A nascent form of sharing economy is taking shape. Airbnb,
when it began was an experiment in renting out that extra bedroom or a less
often used guest room, to a needy traveller looking for a short stay. The room is
offered sans any frills of a hotel room or services, but is inexpensive and with
much less hassles. The experiment caught
fire, and, in a very short order Airbnb expanded to over 34,000 major cities across the
globe.
Sharing a ride was the next natural target. Startups like Lyft, Sidecar and
UberX explored the possibility of car
owners to give passenger a ride for a fee has become immensely successful.
Renting
your car or vehicle was the obvious extension. Seeing
the writing on the wall Avis decided to merge with ZipCar, a car sharing
service, last year to break away from the traditional car rental model.
These experiments did not stop at renting a room or sharing
a car, but extended to bike sharing or dog walking and to potentially several other
fields.
Picking up the slack
Putting underutilized assets (or capital) to work makes good
economic sense. There is demand, and if supply has the capacity and can come in at an affordable price,
there should be no stopping. Sharing economy is cracking the door open to the pent up demand and
bringing in the suppliers aka the
people.
This growth in “informal renting of assets” has caused
established businesses to start worrying. They claim that the playing field is tilted
against them. While they (the businesses) are bound by regulations, the agents
of the shared economy are not constrained in any manner. Cities are worried
that they will loose out on the tax revenue.
So the pressure is being felt!.
Barter Kings...The Next Step?
The “barter system" of exchanging goods and
services with no payment involved appears to be ripe for a makeover. This
age-old practice has literally died long time ago. With the advent of internet
and a dramatic rise in connectivity, the task of finding, matching and mediation
in a bartering process has become much easier.
While businesses have been trying their hands with “Barter Exchanges”, like Barter Business Unlimited, it is the
individual side of exchanging goods and services that could experience the next
wave of change.
When services like u-exchange
are linked with the power and reach of social media, this bartering economy will
have the potential to grow by leaps and bound. It will be interesting to see the economic impact of people flocking in numbers to clean
out their closet (or fill up their
downtime) for getting something they have been looking for in return.
Regulation trying to catch up?
Of courses, taxes and regulations will take time to catch up
to the new emerging reality. Regulations strive to bring order into chaos and taxes protect the equity. Laws, typically, have more inertia, and rightly so
since these needs to see a better part of the iceberg before charting the right
course.
However, displaying amazing speed, California
Public Utilities Commission created
a new class – Transportation Network Companies to provide legal cover for car
sharing model in September 2013.
Challenge and be relevant!
Some of these changes can appear like flash-in-a-pan and may
disappear. eBay tried to entice its users to auction out their unused stuff. But the “thrill of winning an auction”
overtook the “need.”
However these changes are indicators of the transformative
power of connectivity and mobility. Some
of these changes may not pan out, but not before challenging us to rethink the
established traditional business models built on old premises.
It was just seven years ago when Netflix was laughed out of
Blockbuster’s HQ about its offer of partnership on video streaming business. It was even
fewer years ago when Border realized too late that the readers would prefer to buy books
online and that too electronically.
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