China’s online car rental site Zuzuche.com has received $10 million in their round A financing from Qingming Venture Partners.
Guangzhou-based Zuzuche.com went online in 2011. According to co-founder Li Bin, it started as a meta-search platform for well-known car rental brands. The tremendous popularity of Chinese outbound travel has boosted strong demand for overseas car rentals service as well as Zuzuche.com’s market share. Currently, Zuzuche.com handles over 20,000 orders per month with orders usually for up to seven days with an average price of 3000-4000 RMB per order.
Challenges for international car rental brands
On average Zuzuche.com handles around 4000 orders monthly for domestic car rental service with average price at 500 RMB. The reason for this difference is that the leading car rental brands such as CAR Inc. and eHi Car Services have rapidly developed their online presence in the past two years, so many users prefer to order via their official websites.
In the international market however, there is vast potential in services for Chinese travelers as foreign car rental companies’ websites are not in Chinese and have different guidelines regarding Chinese driver’s licenses, insurance, and payment etc. Zuzuche.com has added 140 service providers over the past 3 years in international operations. It has also developed a back-end system to connect with overseas providers and wholesalers. Their system is offering all the information in Chinese for over 30,000 pick-up locations and they have optimized the book flow for Chinese users. Zuzuche.com also offers free Chinese GPS service to the customers.
Building the distribution network for foreign car rental companies
Zuzuche.com is different from similar meta-search platforms who direct users to the 3rd party websites, rather it provides users with a convenient one-stop booking platform. From search, price comparison, reservation, and payment the customer enjoys a smooth flow of service. Zuzuche.com offers three payment methods: “Reservation and full payment”, “Small Deposit”, and “Payment at the Counter” and they charge a 10%-15% service fee per transaction.
Even though multinational chains like Hertz、Avis、Enterprise、Europcar hold a major part of the global market, they face challenges of attracting Chinese travelers so Zuzuche.com works with them as an online distributor. With the increase in orders Zuzuche.com has also gained better bargaining power with suppliers and because some products are sold by pre-payment model Zuzuche.com is able to offer a lower price than the supplier websites.
Besides users from the mainland, more and more users from Hong Kong, Macau, and Taiwan are also using Zuzuche.com. According to data from the back-end system, 15% of international orders have come from these three regions as well as overseas Chinese. This has prompted the company to add traditional Chinese webpages and 24/7 Mandarin and Cantonese service.
Future Co-operation with Qunar.com
Li Bing says that after this round of financing the company will continue to improve products and international services and add suppliers to Zuzuche.com’s global service network as well as start the co-operation with Qunar.com. At this moment many local online travel companies such as Ctrip are starting similar services. (Translated by David)