Dynamics of The Sharing Economy and What does the Future of Sharing Economy looks like?
Industrial Revolutions don’t just happen every day. Nations, economies, leaders, and massive companies have to work hand-in-hand with each other for pulling off an industrial revolution. In this modern era where DATA is the new oil and the people would gladly choose convenience and variety over “feeling of ownership”, times are changing truly faster than ever. And guess what, we’re amidst a whole industrial revolution. The Sharing Economy!
With new startups and ventures by massive multinational companies leveraging the power of this economy in various forms, tables are turning really fast. And everyone is speculating about the future of sharing economy. Sodio has been working on products that are made for the sharing economy in the last 3 years. By making an on-demand parking space to creating many other on-demand platforms, our team has understood the dynamics of this sharing economy pretty well. In this post, we will be sharing our two cents about the next big industrial revolution – The Sharing Economy. And what does the future of sharing economy looks like. We will also discuss various sharing economy examples to help you understand better.
What is sharing economy?
In the sharing economy, the various members tend to share their utilities/resources in harmony such that the utilization of any product/matter is increased while saving customers the trouble of “owning” the particular utility they’d share. Most commonly described as peer-to-peer based activity of providing, obtaining or sharing access to goods and services. It is now more commonly used to describe online transactions via online marketplaces.
The increasing trust and reliable in the payment systems fuels even greater adoption for the sharing economy business models. Many people are not familiar with the term “sharing economy” but are aware of the term ‘shared and on-demand services’ and do use it in their conversations. Buying products from an online sites is often related to sharing economy. Other on-demand services such as cab booking, online food ordering, service booking applications too account for a considerable part of this sharing economy. And the future of sharing economy can be assumed to be bright since all these sharing economy businesses models are doing well.
As we all know, the number of new startups and small companies is rising day-in and day-out. What’s even more interesting is the fact that most of these start-ups are internet based providing some on-demand service or e-commerce. These utilize the digital platform pretty well and are contributing a lot to the sharing economy. And the increased accessibility to internet is a sign that shows a bright future of sharing economy business models. With the many technological developments in various fields, products based on sharing economy are getting better and sharing economy business models are thriving when put to test in the real world.
How did sharing economy become such a big thing?
With the advent of internet and related services, sharing economy was bound to become a big phenomenon. As a matter of fact, the future of sharing economy will be hinged upon the adoption of stuff like smartphones, personal assistants like alexa and the internet. This can be shown by taking statistics from the US. In 2016, there were as many as 44.8 million adults using services like Airbnb and Uber. It has been predicted that the number of users will increase to 86.5 million, i.e. almost double. The industry utilizing sharing economy is expected to expand from $14 billion in 2014 to $335 billion in 2025. Smartphone apps, cloud computing and GPS technology have made various sharing services easy to launch and scalable as well, thus increasing the scope for sharing economy and hence it is expected to nothing but expand. Venture capitalists are also looking to invest in such businesses, especially the startups centered around room sharing and ride sharing have been amassing loads of funding.
In the recent past, there have been many advancements in the online goods provision market and as a result the coming of new innovative solutions has made the promise of sharing economy even more real. A very good example of this is Airbnb which completely changed the game for the hospitality industry. The platform allows individuals to make money by renting out an unused room or property and is a perfect example of peer-to-peer sharing economy. There are 4 million listings across 191 countries and the number of people using it in the US was 30.4 million in 2016, which is expected to double in the next five years by 2021. Through this idea, many people were able to earn a side income. Airbnb has been smart in terms of adapting locally to different countries. For example, in Jamaica where poverty is prevalent, the company has partnered with the government to provide cultural experience in order to promote tourism in Jamaica. So, many communities that have not been so well off are able to benefit from the disruption caused by AirBnB in the hospitality industry.
Uber is another example, which has enabled a person to provide a service using their cars which could have been unused at their homes. The consumer has the Uber app which allows her to book a cab by typing in her location and then finding the nearest cabs. The pricing is fixed according to traffic and different hours of the day. The drivers are able to earn through this in the sharing economy as they’re paid in the peer-to-peer transactions. The seamless and robust peer-to-peer payment transactions have changed the game by solving the most complex problem this sharing economy faced – “How do we ensure peer-to-peer payments to be faster and more reliable?”
Sharing Economy: Then and Now
Sharing has been pretty much of a historical practice. People used to lend their goods and services to their neighbours or knowns and these people may be returning the favour sometime in the future. In the future of those times, i.e. now, people are doing the same thing, providing peer-to-peer services through the internet, to strangers. It is interesting to note that the reduced transaction costs have greatly favoured this movement. All one needs is an internet connection and an account on the website they wish to put up their service on. In earlier times, transaction costs were one of the main reason as to why sharing was limited to friends and family. But now, we live in the times of the internet and hence the limitations stopping us are fewer. Securing payment platforms have in fact lowered risks and made customers more confident in engaging with the sharing economy. A lot of other things such as government regulations for protecting the buyers and sellers on the internet, making online platforms more stringent to the law and the gazillion of laws protecting the privacy of online customers have contributed towards building the behemoths like AirBnB and Uber. Not only this, with increased regulation and oversight by consumer welfare organizations, the future of sharing economy can be termed as stable and robust.
[Decentralized Cryptocurrency Exchange]
Impact of Sharing Economy
The world has witnessed the advent of many industrial revolutions with major shifts in economic paradigms, especially in the last 150 years. These shifts have been caused mainly due to the convergence of three technologies into one at a common point. The first of these is communication technology. How we are able to manage our economic activity? How are we able to let the person on the other end know that there is a lack of something on our end and vice versa? All through communication technology. The second is the emergence of new sources of energy.
This allows us to power our economic activity. How to run the major machines that give you the products at the end of its production procedure? Through an energy source. This, as a matter of fact, will be even more crucial in building a sustainable future of sharing economy. The third is new modes of transportation. With drones and Hyperloop-like mode of transportation being explored, the more efficient logistics of the future will be an even bigger boost for the future of sharing economy. How to get the desired good delivered where you want it to be delivered and that too efficiently at the lowest cost possible? Through effective means of transportation. Take the United States for example. They discovered electricity and put up plans in their cities. They used this electricity to power their telephones which were used for communication.
Next step, their source of energy: Cheap Texas Oil. What’s more, they found a new way of transportation. Cars, buses and trucks and thus brought about an industrial revolution. It took us all through the way in the 20th century.
This revolution was prevalent in the 21st century as well, until the collapse of the world economy in 2008 when prices of Brent Oil shot up. And they were the highest ever. This led to a complete financial breakdown and what we know as the great recession of 2008. The prices then fell again, because there were not many buyers in the market due to the recession. Today the prices of oil barrels are low because of competition between the fossil fuel generators themselves. OPEC decided to lower the oil process and release a lot of oil in the world which wiped out their competitors, shale gas in the US and tar gas in Canada.
[Fitness App Development]
In Germany, the telecommunication, the fossil fuel nuclear power and the road, rail and air transport have already peaked in their productivity. What this means is that – Using the already existent technology, there is only so much you can do to achieve maximum efficiency. Your efficiency will increase if you improve upon the technology already in use, if you create the new. Any advancement always leads to a change for the better and hence, technology is a big factor in the sharing economy. New technology, even bigger.
[Hyperlocal App Development]
Geolocation Technologies for the future of sharing economy!
Look around you and you would see everything is integrated with the internet now. And the future will be shaped by the three internets: Communication Internet, New Energy Internet, and Transportation Internet. There will be an automated GPS card with driverless functions, there already is digitalized communication. The Internet is a major, major contributor to the sharing economy and if you want to take advantage of this platform you need to acknowledge this fact.
We have sensors in our agricultural fields that are monitoring the growth of crops, the soil quality. We have sensors in our industries that monitor the economic data, give proper analysis. We have sensors in our homes, noting temperature needs and energy utilization. All of this is connected to each other and to us giving rise to a phenomenon known as the Internet of Things. The present and the future. With even more cutting-edge research to be followed by scientists in this field, the tracking and intelligent navigation will provide an even bigger boost for the future of sharing economy.
Future of Sharing Economy
Sharing economy has emerged as an ever growing force. But what lies ahead for this peer-to-peer economy? This is the part where we answer all the questions regarding the future of sharing economy. Many industries in the future will be (if they haven’t already) challenged by the sharing economy like the taxi industry or hotel industry. As mentioned in this article earlier, the sharing economy is powered by reduced transaction costs due to smartphones, internet and cloud computing. Technology has increased the efficiency of production and delivery of goods and services.
Developments that have reduced transportation costs:
Matchmaking- Sensing, connectivity and data have been merged into a single forum. Potential renters will have access to the location of their deliveries. The online presence of such markets have enabled the customer to spend more freely and purchase better. Increased accuracy in the process will ensure an even brighter future of sharing economy.
Logistics: Self-driven cars, drones and delivery robots are expected to considerably improve the logistics involved in delivery of goods and services to the select customer.
Enforcement: Blockchain, smart contract and code of innovation help upholding proper payment procedures. Blockchain is a mode of storing data over the internet in blocks that are identical across networks.
Trends Developing right now – In the sharing market, in B2C, sharing has moved beyond rides and rooms. Startups offering shared spaces, storage and delivery and being preferred. Peer-to-peer car rentals, on-demand car booking services and the likes have $810 billion in investments. Another example is the B2B sharing wherein there are construction rental companies.
How to trace the scope of sharing economy
In places where a good was earlier unavailable due to lack of resources in transportation, production and other logistics, sharing economy plays a greater role as it removes the hassle of the logistics totally. For example, in countries where cabs were earlier not so easily available, people are now booking cabs through applications. This has given the power to the common consumer to exploit the sharing economy and avail the required service. In developing countries, young people who are just starting to earn or are settling down use applications such as ones that allow you to rent even utensils or home appliances. Such type of sharing economy ideas are valid only for a strata of people and will be redundant in the future.
Product Design: Earlier, we were limited to a single product because there’s not much variety of the same product if ownership is what you prefer. If a person has a minivan at home, then that minivan has to be used for all purpose. For dropping children, for attending meetings, for movie-nights or couple dates. However, now the on-demand rental market has made it all the more easier and diverse too. You can get a bus for picnics, you can rent a limo for your business meetings, you can rent a sedan for you date. It’s that easy.
Today, sharing economy is touching every product and taking it under its realm. Everything is a service now. The future of sharing economy is going to be an amazing ecosystem and will be having incredible inclusivity. Rental earlier could have been a no-go to people but now with the internet, internet of things and cloud computing, rentals are the not a problem anymore because they’re now modelled as subscriptions. This is how every service that you can think of will be made streamlined and seamless is every sense possible. You can get cars via cab services. You can rent movies and TV shows via online streaming services after paying them a certain amount. You can tune into your favorite music online from Spotify and pay them for their services. This a good model, as when you buy a complete CD or record you pay for all the songs, here you can select what you want to listen to. As this trend increases, customers may be more and more interested in renting clothes as well, especially for special occasions.
When you plan your product for the sharing economy model you need to keep in mind all these facts that were traced in this article. Especially the things we discussed about the future of sharing economy. The past, the present and the future of endless possibilities. The advantage of sharing economy is that this industry is still developing hence there is a lot of scope for new ideas as well as improving upon existing ideas. The advent of this century has witnessed a lot of technological advancements and there are yet many more to come.
How can Sodio help?
Have plans to build a platform related to the sharing economy? Feel free to let us know. Our team is very passionate about the sharing economy and would love to help you in building your dream product with incredible success. Our experience with latest technology and the best frameworks makes us the right fit for your technology partners. Hope you liked this post about the future of sharing economy. Feel free to comment down your suggestions or ask any questions that you have.