BlaBlaCar: bringing fairness, freedom and fraternity to the world of travel
BlaBlaCar is an online inter-city ridesharing platform that connects drivers and passengers who need to travel on the same route and that are willing to share the cost of the journey. Each driver posts the itinerary and the price for a ride on the app and interested co-travelers can book a seat.
Founded in France in 2006, BlaBlaCar is the largest long-distance ridesharing platform with a $2bn valuation and 100 million members1. It operates in 22 countries where it counts more than 25 million travels per quarter.
The founder Frederic Mazzella came up with the idea of a ridesharing platform after failing to book a train ticket to his family home for Christmas. He eventually secured a ride with his sister, and while traveling he noticed that most of the cars on the highway had few passengers. Hence, he thought:
“If I put all those cars with empty seats, in a search engine, such that people can search the available seats in those cars, just like they do while booking a train.”
How does BlaBlaCar create value?
BlaBlaCar creates value by connecting riders with empty seats with passengers looking for inexpensive travels, especially if last minute. For both users (driver and passenger) the incentive is represented by cost-sharing, rather than profit3. To ensure that car owners do not make a profit, the price per trip cannot exceed a ceiling set by BlaBlaCar. This ensures an element of trust in the community, which is further strengthened by a system of reviews and ratings that form the D.R.E.A.M.S. framework4, summarized in Figure 2.
Nevertheless, providing an opportunity to save money isn’t the only way used by BlaBlaCar to create value. The company also aims at turning ride-sharing into a social experience and a source of reciprocal enrichment for travelers. Compared with all the other means of transportations, BlaBlaCar allows its users to identify persons to travel with. Therefore, users are psychologically ready to interact with travel-mates.
The results of the study “Bringing People Closer” conducted to assess the social impact of BlaBlaCar carpooling confirmed the validity of this intuition. The company found that 84% of its members gained knowledge whilst carpooling, whilst 76% of members have felt useful to others by listening or exchanging5.
How does BlaBlaCar capture value?
Today the main revenue stream is represented by service fees paid by the passengers. Service fees represent approximately 10%-20% (depending on the country) of the total cost set by the driver6. Nevertheless, in the first years after its foundation, BlaBlaCar didn’t charge a service fee with the aim of boosting the initial growth of the community through a cross-side network effect. In fact, large pools of drivers and riders were necessary to ensure value creation for both passengers and drivers. The larger the volumes of drivers, the greater the chances of finding a driver who is making the desired trip at the right time. Conversely, the larger the number of passengers, the greater the chances that a driver will find passengers for the ride.
This pricing strategy is still used to enter the market in a new country. When BlaBlaCar launches its services, no commission is charged to drivers and passengers. As the service becomes more popular and network effects kick in BlaBlaCar starts charging for its matching service.
Like many other platforms, BlaBlaCar needs to address the risk of disintermediation. Since a significant number of long-distance travelers is represented by frequent travelers of the same route, the risk of the establishment of a long-term relationship between drivers and passengers is high. BlaBlaCar tried to reduce this threat by enhancing the value of conducting the transaction on its platform7. This is in part achieved through a combination of monitoring activities and provision of optional insurance, aimed at making the ride-sharing experience on BlaBlaCar safer than an informal “hitchhiking”. For instance, BlaBlaCar sells third-party insurance coverage to its drivers to protect them against civil liability and damages. “Complementary partnering” with insurance companies also provides an additional revenue stream7. Companies that benefit from accessing the BlaBlaCar customer base are in fact charged a referral fee for each insurance contract sold through the app.
In 2018, BlaBlaCar broadened its shared mobility offer beyond ride-sharing. The company began integrating bus rides into its marketplace, working with third-party bus carriers or directly acquiring bus companies. Creating bridges between multiple businesses and proposing complementary mobility solutions on a single platform is part of BlaBlaCar’s global strategy to build a multimodal transport network to respond a greater diversity of passenger needs.
References:
1. BlaBlaCar Company Profile: Valuation & Investors | PitchBook. Accessed March 4, 2022. https://pitchbook.com/profiles/company/54112-06#overview
2. Saxena D, Muzellec L, Trabucchi D. BlaBlaCar: Value creation on a digital platform: https://doi.org/101177/2043886919885940. 2020;10(2):119-126. doi:10.1177/2043886919885940
3. How BlaBlaCar works: Business Model and Revenue Streams. Accessed March 4, 2022. https://insights.daffodilsw.com/blog/how-blablacar-works-business-model-and-revenue-streams
4. Entering the Trust age – BlaBlaCar. Accessed March 4, 2022. https://blog.blablacar.com/trust
5. Bringing People Closer – BlaBlaCar. Accessed March 4, 2022. https://blog.blablacar.com/newsroom/news-list/study-social-impacts-carpooling
6. Farajallah M, Hammond RG, Pénard T. What drives pricing behavior in Peer-to-Peer markets? Evidence from the carsharing platform BlaBlaCar. Inf Econ Policy. 2019;48:15-31. doi:10.1016/J.INFOECOPOL.2019.01.002
7. Casprini E, Di Minin A, Paraboschi A. How do companies organize nascent markets? The BlaBlaCar case in the inter-city shared mobility market. Technol Forecast Soc Change. 2019;144:270-281. doi:10.1016/J.TECHFORE.2018.01.012
Super interesting post, Sebastiano. I find it amazing how BlaBlaCar has carved out such a unique model relative to the larger, more common ride-sharing platforms like Uber and Lyft, by virtue of its cost-sharing approach for drivers. The value creation drivers and the value capture potential for the network clearly have influence over one other.
I’m curious to what extent the company has thought about scaling outside of its current market. Is there a larger opportunity to leverage BlaBlaCar’s platform outside of long-distance carpooling trips? For example, would the company ever consider shorter-distance trips, and begin competing with Uber and Lyft, or would this create too much complexity in finding drivers / riders at scale with similar starting / ending points?
I have never used BlaBla car but been absolutely fascinated by how it works and its benefits to both drivers and riders so thanks for sharing more information about this! I’m wondering if there might be natural barriers to geographic expansion for BlaBla car given safety/trust challenges in different cultures despite the existence of Lyft/Uber. I’m thinking specifically of my country, India – where I would be hard pressed to think of someone comfortable with such a model. Not to mention, I think a big regulatory risk is thinking of the physical safety – especially of female passengers – and who the legal liabilities and risks reside with.
What an interesting company, thank you Sebastiano. You touched on a number of concerns I had about the company while reading the introduction, such as customer safety and disintermediation. While third-party insurance is a clever way to bring a new marketplace onto the app, I would still have safety concerns similar to what Snigdha mentioned, and even beyond to harassment or simply unwelcome or uncomfortable conversations. However, I’m sure that ratings go a long way toward mitigating this. You also mentioned the risk of disintermediation, which is possible but perhaps less likely due to the cost-sharing (rather than profit) model. Great post!
Very cool read, Sebastiano!
I always wonder to what extent to companies perform psychological studies and studies to predict how humans would interact, so it’s great that you wrote about Blablacar’s studies.
I wonder how their results varied across different countries.
What are your thoughts about Blablacar’s future considering that the general expectation is that the most advanced nations will have self-driving EVs at pedestrians’ disposal. How do you think this affects Blablacar’s future?
They say great minds think alike, Sebastiano 😉 I was about to start drafting my post about BlaBlaCar, when I saw that you had already covered them!
I used to book rides on BlaBlaCar quite frequently and they really provide an immense value especially when it comes to rides between cities that do not have a direct train connection. I agree (and personally experienced) that disintermediation is especially present in this setting and I am not sure it can be avoided. Drivers and passengers regularly commuting between two cities eventually get to know each other, build trust and then communicate outside the platform. Thus, I think BlaBlaCar broadening their offerings is a necessary move.