Making Sense of the Sharing Economy as a Business

Making Sense of the Sharing Economy as a Business

Technology is utterly fascinating, so goes the understatement! It is able to overcome the inherent drawbacks of existing businesses and then engender a totally radical concept. For example, the concept of renting your property to someone in need has been existing for a while now. But when Airbnb and Zipcar hit the industry, it was hailed with so much gusto! The same with Fiverr and eBay. We had traditional marketplaces already, but the internet just changed the game.

What is the Sharing Economy?

How would you classify Airbnb and Zipcar? Perhaps, if you considered Uber or Upwork, would you uncover the startling similarities they share? How about companies that aren’t as popular. For example, Yerdle or TaskRabbit, can you decipher the sharing economy business model of these companies? What is the impact of these models on our communities? Is the sharing economy an appropriate approach?

To start with, consumer interaction works for several companies for numerous reasons. To sum up these core values, five points are to be considered.

  1. Businesses share because it is economic
  2. The sharing economy emphasizes access rather than ownership
  3. The sharing economy is practical
  4. It promises sustainability
  5. Sharing also fosters social connectivity

The Framework of a Sharing Economy Business Model

Ideally, what underpins collaborative consumption on platforms like Uber and Fiverr isn’t necessarily the funds or the promise of sustainability. Rather, it is the fact that technology is being leveraged to build trust. By being authentic, transparent, and reliable, meaningful connections are made and this fosters the growth of the sharing economy.

For companies like Airbnb, they emphasize the importance of selling the experience and not just the products. Companies like Uber, eBay, etc. also prioritize this by highlighting the reviews of different participants in a halcyon environment.

Hallmark of the Sharing Economy

Apart from trust, what are the other features of businesses employing this model?

Transactions are Incredibly Easy to Execute

An analysis of several businesses employing the sharing model showed one peculiar attribute- interactions on the different platforms are incredibly easy. Think of how easy it is to book a ride, a room, or even a freelance service. It not only saves effort and time, but it improves the experience associated with transacting on the platform.

There is Constant Engagement

There is a need to maintain a certain level of demand and supply in these organizations. That’s why it’s not unusual to see companies like Uber, Taxify, and Airbnb offering promotional codes just to build customer loyalty. There are also incentives for those providing services on the platform and they are rewarded based on their loyalty.

It Relies on Mass Adoption

These sharing models only work when a large number of people use the service. Let’s think of it this way. Uber is successful because of the number of drivers who can easily attend to your needs. Conversely, there are many drivers on the platform because they believe that there are several potential customers on the platform. It’s essentially a cause-effect relationship.

Conclusion

It is mind-boggling to think that the largest platform for renting property (Airbnb) doesn’t have a single room. Neither does Uber, arguably the largest ridesharing platform, manage the cars themselves. The list goes on.

The importance also cannot be overemphasized. In the US alone, the sharing economy is estimated to become a $335 billion market. Perhaps, it is high time that businesses give more focus to integrating the tenets of this model in their organizations. Beyond just being a business model that focuses on revenue,  a sharing model driven by peer engagement, goes much beyond, serving as a digital brand diversification strategy. Bringing in value to end customers, be it businesses or consumers, can only stand to benefit an organization. Initiatives like Open Innovation which are built on the bedrock of the Sharing economy, are only standing testament to the statement.

A business of any magnitude that’s looking at building a sharing model needs to get started with a concept that aligns with their customer centric objectives as part of larger digital strategy. This concept can be developed into an application and value delivered through the web and mobile. At Biztruss, we can’t emphasize enough that a sharing model should not ideally stand as a business model in isolation, but draw in complementary capabilities from the inside as well as the external ecosystem towards maximizing value for the customer.

We would love to share our insights with you and contribute towards your journey in the sharing economy, from strategy to execution. With a concept in hand that aligns with your business objectives, you can work definitive magic for your organization.

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