Sharing Economies

I will try to create a basic understanding about the fundamentals of "Sharing Economies" which have risen up with the rapid development of digital marketing and information technologies.

The term of sharing economy is also used as "Shareconomy", "Collaboative Economy", "Peer to Peer Economy", "P2P Economy", and "Relationship Economy".

"What is mine is yours!" becomes its motto after Rachel Botsman's bestseller book "What is mine is yours: The Rise of Collaborative Consumption" published in 2010.

Sharing economies allow individuals to make money from their underused assets.

In this way, physical assets are shared as services.

Sharing economies turn our world to be more affordable and easier.

It can also be said that shareconomy bring people luxury with a cheaper way.

On the diagram, you can see how common sharing economies are used. There are interesting and attractive platforms as following:

Loan mediation: Lending club
Second hand auctions: Listia, Letgo
Patient Support Programs: Helparound
Fitness Studio Management: Vint (joinvint)
Equıpment and Service Sharing: MuniRent
Learning and Teaching: SkillShare
On demand Work-Space Platform: ShareDesk
Accommodation: Airbnb
Food Experience Selection: EatWith
WiFi Sharing: Open Garden
Transportation: Uber, BlaBlaCar
Experience and Need Sharing: TimeBank
Friendship: Tinder
Logistics: Shyp, Shipster
Garage Sharing: ShareMyStorage

Individual lending becomes common all around the world but it should be kept on mind that it is a dangerous area. Lending activities are generally forbidden with laws. Those of activities can be considered as shark loan activities.

Food Experience Selection Platforms are quite social and popular nowadays. People communicates and enjoy their local meals with new global friends while contributing their budgets.

Even WiFi sharing is very popular at any place.

The author of the article has no idea about Tinder, which is very famous about friendship. If you like my article you can swipe me right. :)

There are several reasons behind the rise up of sharing economies.

Population grows and demand for goods and services also increases. There is a need to look for alternative ways to channelize the increasing demand. Economic slowdowns resulted in unemployment and/or underemployment, as well as inequality in income distribution. Alternative business models contribute people's economy. Certainly, it is now easier for people from different parts of the globe to communicate and transact directly with others. Market innovators has changed the perception of business models. People begin to look for new ways and areas to share with.

A sharing economy platform bring consumers and suppliers together. Consumers register their demand for goods or services to mediator platform with necessary information. At the same time service providers give their offer to the system. Platform combines these offers and requests. In other words, it gives the opportunity to both consumers and providers to have access to market. Consumer fulfil their payment to platform and platform transfer the payment to producer after cuttıng its fee. Owners and seekers rate each other after the end shopping. 

It can be visualized via screenshots from one of the most popular sharing economies platforms; Airbnb.

 

  

The Airbnb has a very simple, user firendly platform, which rapidly directs  the visitor to the desired booking alternatives. After determining the zone, the dates and number of guest, the visitors are directed to the second page showing accomodation options both in a list and on a map with only necessary information such as price, photo, definition. The visitor chooses one of the houses possibly to stay in to see the details of it. We can see this stage on the 3rd picture. Despite given information, any potential guest can directly contact with host for further questions. The platform protects his service by automatically preventing e-mail and other connection info until completion of booking. Rating and commenting system can be seen on 4th picture, which provides customers to evalute the specifications of house and host. It also gives the chance for host to reply the comments to save her trust. A well-organized and simple platform combines individuals all around the world.

The most common shareconomy business model is service fee model. In this model, the platform charges a fee for every transaction. In freemium model, some transactions are served as free. These can be small scaled transactions or first transactions of new users.

Re-cycle and sale model has a company that directly acquires goods from customers, and then resells them for a higher value, after recycling.

Trust is main currency for sharing economy platforms. The supplier should trust the consumer to get the payment, and the consumer should trust the supplier for deliverance and specifications of goods.

No value is wasted under this system. The owner opens her good to others whenever she does not need it. The usage raito of the good increases. The user rents the good without owning by paying its rent.

Sharing economies work with openness and transparency principle which is probably more trustable than industrial or traditional business models. Because buyer and seller communicates directly via platform and can ask any question about transaction. Besides there are detailed info on platform's website or interface. In Airbnb for example, home owners give every necessary detail on platform as well as photos from their houses. The rating and recommendation system is a natural proof mechanism about the credibility of both sides.

If trust is not build between parties certainly, it becomes the most important obstacle in front of the sharing economy platform. Concerns about security of private information, payments and quaility of goods and services are main problems must be solved by platform providers.  Rating and recommendation systems, payment guarantees, insurance systems, commitments about privacy are used to enable trust.

Following statistics illustrate the rapid growth of sharing economies.

     

     

   

And the following graphic shows monthly average contribution of different shareconomy activites to the budgets of prividers in the USA.

The graphic depicts that market gaps in transportation services has been filling rapidly than other sectors using peer to peer economies. Strong competition decrease monthly revenue for transportation service providers. Selling platforms such as Letgo, Listia have had stability, and its revenue fluctuates in a narrow band. But leasing activities are in an upward trend and have attractive revenue opportunities. It is possible to evaluate for an entrepreneur to analyze suitable markets to use shareconomy system by considering following chart.

 
Uber and Airbnb are among the most successful examples on shareconomy startups. The bestselling book of "The Upstarts: Uber, Airbnb and the Battle for the New Silicon Valley" by Brad Stone gives important interesting details about their adventures. I want to finish this article by giving some instances from this book with the lessons I took from it.

YOU SHOULD HAVE A STORY 

There was an international conference in San Francisco and Brian Chesky could not find any place to stay in. Hotel prices rocketed due to excess demand. Chesky decided to fight with.

Camp got a girlfriend, he ordered a taxi for the first date and could not find any on time, he was one hour late. It was the turning point for Camp to build the online cab order industry. THERE IS CERTAINLY A WOMAN BEHIND EVERY SUCCESSFUL MAN

BE PATIENT 

Uber targeted New York as its second market place. New York had nearly half of all cab rides among the US. Nevertheless, it had very limited cars, which resulted unacceptable wait times. In 2010, Uber had only about a hundred of cars in New York. The figure was 35.000 in 2016.

CREATE SIMPLICITY

In the first version of Uber passengers could request the vehicle by sending their address via a text message to a special phone number known as a short code. If passengers made a mistake inputting their address the driver wouldn’t be able to find them.

CUSTOMER DATABASE

YOUR PRODUCT MAY NOT BE PERFECT BUT YOUR DREAM SHOULD BE.  Uber was in front of the court, which is just on the stage to implement millions of dollars punishment to break laws in order to protect taxi and fleet owners. One week ago before the court, Travis Kalanick, CEO of the Uber decided to go to his customer base. He sent a letter to thousands of Uber users complaining that ancient regulations would make it impossible for Uber to serve anymore. The goal of the regulations was essentially to protect the old fashioned, bad service providing taxi industry due to their strong influence on politics, according to Uber executives. The next day Uber posted a public letter to the city council members by giving their contact numbers and addresses. Within 24 hours, the council members received fifty thousand e-mails and thirty seven thousand Tweets. Uber won the trial and had the permission the legally operate in the US.

DO NOT LOSE YOUR TRUSTABILITY 

There was theft claims on accommodations booked via Airbnb. Neighbours were unhappy with their lives to see foreigners around. Airbnb settled an insurance and rating system.

There was a strike related new transportation costs and every transportation agency stopped working except Uber. Besides it determined a higher price to serve by depending on its being the only transportation platform on that days. It resulted a dislike towards it. Its turnover had diminished dramatically soon after the strike ended. It lost his remarkable market share against its competitor Lyft.

LAST WORD

Only one percent of new startups can be successful. But be sure, only one percent of entrepreneurs believe their work, potential, and effort. Only one percent of people never give up.