It’s hard to ignore the growth of the share economy. Nowadays you can easily rent just about anything – somebody’s spare room, car, boat (Getmyboat) and even their dog (Borrowmypooch). And although the sector is being driven by Millenials, the concept is spreading – with 25% of the US adult population having used Uber, 20% Etsy and 6% Airbnb.
Is it entirely new? No. It’s really a variant of traditional rental businesses but reinvented for the digital age. However, the trend means more things are available for rental than ever before and lots of VC is flowing in that direction. The share economy is also likely to play a significant part in future smart environments, which make renting rather than buying significantly easier.
The question is: has your business factored in the effects of the share economy and considered how it can support this trend (other than supplying connectivity)?
Key ideas to consider
The share economy is fundamentally about using digital platforms to resell underutilised assets. It values access over ownership. Currently this requires the user to have a single purpose app for every service they wish to rent. They are likely to get tired of this approach, and seek a multi-purpose approach (more of an Amazon of sharing). It also has fundamental effects on supporting industries such as insurance. One person being insured for a year to do one thing is a dying concept. In future, people will increasingly be insured to do something for an hour or a day – massively increasing the number of transactions.
- The share economy is growing – Time Magazine estimated that by January 2016 42% of Americans had used a shared economy service and 22% had provided one.
- By 2025 Millenials will comprise 75% of the workforce, as Boomers and Gen Xers retire. Millenial trends, such as sharing, will become ever more relevant in the next few years within the global workplace and marketplace.
- The share economy is both P2P (eg Airbnb, HomeStay, Uber, Lyft, Rover, TrustedHousesitters) and B2C (Zipcar and Car2Go)
- It often incorporates social media functions for rating, and trust is a fundamental concept. Identity verification and risk assessment are set to be keyservices to this economy.
- 39% of Germans used the share economy 2016-17, with an average spend of EUR884
- 44% of Dutch have used the share economy 2016-17, with an average spend of EUR506
- 68% of Turks have used the share economy 2016-17, with an average spend of EUR1,031.
By market sector
According to PWC, the share economy is worth:
- hotels and accommodation – eg Couchsurfing, Airbnb, EUR14 billion and set to grow 40% in 2018
- travel and transport – eg Uber, MyTaxi, Car2Go. Worth EUR9.5 billion in 2017 and set to grow 90% in 2018
- retail and consumer goods – eg Rent the Runway, Le Toe, Chic by Choice. Worth EUR9.9 billion in 2017
- services – eg Appjobber, streetspotr, FragNebenan. Worth EUR7.4 billion, set to grow 61% in 2018
- finance – eg Kickstarter, Startnext, auxmoney. Worth EUR22.2 billion, set to grow 2% in 2018
- media & entertainment – eg Spotify, SoundCloud, Hitflip. Worth EUR3.7 billion, set to grow 107% in 2018
- machinery – eg mietbox24. Worth EUR5 billion
Ideas for B2B providers
Shared economy concepts are embedded in the telecoms market as we already share cell towers and other network equipment. But we can take this concept further. For example, B2B service providers could explore the potential for:
- shared data – enabling “buckets” of data to be shared within a SME or loaned within a data co-operative group. For microbusinesses that might not have multiple users to share data with, service providers could enable local co-ops to ‘loan’ data within the group
- handset rental – need a waterproof handset? one that’s ruggardised? maybe you just need to rent this daily or monthly? Likewise, businesses might prefer to rent handsets over shorter periods for dynamic workforces, rather than having to buy them with CAPEX or commit to long contract periods (1 year+)
- provision of identity services to shared economy vendors – secured via the mobile ID
- providing capabilities for enterprise customers to share or rent underutilised equipment (both telecoms and non-telecoms).
It’s easy for B2B telecoms providers to be defensive and resist the demand to open up underutilised business assets for resale. After all, if they’re not using them then it’s pure profit – right? However, this means that some business customers will not buy because the cost of ownership is too high (but would be accessible if shared). Rather than dropping prices, consider if a better option would be to enable the business to share the cost with another business or even with consumers.
If you don’t offer sharing options, some businesses will go ahead and share and just cut you out of the loop. With the emergence of smart environments that’s set to get easier, but community-based initiatives are already showing that this is not just possible but happening.
Instead, B2B providers should help their business customers embrace this trend to offset costs, make an income, or contribute to communities – especially for those in rural areas where fast connectivity might not be available to SMEs or consumers. Sharing blurs the line between business and consumer usage, but that’s a challenge for internal accounting, not a reason not to get involved.