Collaborative Economy – Disrupting Businesses

Imagine a world in which in addition to sharing pictures, opinions and activities on the social media, people start sharing goods and services with each other.

Early indicators of this disruption can already be seen in the following areas:

  • Space – Office Space, Places to Stay. e.g. AirBnB, LiquidSpace, OpenDesks
  • Goods – Pre-owned goods, Custom products e.g. Chegg, Bookcrossing
  • Transportation – Cars, Bikes e.g. Uber, Lyft

Key drivers enabling shared economy include:

  • Connectivity – Allows consumers and sellers to plug into the platform easily to share with each other
  • Gravity – An engaging platform that attracts participants, both producers and consumers
  • Flow – Easy way of handling transactions to foster the exchange and co-creation of value

Challenges and Motivations

People are used to transact with well-known and established businesses. In order for them to share rather than purchase assets will require change in their buying behaviors.

Key Challenges:

Following are some of the challenges for using shared services

  • Risk of unknown suppliers
  • Uncertainty about quality of services
  • Lack of information about availability of shared services.

Key Motivators:

According to a recent survey of people who have used shared services in the past, following are the main factors that drive shared use of assets:

  • Ease of doing business, anytime and anywhere
  • Lower Pricing
  • Product Quality and Service
  • Recommendations or ratings

Who are the players in Shared Economy?

According to a report based on 2 surveys conducted between October 2013 and January 2014 by Vision Critical’s Voice of Market with participants aged 18 and over, demographics participating in the shared economy is divided into the following three categories:

  • Neo-Sharers – Who have in the past year used at least one of several “emergent” sharing services, such as Airbnb and Kickstarter
  • Re-Sharers – Those who “buy and/or sell pre-owned goods online using well-established services like eBay and Craigslist,” but who have yet to graduate to neo-sharer status
  • Non-Sharers – those yet to participate, but many of whom intend to in the next year

Some other key points about the demographics:

  • Neo-sharers skew heavily towards younger groups
  • Sharers are going to be in the affluent sections of the society
  • Sharing of most goods and services tends to be more concentrated in top urban centers.
  • 51% of neo-sharers are women (compared to 50% of non-sharers),
  • 48% are aged 18-34 (versus 24% of non-sharers).
  • Neo Sharers have easy access to mobile technologies and the internet

Will Shared Economy Impact Your business?

According to Altimeter research group, every car-sharing vehicle reduces car ownership by 9-13 vehicles; a revenue loss of at least $270,000 to an average auto manufacturer. Cascading effects of this reach into rest of the ecosystem that includes auto-loans, car insurance, fuel, auto parts etc. Homeowners are displacing hotels. Consumers are skipping the bank and lending to each other.

Shared economy is redefining the seller-buyer relationship. How will your business get impacted?

Smart and innovative companies are already adopting the value-chain of collaborative economy. Companies are re-aligning their business services along following three models:

  • Company as a service e.g.,
  • Providing a platform for shared economy e.g. ebay, Yerdle, Kickstarter
  • Motivating a marketplace e.g. AirBnb

Reassess your business model, see where your business would fit in the value-chain of collaborative economy and then make the appropriate move.



About adhirmattu

A Senior Information Technology Executive with expertise in building world class global IT organizations to improve company profitability and growth. Experienced in supporting multiple large scale acquisitions & global system implementations with consistent track record of reducing cost of IT service delivery.
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