The sharing economy has conquered transport and re-invented holidays, and technology pitch nights resound with the claims of start-ups calling themselves ‘the Uber of x’ and ‘the Airbnb of y’.
Yet, as Financial Times technology and innovation correspondent Sally Davies observes, it is too soon to say whether the peer-to-peer business model is ready to out-compete conventional big business across the board.
‘These are very interesting and exciting business models, but they’re new and quite unproven,’ Davies tells LS:N Global. ‘Most of these businesses are loss-making, heavily subsidised by venture capital money, so it remains unclear whether the unit economics in terms of whether they can make money over the long term stack up.’
Uber and Airbnb have brought new consumers into taxis and spare rooms. ‘They’re not just capturing the existing market, they’re building new ones,’ says Davies. Can those models become mainstream? Speaking at the FT Sharing Economy European Summit, Davies observed that regulatory concerns – most notably about workers’ welfare – are unlikely to go away.
Technology has a sex appeal that has given it a corporate social responsibility, get-out-of-jail-free card, says Davies. But, she warns, in Europe especially, this idea that technology is an unalloyed public good… is starting to unravel.’
1. Take the sharing economy seriously. These businesses have the capacity not only to capture existing markets, but also to add substantial new ones.
2. Look to collaborative marketplaces for growth. On TaskRabbit, one of the most popular tasks is assembling Ikea furniture – so why doesn’t Ikea make TaskRabbit assembly an optional part of its delivery service?
3. Consider whether your value chain can incorporate a collaborative element. Walmart incentivised customers shopping in its physical locations to serve as couriers, dropping off merchandise ordered online to those who live nearby.
4. Expect conflict. The regulatory battle over the sharing economy isn’t over, says Davies, especially if peer-to-peer businesses continue to expand.
5. Prepare for a technology backlash. The idea that disruption is good in itself is coming under scrutiny, and some sharing economy businesses’ working practices come close to exploitation.