January 2nd 2013, car rental giant Avis purchases pay-as-you-go car sharing pioneers Zipcar, (www.zipcar.co.uk) the largest car sharing company in the world for $500 million.
February 13th 2013, Marriott Hotels partner with LiquidSpace to offer on-demand shared work places in under used spaces in their hotels.
March 28th 2013, world’s largest retailer Wal-Mart announces that it’s considering crowdsourcing deliveries by using store customers to deliver goods to online customers.
M&S are shwopping, B&Q have Streetclub, at BMW it’s Drive Now.
Businesses everywhere are moving into the emerging Sharing Economy.
The question is why?
The answer for most, is simple. It’s profitable and in this current market that’s everything.
Globally, the emerging, circular, Sharing Economy is already estimated to be worth over £330 billion, £22.4 billion in the UK (1.3% of GDP, predicted to rise to 15% by 2016). (source: What’s Mine’s Yours, the Rise of Collaborative Consumption by Rachel Botsman); In the last two years, 52% of Americans have rented, borrowed or leased the kinds of items people usually own (source: Sunrun) and with good reason; in the UK, consumer earnings from the Sharing Economy between 2012 – 2013 totalled £4.6 billion
(source: The State of the Sharing Economy, Opinium Research commissioned by The People Who Share May 2013 http://www.thepeoplewhoshare.com/stateofsharingeconomymay13/
The reality is, the Sharing Economy is a cash cow.
But dig deeper and short-term profit is just part of the story.
Businesses that are nailing their colours to the sustainable Sharing Economy mast, are future-proofing their businesses.
Consumers are sharing goods and services and redefining the buyer-seller relationship. In Altimeters report: The Collaborative Economy, Jeremiah Owyang analyses this trend in detail http://www.slideshare.net/Altimeter/the-collaborative-economy concluding that businesses risk being ‘disintermediated’ by peer-to-peer commerce. In this new collaborative economy, social, mobile and payment systems enable consumers to trade with each other, putting power firmly in the hands of the consumer. For business, the message is clear -- join the Sharing Economy or risk being cut out of the picture altogether.
Add to that disruption, the pressure cooker of demands placed on our finite resources and there’s no doubt that the perfect storm is brewing. Smart companies know that resource efficiency is all; making money from idle assets and building business models around the sharing of resource is more about survive and thrive than about the environment.
Think about it, as resources get scarcer we’ll all be after the same prize and where’s the future in that?
But take a different path and instead of competing for resource, build your business around sharing it, and then, you’ll be sealing your future.
Take Kodak – they didn’t see a future in sharing – digital sharing that is and they didn’t survive to tell any tale.
So ignore the Sharing Economy at your peril.
The Sharing Economy at its heart is about making the most of what we have and it’s certainly about staying one step ahead. But it’s also about a seismic shift in power between company and consumer; about a system that enables consumers to trade peer-to-peer, to create value collaboratively, to access on demand the goods and services they need, when they need them from their peers.
No wonder then that economists and academics have predicted that this new economy will have the biggest impact on society since the Industrial Revolution.
And there’s no ignoring the evidence.
33 million Brits are already sharing and a further 14 million would consider it, reveals the first in a series of reports on The State of the Sharing Economy, conducted by Opinium Research and commissioned by The People Who Share, the campaign to build a Sharing Economy (thepeoplewhoshare.com) for Global Sharing Day which runs on the first Sunday each June. http://www.thepeoplewhoshare.com/global-sharing-day/ June 2nd this year saw over 4 million people set a world record for the greatest number of people sharing food in a single day. There’s a hunger for sharing consider that every minute YouTube users upload 48 hours of video, Facebook users share 684,478 pieces of content, Instagram users share 3,600 new photos, and Tumblr sees 27,778 new posts published. With over 10,000 Sharing Economy Businesses in existence (source: Compare and Share Sharing Economy Directory) worldwide (and growing) consumers are now able to share everything from cars to kitchens.
But the Sharing Economy isn’t about altruism, it’s born out of a necessity to do more with less and a shifting cultural landscape where access is more desirable than ownership. Now, using Sharing Economy services like compareandshare.com, Zipcar or Airbnb makes you a smart consumer or indeed a smart business. The very idea of allowing precious resources to languish idly when they could be used (at a cost) by another business, makes no sense at all to adoptees of this burgeoning new economy. When you could increase your bottom line by accessing a service like globechain.com why wouldn’t you?
The philosophy is simple: be smart, make and save money by sharing idle resources. Given that there are over £3.5 trillion worth of unused assets in the world, (source: The People Who Share) that’s one big opportunity. It’s about good business, about making the world work better and who wouldn’t want to do that?
But physical resource efficiency is only part of the equation for 80% of us say sharing makes us happy. (source: Cooperatives UK, The Great Sharing Economy 2011). A happy workforce is a healthier and more committed workforce. By enabling employees to share cars, rides, goods and skills, a company becomes more connected, breaking down silos, creating more reasons to remain part of the company. Sharing businesses retain their staff; sharing businesses know that by creating a collaborative culture, employees will stay. A sharing business is a sustainable business; it’s that simple.
But how easy is it for us to share? 70% say we would share if we knew how (source: Cooperatives UK, The Great Sharing Economy 2011). We have the will but we don’t always know the way.
So How can Businesses Join the Sharing Economy?
So far businesses are becoming shareable in one of 4 ways:
1. Ground-up: New business models built around the sharing of resource
I’ve built my business from the ground-up. Sharing has been part of its DNA from the outset. Designed as a Sharing Economy mother-brand Compare and Share is the leading provider of technology-based solutions for asset-sharing, enabling consumers and companies to access and exploit the world’s under-used assets.
For consumers, there’s www.compareandshare.com the world’s first comparison marketplace of the Sharing Economy; it’s a response to a consumer need to make the Sharing Economy an easy club to join. Currently aggregating car and ride sharing in the UK, we’ll be extending the offer to the broader travel sector with peer-to-peer accommodation and car and ride sharing in the US later this year. Making sharing easy is all-important in the mainstreaming of this new economy. Given the demand for sharing in the corporate sector, we’ve developed technology to enable companies to access and trade under-used assets and will be launching a corporate sharing marketplace in 2014.
2. Adopt the Sharing Economy: a sharing brand is a sustainable brand
M&S knew this when they partnered with Oxfam to launch Shwopping. Tell people to recycle clothing and it doesn’t work; incentivise them, fit M&S stores with Shwop boxes and add a celebrity into the mix (Joanna Lumley) – now you’re talking. 5,500 tonnes of clothing or the equivalent to 20 jumbo jets have been donated to Oxfam via Shwopping since it’s launch in May 2012.
M&S hope to collect as many clothes as they sell – 350 million a year, closing the loop, putting sharing at the heart of their brand.
Making the Sharing Economy an integral part of your business is what the smart brands are doing.
Last year, B&Q launched streetclub.com an online initiative to enable communities to share tools with others in their streets; and American retail giant Walmart made their Sharing Economy intentions clear when they announced they were considering having store customers deliver goods to online customers.
3. Become a Sustainable Sharing Business
There are a multitude of ways companies can become sharing businesses; promote car and ride sharing to employees (compareandshare.com) ; share unwanted resources B2B (warpit.co.uk) introduce company wide skills exchanges; have a Share Table / space in a communal area where employees can bring goods they no longer need and find things they do; run sharing events for employees like clothes swaps (www.swishing.com) or crowdshares (www.thepeoplewhoshare.com
4. Buy a Sharing Brand to be a sharing brand
If you have some cash to spare, sharing brands can be bought. In January this year, Avis purchased the pay-as-you-drive service Zipcar (zipcar.co.uk) for $500 million, signalling for many, the mainstreaming of the market. Avis recognised the growing consumer appetite for sharing and the trend towards access over ownership.
Savvy consumers are saying why buy when you can share?
What are the Business Benefits of the Sharing Economy?
Consider the consumer appetite for sharing: 32.4 million UK adults (64%) now participate in the Sharing Economy and a further 14 million would consider it (The State of the Sharing Economy Report, May 2013, by Opinium Research, The People Who Share http://www.thepeoplewhoshare.com/stateofsharingeconomymay13/
Saving and making money is cited as the main motivation for consumers to share.
Ditto for businesses.
But that’s only part of the story. It’s also about adopting the Sharing Economy’s ‘Value Chain’.
In Altimer’s Collaborative Economy report, Jeremiah Owyang describes a ‘Collaborative Economy Value Chain’, where companies can re-shape their business models in 3 ways:
1. Becoming a Company-as-a-Service (a renting, subscription or sponsorship model). The benefits of this approach are clear, businesses develop a long term relationship with customers, win repeat business and sell products to new customers. BMW says this allows them to ‘sell one car nine times’. Examples include: BMW and Toyota renting cars from dealerships and Barclays bank sponsoring Boris bikes in London.
2. Motivating a Marketplace (re-sell, co-opt, lend or gift ) In this model, companies create a community around their brand and enable their customers to resell or purchase collectively. Rather than take themselves out of the equation, businesses add value to their customers enabling them to take a cut or upsell new opportunities. Examples here include: Patagonia partnering with eBay to encourage customers to buy used and sell what they don’t need; M&S’s Shwopping campaign, enabling customers to recycle clothing which is then donated to Oxfam and B&Q’s Streetclub.com which connects communities to share tools. According to Patagonia, the eBay partnership opens up their brand to people to couldn’t afford to buy it new, it’s a market they wouldn’t otherwise have had.
3. Providing a Platform (co-fund, co-distribute, co-sell, or revenue share). These type of businesses are able to access the crowd to improve their products or services, reduce costs and develop new offers. eBay, Etsy and Kickstarter are great examples of this approach in action. As Neal Gorenflo of Shareable says ‘empower your customers to create value together on your platform under the banner of your brand. That’s the new face of brand loyalty.”
Forward-looking companies are likely to employ one model, with the most advanced employing all three and putting the corporation at the centre.
Businesses will have to meet customers where they are and enable the Sharing Economy. Those companies who are able to share access to products, services and key business functions with customers will grow. As Jeremiah Owyang cites, businesses will have to ‘let go’ of their companies, ‘to gain the market.’
Those who don’t adopt any of these models will write themselves out of the market altogether.
That’s why the Sharing Economy is the future of business.
Ignore it at your peril.