Sharing economy is not just a Buzzword, but a lot more than what people think! Leading businesses are advancing the concept of sharing economy, which is nothing but a socio-economic system built around sharing of physical and intellectual resources. Sharing economy is known as a series of services that enable P2P exchanges through technology. It is an alternative socio-economic system that embeds sharing and collaboration across different aspects of economic and social life.
Sharing economy allow people to share resources such as services, skills, equipment etc at significantly lower costs than traditional arrangements. It increases the efficiency as the resources on demand (such as – cars, boats, goods, apartments, intellectual services etc) are shared and utilized. However, it would not be possible without technology as all forms of collaboration needs technology to get connected. Some of the common examples of sharing economy are – peer-to-peer lending, crowdfunding, house renting, reselling & trading, talent sharing, niche services etc.
Advantages of sharing economy
Sharing economy was built on the idea of sharing resources, such as – goods, services, skills etc in an efficient way. Sharing economy connects individuals who need particular products/services with other people who can render it. For example – Uber’s ridesharing app allow people to share rides. Similarly, TaskRabbit app connects you to people living in neighborhood and willing to do your chores for nominal fee. There are numerous benefits of sharing economy, some of which are –
Companies such as Uber, Airbnb, TaskRabbit, LendingClub, Postmates, Car2go, Collaborative Consumption, Mesh.it, DogVacay etc are pioneers of sharing economy that are changing the way people live and work in the USA. According to report developed by a reputed public relations firm – two out of five people use sharing economy services. It is sometimes referred as on-demand economy, which include companies that use technology to identify services/products and match them with people looking for those products or services.
No doubt, sharing economy is the way of future —- as people are finding it cheaper and much convenient to get it from local individual. Your startup could be the next billion dollar business, if you a need and people who are willing to help fill it.
How sharing economy created opportunities?
Sharing economy is nothing, but creation of economic resources through the availability of private assets that used to sit idle. As sharing economy grows, entrepreneurs can take advantage of its opportunities, as better ideas beat more money. The idea behind this life changing trend is nothing but using digital platform to rent goods, vehicles, skills and services.
As a part of sharing model, Airbnb made private dwellings available for short-term houses. Travelers can rent a room or whole castle on Airbnb. DogVacay let the dog owners to leave their dog with a host who will take care of their pet. It is much cheaper than kennel and in fact gives dogs a comfortable place to stay. TaskRabbit is a mobile market place for people to do tasks and chores at the touch of a button. Whether it is delivery help or office help, one can avail this service anytime and from anywhere. Getaround is another service similar to Uber. The only difference is that people can borrow cars from those who are out of town and left their car with Getaround.
The result of sharing economy is great resource utilization along with expanded earning potential for those willing to share their resources. The growth of sharing economy changed the landscape for entrepreneurs in three areas namely – distribution of production, lowering the entry barriers, less ownership & maintenance. The most successful entrepreneurs would be the ones who will understand how to scale their business as per the changing demand of resources. This volatility led to fleeting profits for those who do too much or too less.
Future of sharing economy
Sharing economy is going to be a major part of global economy. The sudden emergence of sharing economy has introduced many challenges for customers, regulators, policymakers and businesses. Hiring labor and renting products for short term sat at the bottom of the list as only 2%-4% of good and services are shared among peers. However, it was identified that most of the rentals occurred from companies that own assets such as Zipcar and Rent the Runway. In short, true sharing comprised of rideshare services, where software companies connect riders with independent drivers subject to taxi regulations.
The world has witnessed a steep rise of sharing economy facilitated by increasing digital platform and willingness of people to use mobile apps that facilitate shared entrepreneurial enterprises. Sharing economy allow individuals to make money from unutilized resources. People have shown great interest in all range of services provided by sharing economy in automotive, transportation, deliver, labor, short-term loans, retail and consumer goods.
As sharing economy is reaching new heights, its impact on the way people view part-time work and reputability has been fundamental. It is expected that the five major sharing economy sectors – peer-to-peer lending, car sharing, online staffing, peer-to-peer accommodation and video streaming will generate more than 50% of the total global revenue. More than 75% of Americans believe that they will use services through sharing economy in the next 5 years.
In order to understand the future of sharing economy in next 5 years, we have considered a few studies. According to these studies, the increase in revenues in traditional rental industry will be low compared to that of the revenues in shared economy. The growth projection from shared economy is expected to be higher in a few sectors such as – car sharing, online staffing, crowdfunding etc. On the contrary, the growth projection is lower in traditional sectors such as cars, DVD rentals, equipment etc.
The rapid growth of Uber and Airbnb in sharing economy is an indication of potential of both the sectors. No doubt, these firms have witnessed 3 times growth in the last 3 years. Such increase can only be sustained through innovations in their businesses as well as their ability to adapt to local conditions. The main characteristic of sharing economy is the level of flexibility which the contractors receive. These platforms have inevitable benefits that are far beyond those that were initially developed for.
According to our analysis, sharing economy transactions have accelerated over last two years and their revenues have strengthened due to this rising activity. This growth confirms that the sharing economy is changing rapidly, and is progressing from headline phrase to default choice of individuals. There are emerging signs that the sharing models have great influence on consumer behavior with peer-to-peer accommodation sites encouraging people to travel frequently and ridesharing apps that change the way people travel across countries.
The revenue of sharing economy is expected to grow 35% approximately every year, which is 10 times higher than wider economy as a whole. Peer-to-peer transportation is likely to remain largest sharing economy, accounting for 40% of the revenues within the five sectors discussed above. Sharing economy enterprises need to collaborate with stakeholders across multiple fronts to make progress. This includes investing in market-leading scoring systems, reforming exiting regulations, working with policymakers to develop self-regulation, support users to understand legal and tax obligations etc.
The bottom line is – sharing economy is the future of market capitalism, as it allows millions to connect and share assets with minimal expenses, raising the prospect of capitalism. Sharing economy is growing fast and is expected to triple in the next 5 years. The future of sharing projects begun with concept that sharing is good and will get bigger over time. The way people live and work is changing constantly, and sharing economy is a manifestation of this changing trend. With billions of people online, businesses should continue to harness data to put more certainty into marketplace, so that it continues to grow significantly in future.