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Ride-hailing vs ride-sharing? That’s the question for your new startup. Let’s compare these business models to make a better and fully informed conclusion.
Ride-Hailing vs Ride-Sharing – Concepts, Business Models and Pros & Cons Compared
Ride-hailing and ride-sharing are among the concepts that define the modern sharing economy. However, how are they different from each other and what are the pros and cons of these business models? Let’s figure it out.
Ride-Hailing vs Ride-Sharing – What Is the Difference?
Let’s start by defining two of these concepts, and making sure that the difference between them is quite obvious.
1. Car sharing refers to the situation when you are going to share your car with someone else, following your route. In most cases, car-sharing is a non-profitable initiative aimed at covering fuel expenses only. However, there is a way to earn passive income if you are renting out your car to a car-sharing service.
2. Car-hailing refers to booking a car with a driver asking him to lift you to a certain place for money. Taxi ordering is a classic car-hailing example, however, let’s dive into details.
Car Sharing vs Car-Hailing – the Best Services Providers Examples
So, let’s compare the best car-sharing apps with the ride-hailing ones, and understand the difference in their services and business models.
-Ride-Hailing Services Examples
-Car-Sharing Services Examples
Uber. Uber was one of the first companies that managed to revolutionize taxi services. What is more, the company greatly contributed to sharing economy development, and now its business model is successfully reused in other industries. Car2Go. This is a classical carsharing application example. According to a business model, any driver may rent a car, thereby allowing the company and the car owner to get passive income.
Lyft originated as a taxi (ride-hailing) service, however, now it provides opportunities for ride-sharing as well.
This is a P2P carsharing app, and the essence of the idea is that private drivers rent out their cars for short-term use. Thus, there is no intermediary between the car owner and the one who rents it for a while.
This is a quite traditional taxi ordering app with the only one exception – there is a feature for ordering a karaoke-powered cab. And this is one of the interesting examples of how ride-hailing services providers may boost user experience.
This is an outstanding startup worth mentioning. This company offers travelers who are going abroad to leave their cars at the airport and allow visiting travelers to use it. Thus, the car owners may monetize their car while being on vacation, and other travelers may rent a car at better prices.
Car Sharing and Ride-Hailing Pros and Cons
Both car-sharing and ride-hailing opportunities are part of global transportation services, and they are quite demanded by those who don’t want (or can’t) maintain a personal car. Let’s consider the pros and cons of each approach to find out what is better.
Hint! The better option is those that perfectly suit the goal, place, necessity, and budget.
Car sharing pros
Here are the main reasons why the car-sharing approach is so popular worldwide.
● Low cost. Car-sharing doesn’t have to be costly. Since the trip is shared with other passengers, there is no point in overpricing it. Fuel and maintenance costs only are covered in a case of p2p carsharing, plus a little commission if there is an intermediary company.
● Less pollution. Sharing trips with others means less pollution and conscious consumption of services.
● Less traffic. Logically continuing the previous statement, sharing a car with somebody decreases the amount of traffic.
● More profit. Renting your car out for car-sharing may be the source of additional (passive) profit.
Car sharing cons
● Safety risks. Will you allow anybody with a driving license to ride your car for a while? This is the essence of a car-sharing approach but you may never know whether your car isn’t used for a crime commitment and whether the driver really has enough skills to drive your car safely for other drivers, passengers, and pedestrians.
● Increased maintenance. Renting out your car to be shared with somebody means that your car will be constantly used, and the mechanisms inside will be outworn faster.
● Personal driver and personal trip. Ride-hailing trips are always convenient and personalized – you may choose the pick-up place, the route, the comfort class of your car, and even music you will listen to during a trip.
● On-demand availability. Compared to car sharing, car-hailing services are available 24/7 in any corner of the world. As for car sharing, this option may be not supported in certain locations, and sometimes, it is necessary to book a place in a shared car in advance.
● More traffic and pollution. Logically, ride-hailing services contribute to the increased amount of traffic and environmental pollution. Fortunately, the latter problem is solved with the help of electric cars and other types of eco-friendly vehicles.
● Higher cost. Personalized trips are expected to cost more than shared. However, modern taxi apps allow passengers to choose those tariffs they will be comfortable with.
● Safety risks. Ride-hailing services also have safety risks. Unfortunately, a taxi driver is a job with No.1 murder rate, and there is a direct threat to passengers and business owners too.
Ride-Sharing or Ride-Hailing – Which of the Businesses Is Easier to Start
Should car-sharing or ride-hailing become the business model of your future startup? Well, the answer will be as always, individual. A lot will depend on your initial idea, the presence of strong competitors nearby, the level of public awareness (for example, car sharing has fewer chances to be too popular in Muslim countries), market conditions, and the possible ways to make your service outstanding.
However, there is also a good thing about car-sharing and ride-hailing business. Whatever you choose, you don’t need to invest in a car fleet since you may offer car owners and car drivers to share the car/ offer to give a lift using your platform.
What is more, the recent COVID-19 pandemic influenced the transportation services in a bad way but didn’t stop its development completely. The need for social distancing may be a good motivation for startup initiators to come up with advanced ways of health protection on a trip.
We suggest that there is no point in stating that a car-sharing option is better than ride-hailing, or vice versa. Everything will depend on the preference of the target audience, their goals, solvency, and the worldview. Car sharing is a great way to develop a sharing economy, while ride-hailing is a way to provide users with personalized and eco-friendly trips at a higher cost.