The proliferation of apps has led consumers to demand convenience and ease of use, with access to services whenever they want and wherever they are.
From grocery and food delivery to meeting with a doctor or healthcare provider remotely through digital channels, consumers increasingly place a premium not just on the ability for their needs to be met instantly but also on the breadth and depth of choice available to them as part of these on-demand services.
Many consumers favor exclusive, hard-to-get items over mass-produced ones and choose affordable, customized experiences over commoditized or one-size-fits-most options.
Also, the rapid increase in flexible work arrangements and working from home is leading more and more individuals to start businesses and supplement their income by utilizing their skills and providing access to assets they already own.
These trends can very well be seen in the mobility sector. The ability to access services anywhere, anytime, through mobile devices and connectivity has rapidly expanded the availability of mobility choices for consumers.
Shared mobility services have now become firmly integrated into global urban transportation systems. Car sharing, scooter sharing, bike sharing, ride sharing/transportation network companies (TNCs), and other systems now offer urban travelers access to transportation services that had long been only possible through personal vehicle ownership.
To leverage these trends, Turo has built the world’s largest car-sharing marketplace where guests can book any car they want, wherever they want it, from a vibrant community of trusted hosts.
So as strategy enthusiasts, we decided to break down the business model & marketing strategy of Turo. We will also learn how Turo works, makes money and who are its major competitors.
What is Turo? How does Turo work?
Turo, founded in 2010, is an American company based on a peer-to-peer car-sharing business model. The company allows private car owners to rent out their vehicles via an online and mobile interface in over 56 countries.
Turo is the world’s largest car-sharing marketplace, where guests can book any car they want, wherever they want it, from a vibrant community of trusted hosts. As of September 30, 2021, Turo had over 85,000 active hosts and 1.3 million active guests worldwide participating in its marketplace.
Turo, till 2021, operated primarily in cities across the United States, Canada, and the United Kingdom, allowing guests to choose from a wide selection of nearby vehicles while hosts can earn extra money to offset the costs of vehicle ownership.
Whether they’re flying in from afar or looking for a car down the street, searching for a rugged truck or something smooth and swanky for a once-in-a-lifetime event, guests can take the wheel of the perfect car for any occasion, while hosts can take the wheel of their futures by sharing their underutilized personal vehicles or building an accessible, flexible, and scalable car sharing business from the ground up.
Turo is pioneering a new transportation category, advancing the next era of personal mobility by connecting consumers with an unrivaled network of privately owned vehicles.
Cars remain the preferred means of transportation for short-, medium-, and long-duration trips across various use cases, but traditional mobility options do not provide adequate and efficient access for consumers to vehicles.
The peer-to-peer car-sharing opportunity Turo delivers to consumers provides a more convenient, economically efficient, and environmentally and socially responsible way to access an extraordinary selection of vehicles compared to traditional car ownership and car rental.
Turo’s platform unlocks peer-to-peer car sharing through technology that connects hosts and guests and enables them to transact in a trusted, safe environment. Turo has three categories of hosts:
- Consumer hosts, who typically share one or two cars intending to offset the cost of car ownership;
- Small business hosts, who typically share three to nine cars, intend to generate a secondary source of income; and
- Professional hosts, who typically share ten or more cars, are often their primary income source or part of an existing business and invest in building scalable, accessible, and flexible companies.
With Turo, hosts can quickly list vehicles, adjust their availability, and dynamically modify prices to access the unique demand patterns in their market. Guests can search by location, type, price, use case, and many other categories to find the perfect vehicle for their needs.
Turo’s platform supports a variety of use cases — from the minivan for the family road trip to the convertible for the long-awaited beach getaway or a simple vehicle for escaping the city grind.
Built-in messaging, payments, fraud detection, the proprietary Turo Risk Score, and host and guest protection plans are designed to deliver a safe transaction and experience for Turo’s community. Moreover, Turo offers protection plans for hosts and guests that are integrated into the Turo experience.
Turo works on its proprietary algorithm called Turo Risk Score that collects data on trips, vehicles, and other activities of hosts and guests on the platform to dynamically adjust the Marketplace Fees that Turo charges guests to complete a booking.
How does Turo make money? What is the business model of Turo?
Turo has built an asset-light business model as it owns no vehicle. It’s like Uber for rentals.
How does Uber work & make money | Business Model
Value proposition
Hosts:
- Income Generation: Hosts are empowered to transform their assets into earning engines, dramatically improving the economics of car ownership without needing to spend hours behind the wheel to monetize their assets. Hosts of all sizes have made more than $1.1 billion in the aggregate on Turo since its inception.
- Scalability & Flexibility: Hosts can choose how often to make their car available and at what price and value the ability to earn income or offset the cost of car ownership around their personal needs and interests.
- Safety: Turo insures all its bookings. Turo reimburses the host for eligible repairs up to the car’s actual cash value.
Guests:
- Access and availability: Guests get access to a vehicle when and where they want it, without the need for ownership, for a spectrum of budgets.
- Choice: As of 2021, Turo has over 1,300 makes and models available on its platform, ranging from a truck to a swanky exotic for a luxurious weekend away to a classic cruiser for a picture-perfect road trip.
Growth Flywheel
Turo’s platform benefits from the self-reinforcing value proposition between hosts and guests. Hosts engage with Turo due to the unique income generation opportunity, becoming increasingly engaged as they earn more.
As existing hosts grow and new hosts join, Turo’s value proposition to guests strengthens as guests have access to a unique selection of vehicles in more locations.
The unique inventory of vehicles spurs organic, word-of-mouth growth and repeats the behavior. An increase in demand leads to more significant income opportunities for our hosts, further strengthening the host value proposition and, in turn, encouraging existing hosts to grow and new hosts to join.
Lyft Business Model: Improving lives through transportation
As Turo scales, the guests book more trips which Turo leverages to generate data that powers its machine learning algorithms, such as data-driven pricing, search results ranking, and vehicle recommendations.
These algorithms improve the host and guest experience and make the business model of Turo more profitable, resulting in reinvestments to further enhance user experience and propel growth.
How does Turo make money: revenue model
Turo made $150 Million in 2020, representing a 6% growth from $141.7 million in 2019. For the nine months that ended September 30, 2021, Turo generated net revenue of $330.5 million, representing 207% growth from $107.8 million for the same period in 2020.
Turo primarily makes money from fees charged to both hosts and guests to complete a booking on its marketplace, or Marketplace Fees, and for value-added services such as protection or Value-Added Services Fees.
Guests: For each booking, the amount Turo charges the guest consists of the vehicle price, a Marketplace Fee, and a Value-Added Services Fee (primarily for protection services).
Hosts: For each booking, Turo charges the host a Marketplace Fee based on a percentage of the vehicle price chosen by the host. In addition, hosts pay a Value-Added Services Fee for items such as reimbursement for physical damage to their vehicle.
Turo: Turo finally makes money by retaining a portion of the fees charged to guests, with amounts owed to hosts and local authorities as taxes.
The table below shows the components of an illustrative one-day booking:
Turo Competitors
Turo’s biggest competitors are BlaBlaCar, Flexcar, Getaround, Maven, HyreCar, Uber, Lyft, and Hailo.
Competition for hosts
Turo competes to attract and retain hosts who share their vehicles on our marketplace, as hosts have other options should they choose to generate income from car sharing.
Turo believes its marketplace is more valuable to hosts than other peer-to-peer car-sharing platforms due to greater guest demand, broader geographic footprint in the United States, ease of onboarding, host tools and services, strong brand, and a trusted community.
Competition for guests
Turo competes to attract and retain guests, who have a range of options to find and book vehicles. Turo’s primary competitors are in the long-distance and long-duration automobile transportation space, including:
- Peer-to-peer car-sharing competitors in the United States, such as Getaround, Inc., or Getaround, and ANIHI Newco, LLC (doing business as Avail), both of which offer peer-to-peer car sharing and own their fleets of vehicles to rent, as well as Hiyacar Limited and Getaround in the United Kingdom; and
- Car rental companies, such as Avis Budget Group., which operates Avis and Budget; Hertz Global Holdings., which operates Hertz, Dollar, and Thrifty; and Enterprise Holdings., which operates Enterprise Rent-A-Car, National Car Rental, and Alamo Rent-A-Car; Fox Rent A Car; HyreCar; Silvercar, Inc.; Sixt Rent A Car; and rental options available through TNCs such as Uber, and Lyft.