- Management & Leadership |
- 15 September 2016
3 lessons big business can learn from the sharing economy
The peer-to-peer economy is not just here to stay, it’s growing at a rapid pace. What can big business learn from the new sharing economy?
PwC predicts growth of the sharing economy of US$15bn in 2013 to US$335bn in 2025.
In five sectors, like car sharing, this new economy consists of only 5% revenue, but could increase to half overall sales in ten sectors considered in the report.
In another PwC report, ‘The Sharing Economy’, nearly two thirds of respondents said that peer-to-peer is more fun than engaging with traditional companies, 86% agree it makes life more affordable and 83% said it makes life more convenient and efficient.
Today’s culture is increasingly one of sharing. Facilitated by technology and social media, sharing everything from videos, opinions, photos and a spare room has become easy.
With motivations ranging from earning a little extra money, putting to use under-utilised possessions, a preference towards ‘loan vs own’, a more human experience, lifestyle flexibility and affordability; societal norms are changing at a rapid pace.
Putting to use a spare room to generate income (e.g. Airbnb), that enables a guest to enjoy a more local experience, or earning an income with no contract by driving people (e.g. Uber) that need to get from A to B in a comfortable car, both satisfy the need for convenience and a better experience at an economical price point.
This trend is forging at a rapid pace. What can large organisations learn from collaborative consumption, or this peer-to-peer economy?
Disruption can come from anywhere
Innovation and new competition can, and will, come simply from leveraging technology to solve a problem. In the well-known cases of Airbnb and Uber, while ‘disrupting’ the hotel and taxi industries, the real estate or car ownership is that of the user, with the business model existing purely to facilitate the community and the sharing of under-utilised assets. In the case of Uber, it also created a new labour market free of contracts, set hours and an overbearing boss. Agility is key to staying relevant in today’s changing economy. Competition may not come from within the industry, so a 360-degree view is crucial, with technology providing seemingly limitless possibilities.
We are trusting large institutions less
Technology permits speedy two-way feedback. As a whole, society is growing more trusting of one another, and large establishments less. Technology allows us to reach anyone wishing to be reached, along with the service, experience or product they wish to exchange for money or otherwise. Trust and transparency built into peer-to-peer ratings systems are becoming ever more sophisticated and can often bypass large organisations altogether in favour of the personal experience. Emerging younger generations are also aligning more with a sense of purpose than profits, actively seeking out experiences with a story or value proposition against purely buying a product or service.
Cost and waste are top of mind
Shiny and new are not always the default norm. Millennials are a generation aspiring to less ownership and are becoming increasingly conscious of the social impact of ownership such as cheap labour and production, or waste. Freedom to move devoid of possessions is more appealing to younger generations than ever before — preferring the borrow vs buy approach. Provision of eco-friendly options, plus the option to rent vs buy are both increasingly viable business models in today’s sharing economy.