Many commodity markets moved successfully online already a few decades ago – think of hotel bookings, car rentals or flights. Why not parking?

Nowadays these commodity markets are completely digitalized, effective marketplaces with services such as Uber and Airbnb gaining momentum and users exponentially.

Although it would make sense to have an online marketplace for parking, the parking industry has tried and failed – one of the major problems of the parking industry. Municipalities, parking providers and startup companies have attempted to build their own parking apps and online or mobile payment solutions, but to no avail when it comes to properly and sustainably moving the industry online.

In this blog post, we try to help you understand why there is yet no “Airbnb for parking” –  a parking online service. Why is the industry lagging behind on the digital revolution?

A successful online marketplace is made up of four main ingredients

When trying to understand why there is no “Airbnb for parking”, we looked at some of the most successful digital marketplaces, and tried to understand what the common mechanisms behind them are and reflect those to the parking industry. Following the excellent article by Bill Gurley, we distinguish four important characteristics that each online marketplace should have:

1. Improved user experience vs. status quo

When going to a marketplace (any marketplace) the buyer has two fundamental problems:

A: How can I find what I’m looking for?

An online forum typically allows the buyer to perform a simple search, compare suppliers, and have a recommendation and 1-3 purchase options available in seconds. The platform has to be significantly better at helping buyers find what they are looking for than the old “offline” marketplace. This makes it worthwhile for consumers to use the online solution. A great example of this is by visiting one website, you get access to most hotels in the world in seconds, rather than having to call your local travel agency to ask for advice.

B: How can I find the best price for the product?

The more expensive the item the buyers are looking for, the more willingness they have to look for different options in order to save a good amount of money. Flights, hotel rooms and car rentals are all pretty expensive purchase items, so buyers have been eager to try the online sites from the very start: there is a great chance of saving both money and time when using an online marketplace.

When cities try to introduce online solutions for parking, they tend to ignore these two fundamental driving forces. An online platform for parking will only work, if it helps car drivers find vacancies and save money and time. Since parking typically costs only a few dollars per session, the buyer (car driver) will primarily measure savings in time and ease of use, rather than in dollars.

2. Economic gain vs status quo

For the sake of clarity, let’s break the term economic advantage into two parts. Part one is the monetary advantage achieved by a new technology. For example: it’s more expensive to send physical mail than email, which is why both senders and receivers like to use email rather than traditional mail. That’s why traditional mail is a dying phenomenon, and almost all mailing activity has been replaced by electronic mail. But equally important, email is also a great deal easier to use, making the total economic advantage even greater. 

Because email is both easier to use – and significantly cheaper – than traditional mail, email has managed to replace it almost completely. The reason being that the total economic advantage is huge.

In the parking industry, many mobile payment solutions are both more expensive as well as harder to use than the status quo solution.

3. Ability of the new technology to offer something new

A digital marketplace has the potential to bring about a new innovation that solves a problem in an previously unseen way and creates completely new-found value. A great example of this is Airbnb, because it has created a revenue source for house-owners from scratch. Homeowners are excited to join, because Airbnb offers a “found money” opportunity for them – a revenue-stream that did not exist before. There are even services like DogVacay, which has opened a whole new connection between dog owners and sitters – and people are loving it.

The parking as a business has seen many online attempts, especially mobile payment solutions. But none of these have really created something new, but rather tried to introduce a new payment method, alongside coins and credit cards.

In order to succeed, an online platform must bring added value to the market, and enable both car drivers and parking providers to achieve something revolutionary that they didn’t have access to before. This can include for example solving the problem of how drivers could find parking spaces in real-time based on their location, or replacing cash payments – both of which are issues that the industry has failed to resolve before.

4. Aggregating supply and demand

Parking as an industry is fragmented, in the sense that there is no monopoly based on which it works – municipalities and private providers all cater for individual and business consumers. The industry has no effective communication between the service supplier (parking providers) and the consumer (car drivers): there is no place, online or offline, where you can go when you are looking a) to find a parking place for your car or b) to reach out to car drivers to inform them about your parking area. As a market, it’s not only open for but has an actual need for a working modern-day solution because it clearly lacks an aggregator between the supply side and the demand side.

An intermediate (a middleman linking parking spaces with drivers and vice versa) increases the rate at which supply and demand meet, creating boost of revenue for the provider side while making the consumer’s user experience better. A potentially successful resolution enables this kind of development without being too stiff or too concentrated. In this sense, parking industry has all the potential to become a solid fully digitalized marketplace.

Parking has yet to tick all the boxes of a great online marketplace

In the different commodity markets the product itself is static – a flight, hotel room, taxi travel or  parking space doesn’t change in quality much. It’s merely a means to achieve a needed service to facilitate another action (for example, an overnight stay or physically moving from point A to B).

So looking at the qualities of a successful online forum, we see that the focus is not on offering a tweaked end product, because that is simply not needed. The focus is on facilitating the process of obtaining the product – making it easier, faster and cheaper to book or buy the needed service by removing unnecessary friction from between the supplier and the consumer.   

In the ideal case, this works both ways: consumer and supplier are both looking for each other, and a successful marketplace enables either one to find the other. In parking, this translates into car drivers being able to find parking spaces and parking providers getting occupants for their vacant spaces –  a clear win-win.

In today’s world, the smartphone is at the heart of any new service, and a market must function on-the-go. The very essence of an effective marketplace is that it’s available around the clock, that it’s not bound to any location, and that it’s tied to real-time, always. Thus, a successful online solution for parking must be a high-tech service that works as a smooth operator between motorists and parking professionals 24/7.

When online market requirements are filled, the industry will move 100 % online

It’s clear by now, that the parking industry has not found its way online with the rest of the commodity markets because although it has all the potential, any new developments so far haven’t been able to fill the needed requirements in order to create an effective online marketplace.

The industry needs to take a big leap forward to move online. This basically translates into a solution that brings a significant improvement to the everyday user experience just like other online forums have brought for booking flights, finding a cab, ordering food and so forth. It needs to:

  • Let users find available parking options easily in real-time and compare prices
  • Provide a substantial economic advantage by saving both users’ money and time
  • Offer a new way to solve the existing problem of finding and paying for parking
  • Bring parking providers and motorists together and facilitate their interaction

These are the requirements for a successful online marketplace, and when they are met, parking will move online for good because then consumers will no longer want to return to old ways – nor will parking providers, because they will have a platform to replace heavy payment, enforcement and information processes. Once the solutions have been chosen, cities will have it much easier and will also be able to offer effortlessness to the residents’ everyday lives.

What Uber did to the taxi industry and Airbnb to accommodation, the same virality can be true of parking when users are introduced a state of the art solution that takes the experience to the next level – the 21st century level, where it belongs.

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ParkMan is an efficient digital solution for parking management, and a parking app for drivers to find and pay for parking. Read how ParkMan can help you!

Main photo by Hafidh Satyanto from Unsplash/CC