Has the sharing economy touched your business?

An emerging trend is both disrupting and creating business.  It’s the sharing economy, sometimes referred to as collaborative consumption.  Put simply, it gives people the option to hire access where before they could only buy a product.

What’s new, you say?  Rental business is well established.  However, driven by new technologies, the sharing economy is connecting people using social media, peer to peer sites or mobile apps.  It’s a new marketplace.  People are behaving differently within it.  And in some cases, the products are new.

The explosion of digital goods created new industries.  Social media has accustomed us to information shared rapid-fire.  Where iTunes revolutionised music purchases, Spotify has disrupted the whole notion of buying music, giving customers access to a shared music library.  Netflix have done it with movies.  While the e-reader market is based on ‘buying’ a book in electronic form, this model may already be changing shape with proposals to launch all-you-can read books for one monthly fee.

The risk associated with lending things to strangers was a barrier to the sharing economy.  In the past, businesses overcame it by marketing themselves as reputable and reliable, with safeguards in place such as contracts and bonds.  Social networking and peer to peer sites such as Trademe have changed the game.  For online consumers, research indicates that recommendations from personal acquaintances or online customer opinions are now the most trusted forms of advertising.

The sharing economy also appeals to eco-conscious consumers.  They may have a lighter carbon footprint sharing a tool or a vehicle than consumers who each purchase that tool or vehicle for themselves.  And, if you work out that you only use that power drill eight or nine days a year, maybe sharing makes more sense.

In New Zealand, space hire saw early buy-in to the sharing economy.  Sites such as ‘bookabach’ and ‘airbnb’ unlock the holiday home or the spare room to travellers.  More diverse spaces for business use are available through sites such as ‘sharedspace’ which offers shared access to meeting rooms, office facilities, studio space, kitchen, pop-up retail, event space, and parking.  Shared boat ownership seems like the odd man out here but ‘sharedspace’ offers that too.

Service-based businesses in New Zealand are using sites such as ‘Pocket.Jobs’.  Overseas, consumers are connecting with people in their community to share tools, vehicles, equipment, toys and designer clothing.  The UK’s ‘BorrowMyDoggy’ matches dog owners with local borrowers for walkies, play days and holidays.  Around the world bike-sharing schemes have livened up the tourist landscape.

Peer to peer lending and crowd-funding are relatively recent phenomena, bypassing traditional financial institutions as another option for startups and seed funding.

Businesses like ‘Simplist’ are starting to piggyback off the trend, offering to keep track of friends and contacts so your network is more effective connecting you with the goods and services you’re looking for.

The potential for tie-ins with innovative businesses is wide open.  Some businesses are threatened by newbie competitors without traditional overheads, while others may find a raft of opportunities.  How will the sharing economy touch your business?

Published Winter 2014.

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