or be disruptedsh
or be disrupted
How the sharing economy is decentralising businesses.
With the evolution of the smartphone and the explosion of social media, new networks and communities, where individuals communicate online with one another for a variety of purposes, are created. It is on these very peer-to-peer networks and communities that the sharing economy was born.
The sharing economy is an economic model in which assets or services or shared between private individuals typically via the Internet. Consumers have become providers – effectively forming People-as-a-Service platforms for mutually beneficial transactions.
“The asset can be a car, a bedroom or an extra phone, and the technology will allow these kinds of things to happen much more easily. […] With social media, you can understand what to expect before you get there.”
– Chai Jia Jih, Vice-president at Carousell (formerly Managing Director at Airbnb, Southeast Asia)i
The de facto faces of the sharing economy, Uber and Airbnb, are leading the way as proof of its disruptive power. Today, Singapore has more than 15 local players fluorishing in its sharing economy. One such player, carpooling app Ryde, just expanded its services to include ride-hailing.
How has the sharing economy disrupted industries via decentralisation? Let’s break it down below:
Changing business models
President of Sharing Economy Association (Singapore) Mr Eugene Tay finds the sharing economy to be a business model particularly suited to Internet-savvy and densely-populated Singapore. “In a resource-constrained city like ours, it makes financial and environmental sense to monetise the use of underutilised assets,” he saysii.
Such behaviours have significantly lowered barriers for small businesses to enter previously capital-intensive industries. Singapore-based platform Airfrov pairs shoppers with travellers with luggage space to buy goods from overseas for them, minimising shipping and forwarding fees. In the past, such shoppers had to engage logistics and shipping companies backed by its own transport fleets or partners.
By understanding that the real value of a business in the sharing economy relies on the contributions of its users rather than its own company resources, you can find numerous avenues for opportunities to tap into without needing to put in significant investment capital.
Changing labor structures
The change in business model also brings about a change in labour structure.
Since individuals in the sharing economy are not employed by or tied to a company, they work flexible hours effectively as freelancers. Singapore-founded platform Butler Factory comes to mind, wherein businesses can find help from skilled freelancers working from all around the world for professional services.
As a business owner, you may find this especially beneficial, as there will be situations when you do not require some functions at a large enough scale to justify adding it into your payroll. Furthermore, such platforms typically make it a point to conduct screening for qualifications, streamlining the hiring process.
Improving availability and localisation
The decentralisation of assets and services means that such resources tend to have increased availability in every area. The necessity for the establishment of corporations providing such assets or services in the area is eliminated.
In some instance, the assets are so well distributed that they are practically everywhere. Singapore bike-sharing company Obike has such a large and distributed supply of bicycles that users can start and end rides at any point, compared to the old model of having to go to a bicycle rental shop at a single fixed location to rent and return the bicycle.
Because the assets and service providers are often from the area themselves, this means that the asset or service is also highly localised. For example, Singapore-based on-demand meeting and workspace platform Workwander allows businesses to book offices or conference rooms around the country depending on their needs.
Growing potential for small businesses
Small businesses are now able to compete with mega-corporations on a relatively more level playing field.
If you require capital for expansion, the sharing economy has you covered too. Funding, which previously came only from high net-worth individuals and institutional investors, now has its own decentralised form. Anybody who believes in your business vision can back it up with their dollars on crowdfunding platforms like Indiegogo, which has recorded funding of over $13 million for a single project.
For your business to enjoy sustained success in using the sharing model for revenue generation, you need ensure the effectiveness of your platform in accommodating transactions. The pool of users will gladly adopt your platform if it allows them to remain in control of their activity, generate and grow revenue. When done right, it becomes a self-governing entity, albeit one that’s linked to your business.
Many of these platforms perform their best as mobile apps, improving user experience by using software integration and data such as user location. Make sure that your mobile phone is well equipped with the latest capabilities and fastest network speeds to maximise how the sharing economy can work for you.
The sharing economy has allowed users options that are faster, cheaper and more readily available. Technology is marching towards even greater decentralisation, with the advent of blockchain that may potentially eliminate intermediaries altogether. In view of the ever-changing digital landscape, staying on top of technological developments is the best way for you to get an edge ahead of your competition.
How Artificial Intelligence Is Reshaping Marketing
The role and impact of AI in modern marketing.