Today’s economy represents a shift where consumers buy less and share more, a restructuring on a scale that will likely change the way we do business into the future.
“The sharing economy is one of ten ideas that is going to change the world.” ~ Time Magazine
Over the course of the last century, we’ve watched our economy shift from one where companies do one specific thing, eight to ten hours a day, five days a week to one where companies enhance one-another to deliver service 24-7. If the 1990s were about getting people online, the 2000s were about connecting those people together. Today’s economy represents another shift where consumers buy less and share more, a restructuring on a scale that will likely change the way we do business into the future. This new economy fulfills a different need for people today. Instead of buying and consuming, citizens look for creative ways to collaborate, building a community where the collective is greater than the sum of its parts; in short, a sharing economy.
The Sharing Economy’s Shift
The sharing economy is a place where you can catch a ride, stay in a stranger’s home halfway across the globe or get someone to cook dinner for you, all accessible at the click of a mouse or a tap of your smartphone. It’s a socioeconomic system built around the idea of providing access to resources through crowdsourcing app-based platforms. People own hundreds of things, so why not share the wealth and make a little money at the same time? This is an ecosystem built for and by millennials and boosts the concept of empowering regular people by creating an economy that’s communal, inexpensive, efficient, and eco-friendly. Millennials prefer access over ownership, convenience over collection. This Uberfication of the service industry is changing the way people and businesses capitalize on unused assets to benefit others.
While there are distinct benefits to consumers within a sharing economy, this shift from consumer experience to consumer allocation has the service industry sweating. As consumers collaborate to work around further consumption by sharing their goods and services, brands are fearful of what they will do if all consumers borrow and share, instead of consume. Experts believe this new industry, unbound by the usual rules and regulation, is undermining stable jobs, creating uncertainty, cheapening labor, taking away benefits, and cannibalizing existing businesses. Already the sharing economy is upending business models across the globe, driving companies and consumers to rethink the use of underutilized assets. The growing sharing economy has major implications on traditional businesses like the travel and tourism industries, feeling the heat from cheaper and more convenient alternatives.
Already the sharing economy is upending business models across the globe, driving companies and consumers to rethink the use of underutilized assets.
In order to compete in this new sharing economy, brands will need to reinvent their marketing approaches and campaigns around creating value and meaning for consumers, not merely influencing market share and selling their wares. The fact that entrepreneurs are continuously coming up with new platforms and apps to assist with the growth of the sharing economy puts the onus on companies to keep up with the trend or risk falling by the wayside. Forward-thinking businesses will have to be adaptive, flexible, and start viewing the sharing economy as a way to enhance their customer journey rather than a competitor to be vanquished. If consumer demand for the sharing economy shows that this is the next wave of innovation, companies will have to find ways to embrace the new realities of sharing and collaboration.
Initially, the sharing economy was a strictly peer-to-peer with platforms specifically created to meet consumer demand, however B2B companies today are catching on to the sharing wave. Industry leaders Uber, Lyft, and Airbnb are the most familiar for consumers, but there are a growing number of other sharing platforms that appeal to business-facing enterprises, as opposed to just providing services for individuals. Convenience has always been at the heart of the consumer case for these offerings, but now that businesses are growing more attuned to the potential financial and operational benefits of jumping on the sharing economy bandwagon, corporations and industries are shopping for better B2B services, as well. The startups developing sharing innovations are revolutionizing entire industries and often ousting the more established and traditional competitors.
Businesses Share the Love
Nothing embodies the sharing economy shift more than crowdsourcing and technology in order to do things faster and cheaper than ever before. Enter Taskrabbit, a crowdsourcing app that connects individuals to friends and neighbors for the purpose of outsourcing any number of tasks whether it’s household chores or running errands. As a company that was initially conceived as a peer-to-peer platform, Taskrabbit is adapting its business model to appeal to companies looking to change the way they carry out business tasks. Walgreens is a company looking to bring in new external perspectives to their business practices. As such, the company and has partnered with Taskrabbit to help provide added value to their service by facilitating delivery of prescriptions and medicines to a patient’s front door on the days when they are too sick to leave the house.
As a company that was initially conceived as a peer-to-peer platform, Taskrabbit is adapting its business model to appeal to companies looking to change the way they carry out business tasks.
Although Taskrabbit users have long had the ability to request a pharmacy pick-up and delivery, this partnership is more or less a promotional effort by both companies to help raise awareness during peak cold and flu seasons. It’s nevertheless a smart business move by Walgreens, because companies that acclimate to the demands of millennials and subsequent generations, sooner rather than later, will enjoy the fruits of that labor, while other companies struggle to remain relevant. Another B2B development is ShareDesk, essentially the Airbnb of workspaces, helping small businesses and startups rent out unused office space. The app allows excessively mobile freelancers to flexibly book workspaces according to their preference and travel. Businesses that are looking for fresh new ideas are beginning to search beyond their own walls, often partnering with new sharing economy startups to help with innovation ideation.
In fact, the introduction of ride sharing apps has encouraged many car manufacturers to reform the way they do business. Auto companies are beginning to realize the enormous impact collaborative apps like Uber and Lyft are having on their industry. The new preference for young people to share resources rather than purchase their own have many auto manufacturers concerned. While there’s no evidence yet to suggest any decline in overall car sales, it’s not inconceivable to imagine a world where cars are no longer a product, but a service instead. Though this new trend is threatening auto manufactures in some ways, it also has the ability to support industry growth in many others. While most of the auto industry cowers in fear of these new services, companies like Porsche and BMW have embraced them in ways that extend and enhance their brand.
In late 2015, BMW partnered with Uber using their service as an opportunity to engage people with the BMW 2016 7 Series. Unsuspecting Uber customers in New York, Miami, Chicago, and Los Angeles experienced BMW’s new flagship supercar firsthand and without charge. The tactic seems to be working as the 7 Series has now eclipsed the luxury leader Mercedes S class in sales so far for 2016. BMW and Uber have since partnered to pursue more altruistic ventures, as well. The two companies are currently developing and testing a new pilot project in Johannesburg, South Africa with the aim of reducing CO₂ emissions. UberGREEN customers will be commuting in BMW i3 electric vehicles, which promote sustainability and affordability.
“In order for the momentum of electric mobility to increase, partnerships with market leaders like Uber are essential to expose more consumers to the viability of electric vehicles and sustainable urban mobility options,” ~ Tim Abbott, Managing Director of BMW Group South Africa.
A big consideration for why many industries and corporations have been fighting the sharing economy is that the sharing trend was not really created for business use. Now, we’re beginning to see business involvement in aide of shaping the sharing economy to fit their needs, as well as the needs of individuals. Collaborative apps had been commonly viewed as strictly peer-to-peer platforms. Until recently, businesses that were trying to stay ahead of the times were having to partner with consumer apps like the examples above, as opposed to a more suitable B2B app customized for business use. As the sharing economy expands, up-and-coming sharing startups are realizing the need for B2B sharing apps and are developing services that make it easier for businesses to embrace the sharing trend. From renting out unused office space, crowdsourcing equipment, maximizing factory capacity, and outsourcing capabilities, these apps are helping businesses increase revenue, lower costs and maximize ROI.
Uber and Lyft initially changed the game for on-demand consumer car rides, but upstarts like Cargomatic have developed similar offerings for business customers. This Uber-style solution addresses the age-old trucking conundrum – how to fill up excess trailer space. The same way airlines try to fill each flight, trucking companies also attempt to fill trucks to capacity, making each trip as efficient and profitable as possible. Cargomatic is aiming to do for short-range trucking what Uber and Lyft have done for the consumer transportation industry: use the capabilities of smartphones to connect drivers to nearby freight that needs moving in a way that lowers cost without losing value. Like many sharing apps, Cargomatic is just another example of mobile technology’s power to squeeze out excess inventory by better matching supply and demand.
What business and brand developments would you expect to see as an outgrowth of the sharing economy? We’d like to hear your thoughts. Use #sharingeconomy on social and keep the conversation going.
Co-authored by Ryan Barrick, Marketing & Strategy Intern.