What is a “sharing economy”?
The term “sharing economy” refers to peer-to-peer sharing through an online market place.A sharing economy works on the premise that individuals do not exploit the resource they own entirely for own use and hence can earn some revenue by way of sharing it with others. For example, a buyer of a car can opt to use the services of a ride-hailing app, Uber, and earn money by renting her car to other commuters.
Understanding the concept of such an economy becomes simpler when one looks at the working models in this sector – AirBnB, a home rental service that lets users share their space for rent; Freelancer.com, where jobs posted by individuals or small businesses are grabbed by freelancers; and Ola, a ride-hailing service with operations handled through a mobile application.
The Penetration
About 10,000 enterprises are believed to be operating in the sharing economy space in roughly 25 categories and in more than 130 countries. From finance to technology and real estate to data, the concept has touched upon most of the sectors within the economy.
When looked at deep the penetration is with respect to geographical regions, the US seems to be the frontrunner with approximately 72 percent of people there having used a digital platform or mobile application based on sharing economy. In Asia-Pacific, however, more than 3/4th of the population has expressed willingness to be a part of the sharing space by both being a provider or seeker of services.
Disruption Caused
Disruption is visible. More and more Indians are availing services offered by platforms like OLX and Quikr – where one can sell used items, alongside selling services and posting ads for rentals. In the Financial Year 2016-17, OLX reported an upsurge of 58 percent in revenues; the profit too was on higher trajectory with 31 percent increase as compared to INR 6.1 crore the previous year.
More and more urban dwellers are opting for services from Ola and Uber and are rejecting the traditional way of hiring a taxi. Not only has the space become economical, the ease that comes along is attracting users every passing day. Also, is the rising use of platforms like Freelancer.com that has allowed youngsters to steer clear of the lack of employment opportunities in traditional job market.
Benefits arising out of a sharing economy are immense, so are the challenges.
Pluses and Minuses
Few pluses are;
- Allowed the owner of the resource – a car, skill or a house to fully exploit it
- Flexibility of working at any time of the day
- Brought down prices of many goods and services
- Added to economic growth and non-traditional employment opportunities
Few minuses are;
- Currently, sharing economy platforms are mostly popular among young people, with those under 30 most likely to avail these services
- Regulatory challenges where we saw cancellation of licenses of Uber and Ola in some locations, pose an imminent threat to the future viability of this concept.
While the private and public sectors are still navigating their way through the nuances of the sharing economy, it’s beginning to transform what business is and could be. Look through this informative infographic to learn more about this exciting new business model.
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