Ever ordered Indian food through Deliveroo? Bought a second-hand wardrobe through Facebook’s marketplace? Thought you would become a millionaire by investing in cryptocurrency? Congrats, you participated in the sharing economy. Probably unknowingly.
By now, you should have heard of the sharing economy, if you are interested in business. Chances are you have stayed in an Airbnb and are proud of your 4.8 Uber rating. You might be under the impression that such sharing platforms are way too commercial to be associated with sharing. The truth is, you are probably right. Airbnb is worth $31 billion and Uber $72 billion, and so we can safely say that serious money is being made in this new and promising businessland. In fact, by 2025 the sharing economy is projected to be worth $335 billion. Yup, three hundred thirty five billion shiny, green dollars. Therefore, it is about time to clear some things up. What exactly is meant by the sharing economy? Why does it matter and in what ways can it affect you and your business?
What Is the Sharing Economy?
First of all, the term “sharing economy” is confusing. Some experts attempted to invent a more suitable name and refer to it as collaborative consumption, peer-to-peer economy, gig economy or freelance economy. All funny names aside, it comes down to an economic movement where modern technologies allow people to get necessary goods and services from each other rather than buying it from corporations. Like any market, it is about demand and supply. Demand comes from the people (like it almost always has), but now supply is provided by the people too. All that is needed to connect the two is a platform and some good old trust – enabled by technology.
How Did It Come About?
Well, you might remember the magical year of 2008. Although it sounds like yesterday, this was 11 years ago (time flies when you are having fun). In 2008 we entered an economic recession. On top of that, we came to understand that we were all together ruining the planet. We were starting to feel a loss of community because people were spending more time on MSN and with their Blackberries than with their friends in person. Ok, so it were difficult years, things seemed dark. On the bright side, we started to learn that technologies do not necessarily dehumanize; they can also bring people together.
Huh? How? For example, we got in the car with a stranger by using Blablacar, we joined dinner parties with like-minded people through Eatwith and we recycled our unused clothes by selling them via Ebay. After all, we had to be more conscious of our wallets and felt a need to be socially included. As the years passed, we learned that we do not want to be materialistic people. We discovered that we would rather travel to Colombia than buy an expensive watch. We do not care about the stuff, but about the effect that it brings about. I mean, isn’t this the very reason we all ride around on our Swapfiets and ask to use our neighbour’s power drill through Peerby rather than buying a new one? The message is clear: today’s generation wants to have a comfortable, flexible lifestyle in which having access is considered a privilege and ownership a burden.
So, you got a better understanding of what the sharing economy is and how it affects consumers on a daily basis, right? Still, the term might be vague as it comprises various, bigger concepts. Rachel Botsman and Roo Rogers divided the sharing economy’s companies into three comprehensible sections: product service systems (e.g. car2go), redistribution markets (e.g. Ebay), and collaborative lifestyles (e.g. couchsurfing). The figure below outlines the essence of each of the forms.
What To Do As a Business?
In order to capitalize on the sharing economy and to gain a share in this multi billion dollar business, it is more important than ever to give voice to the consumer. Technologies and platforms have changed the role of traditional institutions and the power has shifted from companies to the people. In other words, in the equation of P2P, there does not seem to be space for the B. So, what to do?
Many established companies encounter resistance in their attempts to integrate the sharing economy into their business models. Yet, it is not impossible. In fact, it is extremely refreshing when they succeed. It provides the consumer with convenience and it provides the company with a sustainable, competitive advantage. Think of Ikea renting out furniture, think of Porsche letting you share a Porsche, or Bol.com providing a second-hand marketplace.
Naturally, many companies choose such paths because they feel the environmental pressure to become circular rather than linear. They are pushed by certain sustainability standards to which they need or want to comply, which represents the overlap of the sharing and circular economy (this topic we will save for later). But apart from that, those companies learned to not see the new supply by the people as a threat, they support it and invent a way of co-existence and collaboration. Hence the name collaborative economy.
Being able to adapt one’s business model to the laws of the sharing or collaborative economy, requires a deep understanding of the market and its users. It is about thinking in solutions rather than problems, about turning today’s threats into tomorrow’s opportunities. How to do that? Good old-fashioned research is a start. After all, research is the new homework. Maybe we can help.
About Amstel Lab
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