Travelling of the internet has also brought many

     Travelling
around the world has not only become easier, but also significantly cheaper in the
past decade. Firms such as Locomore, Flixbus or Ryanair offer low-cost rides or
flights to continents all over the world for affordable prices. Especially in
recent years, along with the increasing importance of globalization and digital
business, being able to flexibly change locations, whether internationally or
not, is more important than ever. Besides travelling, the relevance of the
internet has also brought many entrepreneurs to start a digital business.
Facebook for example, the most popular social media platform, made
communication much more accessible and flexible. Many aspects of these social
media networks are an important part of today’s car sharing platforms.

Using a network as an online platform to exchange
resources among users emerged in 2001 under the term “Web 2.0”. The development
and growth of the Web 2.0 promotes online collaboration and enables users to
share all kinds of intangible or tangible resources online (Kaplan &
Haenlein, 2010). While this invention opened the path to various projects based
on collaboration such as Wikipedia.org to name a more prominent site, this
paper’s focus lays on the “Sharing Economy”. As Guttentag (2013) stated, this term
refers to the collaborative consumption of privately owned assets, which can
range from short-term rentals of private living spaces (Airbnb.com) to renting
private cars (Zipcar.com), power tools (Toolsity.com), or even sharing the
costs of long-distance car-rides. Platforms that are part of the Sharing
Economy are usually based on a peer-to-peer system allowing direct contact
between supplier and demander (Fraiberger & Sundararajan, 2017).

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The core idea behind ridesharing is that people share
a vehicle and most commonly travel mid- to long-distances by car together. The
involved costs such as gas are being split upon the passengers. This provides a
more flexible and fast trip to the desired destination. The price for a trip
depends on its specifications. However, it is said that the costs for a ride
are usually lower than when one would travel by bus (Farajallah, Hammond &
Pénard, 2016). One firm in that industry is the French company BlaBlaCar
founded by Nicolas Brusson, Frederic Mazzella, and Francis Nappez in 2006.
BlaBlaCar is a ride sharing platform based on Web 2.0 technology with social
media elements (Casprini, Paraboschi & Di Minin, 2014).

So far, “Sharing Economy” functions as a collective
for the online peer-to-peer exchange of goods and services. However, the
increasing relevance of online collaboration in our today’s lives along with
further technological development, the number of start-ups with various
business models that are entering the Sharing Economy is becoming greater as
well. This diversity requires further categorization since the firms can differ
by a lot.

This literature review assesses the extent to which
BlaBlaCar contributes to the Sharing Economy. First, the company’s business
model and core activity will be presented in depth. Furthermore, the relation
to the Sharing Economy and the platform’s placement in it will be studied in
detail. Thereafter, benefits of ridesharing and the company’s ability limiting
regulations will be presented. The final section of this paper will end with the
conclusion.

 

I.               
Theoretical Framework

As Mittal (2017) summarized, BlaBlaCar is the world’s leading
long-distance ride sharing community consisting of almost 40 million members that
offers a platform with the goal to link car drivers with empty seats and
passengers looking for a ride in exchange for some money. It is important to
mention beforehand that none of the participants have a work relation with the
company. Supply and demand match as follows: owners of cars who are about to
travel a long distance can offer their ride online and specify the route including
possible stops, price, date and seats available. Potential co-travellers can
then contact the car owner on BlaBlaCar’s platform via chat or call them by
phone if questions arise. Currently valued at around $1.5 billion (2017), the
company has recently expanded its reach to 19 countries across Europe as well
as in India, Brazil and Turkey.

Mittal furthermore explains how BlaBlaCar helps passengers
saving around $250 million per year. While both driver and co-passenger benefit
from the travel costs that are saved, not only the people in the car but also
society benefits from car sharing. Using BlaBlaCar creates a positive
externality by increasing the average number of passengers in a car from 1.7 to
2.8 causing a reduction in traffic and reduced air pollution (Furuhata et al.,
2013).

Platforms in this domain usually make use of so-called
network effects, which means that a platform’s value increases with the number
of its users which in turn provide more input (Donelan, Kear, & Ramage,
2010). Besides, as Casprini et al. pointed out, BlaBlaCar also makes use of
network effects. Generally said, network effects arise when the value of market
increases with the amount of its users (Farrell & Klemperer, 2006). In the
French company’s case the value for the potential passengers increases with the
number of drivers that offer rides. The same is true vice versa: with an
increment in the number of users the driver is more flexible and is likely to
find suitable co-passengers at more times. Another incentive for using the platform are the
non-existing transaction costs. As many companies only charge on the condition
of a trade occurring the advertisement and therefore transaction costs are
minimized (Teubner & Hawlitschek, 2017). Similarly, BlaBlaCar takes
commissions of around 15-20 percent on every ride for using the platform.

However, Online peer-to-peer platforms require a
certain degree of trust between the participants. As Möhlmann & Geissinger
(2018) analyse, digital agency platforms consist of at least three entities
that are part of the trust relationship: supplier, buyer and the platform
provider. In this context, BlaBlaCar acts as an intermediary trying to ensure
fluent transactions and safe mediation. The latter is achieved by the
involvement of a bi-directional rate and review function on the platform where
drivers and passengers can rate each other. A high rating implies that the
respective participant is trustworthy and safe to drive with. In addition to
improving the trust relationship among users, BlaBlaCar also offers services
such as roadside assistance, additional insurances, legal advice and return
delivery of lost items in order to strengthen the trust relationship with the
community (Albinsson & Perera, 2018). It furthermore inherits social media
technology as a source of business model innovation and offers its community
social media features such as chats (Casprini et al., 2014).

To analyse what makes BlaBlaCar unique and further
explore its relations to the Sharing Economy we first distinguish their
platform from other companies that have already established themselves as part
of the Sharing Economy. Uber will be used in this example as the company is
operating in a similar business. One difference is the pricing system the
company is using. Its decentralization allows the drivers to decide upon the
price they want to charge for the rides they offer. Adjacent to that, Uber’s
business model operates with a centralized pricing system meaning that
essentially the price is the same for any driver offering a specified route and
time (Farajallah et al). Farajallah et al. also argue that this causes a broad
variety in prices, which stresses the importance of social skills or experience
that in the end determine the prices. However, in contrast to Uber where
passengers can order a ride, passengers on BlaBlaCar’s platform must orientate
themselves toward the ride supplier’s date, price and trip specifications
making it less flexible. Even though the pricing system is decentralized, there
are certain limits and regulations. BlaBlaCar introduced a price color scheme
in 2012 whereas the color implies the reasonability of a car driver’s set
price. Further distinction can be made by looking at the pay-off for the respective
car drivers. Unlike Uber, Farajallah et al. underline that BlaBlaCar is meant
to reduce the costs of a trip and is therefore considered as a not-for-profit
ride service which emphasizes the communal character of the platform. Upper
bounds for prices set by BlaBlaCar prevents drivers seeking profits from
charging too much. A driver can therefore only set the price up to 50% above
the recommended price by BlaBlaCar. However, since the driver is only receiving
a compensation for the travel expenses and not really a profit they don’t have
to make changes in their insurances or pay taxes since no profit is involved (Rose
& Wheeler, 2017).

The differences mentioned above and the fact that
BlaBlaCar and Uber are no direct competitors arises the question whether they
can be part of the “same” Sharing Economy. Constantiou, Marton and Tuunainen
(2017) divide the Sharing Economy into 4 Models: “Chaperones” (High rivalry,
Loose control), “Franchisers” (High rivalry, Tight control), “Gardeners” (Low
rivalry, loose control), and “Principals” (Low rivalry, Tight control). The
paper assigns BlaBlaCar to the model of the Gardeners, which consists of low
standardization and non-dynamic but rather categorized pricing that shapes a
non-rival landscape among the supply-side of participants because their services
are being offered for compensation and not for profits. Competitive advantage
is generated by active collaboration of the community. On the other hand, Uber
is categorized in the Franchisers model which is characterized by the platform
owner having total control over the service such as the pricing of the rides
(Constantiou, Marton & Tuunainen). This shows how different the business
models in the Sharing Economy can be.

Unlike other companies in the Sharing Economy,
BlaBlaCar has not yet had problems with violating regulations. In fact,
BlaBlaCar got sued in 2015 by a bus company for unfair competition, which
eventually resulted in BlaBlaCar being judged not guilty as the platform solely
acts as an intermediary and does not actually offer transportation services
(Keating, 2017). Furthermore, the drivers are not employees of the company.

The emergence of BlaBlaCar created a new type of
market. A market where the participants do not make any profit but rather enjoy
the benefits of flexibility and expense compensation (Casprini et al.). This
brought the company considerable success in recent years. BlaBlaCar employs 550
people around the globe and is constantly seeking for global expansion (Rose
& Wheeler). Along with the number of countries BlaBlaCar is present in, the
platform’s valuation is increasing as well ($1,5 billion). 

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