Although it is undeniable that the sharing economy is on the rise, few can agree on what exactly a “sharing economy” is.
PwC describes it as a movement in which “physical assets are shared as services”. For example, a car owner may allow someone to rent out her vehicle while she is not using it”1. In other words, peer-to-peer lending. Others consider it an umbrella term for “collaborative consumption”, which is simply “The shared use of good[s] or service[s] by a group2.”
Regardless, they all agree that this new economy is facilitated by internet usage. With a global connection, the average consumer can now be their own micro-entrepreneur. However, the individual is not the only one who can capitalise on this economic boom. Businesses are gradually integrating it into their strategies as well.
US$335 billion economy:
One key result of the sharing economy is peer to peer finance lending, or crowdfunding. Crowdfunding is a movement facilitated by platforms like Funding Societies that connect investors and promising businesses together, forming partnerships to finance business ideas that lack funding.
Given that 40% of SMEs lack banking support3, crowdfunding is becoming an increasingly popular alternative for those who do not qualify for traditional financing methods. Funding Societies alone has raised over S$2.4 million in funding for local SMEs since its inception. The sharing economy has thus opened up another financial outlet for businesses to turn their ideas into reality.
Retail business can allow customers to rent clothes, or equipment instead of having them purchase products they might not use too often. Local websites like Rent a Dress allow customers to rent outfits for all occasions at a fraction of the retail price.
"Traditional gown and wedding dress rental services have been around in Singapore for brides," says Rent a Dress Founder Ms Shuen Chiu, explaining how she was inspired to set up the new business. "However, there is a gap in the market that caters to fashion-forward guests of less formal events.” Since bridging that gap, Ms Chiu has received overwhelming demand for her rental services.
Also tapping into this new market opportunity is Mr Tan Ho Ching, whose bag rental service That Bag I Want has amassed over 25,000 members.
On the B2B front, consider sharing resources like rental space, shipping or POS solutions to maximise use. Singapore’s own The Green Book, for example, has helped numerous businesses in the construction industry save finances with their equipment loans, ideal for short term projects.
You can even co-innovate and pool together products and services to create a larger scale movement. Take your cue from regional hit Aladdin Street, an e-market featuring businesses that sell halal products. With SMEs making up the bulk of the retailers, the initiative is reported to give small businesses “a leg up in an increasingly competitive environment”4.
to tap into a market with an estimated
4 billion consumers worldwide5.
One such retailer, Ms Jacinta Ong, also finds this collaborative platform a good way around high rental costs, forgoing a brick-and-mortar shop altogether: "I think the right way forward is going online and collaborating with other retailers to harness demand in the halal market".
Uber has shaken up not only the transport industry but now the delivery and food sectors with UberRUSH and UberEATS. Savvy businesses have tapped on this growing force to aid their own companies. For example, more restaurants are collaborating with UberEATS to deliver their food. This not only expands their consumer reach, it also saves on manpower costs required for in-house delivery staff.
Regardless of the industry your business is in, the sharing economy holds vast potential. Not only is it cost effective, as the Straits Times’ Jessica Cheam explains, “It generates economic activity by enabling people to share and earn income from underused assets”, “reduces environmental impact by minimising consumption” and fosters “relationship-building”. It is only a matter of time before the sharing economy becomes the norm, and SMEs will benefit from harnessing the trend early.