and increasing trust. No deceit and both hosts and renters are perfectly aware of what they are signing up for and the costs included. 3)Lower prices than traditional car rental stores
Because we don’t have heavy overhead costs, such as warehouses, rent and low marginal costs for expansion and the hosts do not have to bare any of these costs, they will offer their cars at lower prices than traditional stores.
4)Providing extra income and saving costs for hosts Clear drive for hosts- making money. Easy and hassle free way to make extra money, especially when they leave the country and will not be needing their car. They could also be saving the hassle of worrying about the car’s battery (because it is not being used for a long time) and parking fees, because in the UAE, parking is mostly paid and not even shaded.
5)Low marginal costs As the app grows, the expansion costs will not be too high as it is just a matter of maintaining and debugging the app. 6)Highly personalized We provide a highly personalized experience for both the hosts and the guests: Hosts: Can choose the period they want to rent their car for Can choose how much they want to charge Can choose how they want to charge- amount of days/ amount of miles Guests Can choose what kind of car they want Can choose the time frame that they need a car in Can choose how they want to pay (amount of days/miles)
Opportunities 1)Potential to expand Because it is an untapped market, and we will achieve the first movers advantage we will manage to lockdown the UAE market, we can expand to the GCC also due to low marginal costs and once we have established a brand name we can grow. It will be relatively easy to expand to the GCC, because it was a quite similar market with similar trends and peak holiday periods. The percentage of expats is also very high in the GCC countries and is represented in the diagram below:
2)Growth of mobile device markets Due to the emergence of smartphones and easy accessibility to the internet using phones, the use of mobile phones has exponentially increased over the past years and mobile phones are being used to do nearly everything you can think off. 3)Growth of tourism in the UAE Tourism is a key aspect of UAE’s GDP and they have been very keen on increasing the tourism rates- and it has been quite successful. Therefore the more tourists, the more we can grow. 4)Achieve network effect The more users we have means that more people will put up their cars for rent, and the more options guests will have, allowing us to grow with little or close to zero marginal costs. 5)Partner with tourism related services Partner with airports, or websites such as booking.com so that when tourists purchase tickets to come to UAE or when citizens leave the country, they are asked if they are interested in renting a car or renting their car like shown below:
Weaknesses 1)Not recognized brand name When we first launch, the brand name will not be recognized but then we will launch campaigns and advertisements to raise awareness and build our presence.
2)Idea can be easily imitated Since the market entry is relatively easy and the business model is clear, it can be easily copied. But if we manage to build a strong presence and loyal customers then the switching costs will be high. 3)Experience is inconsistent Because we are dependent on the hosts, someone who uses our services will deal with different people every time they rent a car, the experience may not be consistent. Threats 1)Future competitors Because the idea can be easily imitated, we might face competition in the future with copycat companies. 2)Compete with well established traditional car rental stores It will be difficult to compete with well established brands and a much more traditional concept of renting a car but we will have a price advantage because we will offer cheaper prices.
Business Canvas Analysis: Value proposition Caraway is a car rental website which enables its users to search through real, live-time listings across the UAE. It provides convenience at good prices along with low cost of transportation and safety. Revenue The hosts pay Caraway a fee to put it on their website/app. Along with a commission of a percentage of 10 % from hosts upon every booking Hosts (people who offer their cars for rent): earn revenue by renting their cars out to our guests. Guests (people who will rent the cars offered by the hosts). Cost The cost would include funds to keep the websites and apps functioning and updated. Caraway must also pay salaries to their employees. They also have marketing costs. Technological setup and running costs to make sure the app is always updated with the timely options. Lastly, payment to freelance photographers Key Partners The owners of the cars are our major partners, as they basically provide the main ingredient of our whole service. Investors, who will make sure that our business receives the start-up capital it needs. Insurance firms, who will ensure that host cars are secure from any damage costs. Photographer who will take standardised pictures for our portal. And lastly, payment processor, which include online payments. Key Activities
Ensure the cars are of the same quality as stated by the owners, in order to build guest trust. Quick Response to any complaints from either the customers or the owners, making sure our customer service is at benchmarked levels. Keeping an updated record of all transactions. Product development & management, building host network and managing hosts and building travellers network and managing guests. Key Resources Our website and app are one of the major resources along with the cars of the hosts. Our employees will play an important role. The database which will include data collected. Our digital platform. Customer Relationships To have good customer service; hence being able to respond to customer complaints. The database allows them to send customers updates on offers of cars they are interested in. Collecting reviews and feedback through mobile application, social media platforms and accounts. Customer Segments We will be targeting based on demographic such as those above 18 that have a valid driver’s license. Also targeting different segments based on income. Consumers who do not own a car, consumers who are looking for an economical way of transportation along with tourists. In addition to hosts who either have an extra spare car or are going on vacation and want to make the most out of it can put their cars up. People who love to travel and want to transport comfortably at a cheap price. Channel As we are an e-commerce business, the media that Caraway will use to reach its customers and send updates is their app. Also they will use social media accounts to become more
engaged with their audience in addition to the website is also very informative and use friendly.
Value Chain The Value chain is a plan that enables a firm to add value to the customers, meet their needs, and keep them satisfied. It is the process that includes secondary and primary activities. Secondary Activities o Human Resources – CarAway will heavily rely on their employees in order to keep customers satisfied. This will require choosing the best employees that meet the organizations culture, so they fit and feel comfortable. CarAway will provide a safe work environment, to increase productivity and motivation, and decrease the turn over rates of employees. This would be attainable by hiring like-minded people that would get along. This would require having a constant call center to solve any disputes, Information Technology personnel, an excellent accounting and finance department that would enable CarAway to manage their cash flows. o Technology Development – Since CarAway operates mainly online, it would require a top class Website and Application. These would need the basic functions to make it easy to use, easy to navigate, easy to read, eliminate redundant clicks, contain the needed information, and would need constant maintenance. CarAway would also like to build a strong customer database in order to send personalized e-mails to their customers, therefore, they would need to have a good analytical program and a place for information storage.
o Procurement – the things CarAway would need in order to become successful is an efficient website and mobile App. They need a call center that can communicate with customers, and good knowledge of their customers needs. However, they do not require many items for them to operate, except a strong hardware and software. o Infrastructure – CarAway would at the beginning have a limited infrastructure since the number of employees is limited. There would be a marketing and sales, finance and accounting, tech-savvy personnel, a manager to oversee the process, and employees to handle the call-center. Primary Activities o Inbound logistics – Suppliers of cars would be the main inbound activity. However, CarAway does not provide products or turn raw materials into final products. It purely provides a service to its customers. CarAway will receive orders, and upload the cars on the website along with pictures, price, and product information. o Operations – to manage their website and mobile application, constantly ensure that it is updated in terms of information and adds value. To ensure that the cars put up on the website are truthful representation of the actual vehicle. CarAway should also keep track on where the car is, was it delivered on time, if there is any damage to charge the renter. CarAway needs to also keep an eye on the privacy policy and keep the customer information that was collected private. o Outbound logistics – There would be no final product made by CarAway. On the other hand, the cars that will be up for rent will be distributed by the
communication between the renter and the guest. They will co-ordinate and decide on a place and time for pickup and delivery. o Marketing and Sales – this activity is one of the most vital for the success of CarAway. Since the idea is new, and it requires a lot of thought to rent out your car to strangers. People would require heavy informational ads to ease the car owners into it. This would be costly but effective in reaching consumers and persuading them. CarAway’s marketing campaign would be targeting those planning to visit the UAE on social media, our partners (booking.com), on television, and banners around the UAE. This is to reach a wider audience and attract more customers to build a strong customer base so we always have a good supply of cars to meet the demand at peak seasons. o Services – After the transaction has been made, CarAway hopes to get feedback from its customers. It would also have a complains section on their website and a call center. We would also be asking through pop-ups on the application to see if their transactions are running smoothly or not.
Scheduling & budgeting Scheduling Scheduling is basically planning the time frame and setting different objectives at different points in time to achieve what needs to be accomplished. In this scenario, the primary objective is to launch a website and a mobile application, CarAway, a carrental service, by the 1st quarter of the year 2018. August – September 2017: Market research on the kind of things customers would prefer, what is the acceptance rate of an idea as such, what kind of campaigns need to
be raised for customers to be persuaded. This would be done through online surveys and questionnaires. September – October 2017: Generate ideas for website and app interface, design logo, home page, landing page, transaction page, website in general. October 2017 –December 2017: Develop the website and application – CarAway will not be outsourcing either the building of their platforms or managing it. January 2017 – February 2018: Build awareness by advertising on digital platforms, outdoors and generate a database for email marketing. February 2018: Testing process – the testing process would require individuals to try out the website and application to see if it is user-friendly or not. If there are issues with the website and it needs bugs to be fixed, this is the stage it will occur. March 2018: Launch/implement the e-commerce platform Budgeting Budgeting is a crucial element of a business plan, which allows to give us a rough idea as to how much funding a new startup would need and where these funds will or should be invested to garner a fruitful product or a service. For these investments to be made achievable, CarAway would be raising capital in two ways: Seed Capital and Angel Investors. Below is a list of expenditures and the breakdown that will be done with the funds that we will be able to gather and these are a set of activities that should be carried out: Website development – AED 300,000 Mobile app development – AED 100,000 Marketing research – AED 150,000 Administrative costs – AED 50,000/month Advertising/Marketing – AED 500,000
Office rental cost – AED 60,000/year Salaries: UI developer - AED 6,000/month Content writer – AED 5,000/month Database architect – AED 6,000/month Business development executive – AED 5,500/month Marketing executive – AED 6,000/month Graphic designer – AED 6,000/month Social media executive – AED 5,000/month Finance and accounts executive – AED 6,000/month Customer service agent – AED 4,500/month
Industry analysis – Porter’s 5 forces model Porter’s 5 forces model, developed by Michael E. Porter in the year, 1979, is basically a strategic list of components that should be looked into before launching a venture, company or an organization. It allows for assessing the market situation in terms of competition, external threats and a thorough review of the potential suppliers and buyers.
Bargaining power of buyers: Basically, this is the power or the command that the consumers hold in driving down the prices of the products or services on offer. It primarily depends on the size of the market of buyers and how changes in prices may affect them and how they would react to it. However in this scenario, buyers are the consumers who are looking to rent a car from other consumers, better referred to as, hosts. Hence, in this case, consumers may opt to rent a car in a traditional manner, which is physically going to a rental store and renting out a car or they can just use the application or the website of CarAway to navigate as to which car they would like to rent out, making it completely hassle free. So therefore, the bargaining power in this context is moderate as consumers can make a decision whether they want to
enjoy a hassle free process of renting out a car or they would like to complete the process in a more conventional manner. Threat of substitutes: This is a situation wherein other alternatives or substitutes of a product or a service exist in the market. This is definitely deemed a threat as higher competition may mean less revenues and profits; therefore, this is a very important strategic component of Porter’s 5 forces model. In this scenario however, there aren’t a lot of substitutes that tend to provide the same hassle free journey and service such as CarAway, but switching costs are pretty low and any competitor may arise to become a threat by operating a similar business model. However, there are a few ecommerce companies that perform similar kind of activities such as RTA’s ekar. Ekar is basically a service that has its cars parked in strategically researched places such as tourist spots and through a mobile application, consumers can check out these cars but they are expensive to rent out. Other similar services that are provided in the UAE are in the form and shape of Careem and Uber, which is more like a taxi service but on the consumers’ own convenience. Moreover, some consumers, who do not trust Internet or e-commerce, may adopt a more traditional approach of renting out a car from a physical rent a car company, which are located abundantly throughout the country. Bargaining power of suppliers: This is the power that the suppliers hold in terms of driving up the prices of products or services they may offer. In this context, suppliers are the consumers who are in a position to make their cars available for others to rent out. Therefore, the power of suppliers in this scenario is moderate as if they may feel that the price they set for their car is low, they may not want to rent it out. Moreover, they may not be comfortable in renting out their personal cars to consumers who they may feel aren’t trustworthy or good drivers. However, through this e-commerce
platform, consumers have the opportunity to make an extra amount of money by Discussed in the paper
putting up their cars for rentals. Threat of new entrants: This is basically about potential threats of new ventures that may come into the market with heavy capitals and better business models. Therefore, in this scenario, the threat of a new entrant is high as e-commerce generally has low barriers to entry, which means that anyone can start up a new venture easily as there aren’t many restrictions. Rivalry among existing competitors: This force is primarily about the market size and how many competitors are already in a competition in a specific industry or market. However, as mentioned earlier, in this context, there aren’t any competitors that offer the same kind of service so hence why, CarAway has differentiated itself from companies offering a more conventional service. Therefore, there isn’t much of a rivalry among competitors per se.
Checklist of Business Canvass Value Proposition Assessment
Evalu ation
Our value propositions are well aligned with customer needs.
1 2 3 4 5
Must customize vehicles
Our value propositions have strong network effects.
1 2 3 4 5
Were the only business doing this
There are strong synergies between our products and services.
1 2 3 4 5
Our customers are very satisfied.
1 2 3 4 5
Comments
Our database and provided call centers
Revenue/Cost Assessment We benefit from strong margins.
1 2 3 4 5
Our revenues are predictable.
1 2 3 Depends on demand and supply of cars 4 5
We have recurring revenue streams and frequent repeat purchases.
1 2 3
Our revenue streams are diversified.
1 2 3 4 5
Our revenue streams are sustainable.
1 2 3 % of total payment, unless no demand or supply 4 5
We collect revenues before we incur expenses.
1 2 3 4 5
We charge for what customers are really willing to pay for.
1 2 3 4 5
Our pricing mechanisms capture full willingness to pay.
1 2 3 We don’t set the pricing 4 5
4 5
Either by miles driven or by rent length
Yes because of online payment
Our costs are predictable.
1 2 3 4 5
Our cost structure is correctly matched to our business model.
1 2 3 4 5
Our operations are cost-efficient.
1 2 3 4 5
We benefit from economies of scale.
1 2 3 4 5
We don’t own physical cars
Key Resources/Activities/Partners Our key resources are difficult for competitors to replicate.
1 2 3 4 5
Resource needs are predictable.
1 2 3 4 5
We deploy key resources in the right amount at the right time.
1 2 3 4 5
We efficiently execute key activities.
1 2 3 4 5
Our key activities are difficult to copy.
1 2 3 4 5
Execution quality is high.
1 2 3 4 5
Balance of in-house versus outsourced is ideal.
1 2 3 4 5
We are focused and work with partners when necessary.
1 2 3 4 5
We enjoy good working relationships with 1 2 3 key partners. 4 5
Customer Segment/Channel/ Relationship
1 2 3 4 5
Our partners are our strongest asset
Customer churn rates are low.
1 2 3 Substitutes 4 5
Customer base is well segmented.
1 2 3 4 5
We are continuously acquiring new customers.
1 2 3 4 5
Our channels are very efficient.
1 2 3 4 5
Our channels are very effective.
1 2 3 4 5
New idea so customer base will expand
Reaches the right audience when needed
Channel reach is strong among customers. 1 2 3 4 5 Customers can easily see our channels.
1 2 3 4 5
Channels are strongly integrated.
1 2 3 4 5
Channels provide economies of scope.
1 2 3 4 5
Channels are well matched to customer segments.
1 2 3 4 5
Reach them based on their segment and needs
Strong customer relationships.
1 2 3 4 5
Self-service
Relationship quality correctly matches customer segments.
1 2 3 4 5
Hassle-free
Relationship blind customer through high switching costs.
1 2 3 They can go to other rentals, but people who want to rent 4 5 cant
Our brand is strong.
1 2 3 4 5
First movers advantage
(Ref: business Model Generation by Osterwalder & Pigneur, 2010)
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Web Development Cost / Rate Comparison - Different Types of Custom Web Application Companies. (n.d.). Retrieved from Comentum website: http:// www.comentum.com/web-development-cost-rate-comparison.html