Last year, we saw a massive traffic jam caused by many cab drivers who’d climbed out of their vehicles to gridlock central London protesting Uber. Similar protests happened in France and recently in Indonesia. Why the fuss?
Disruption by the sharing economy.
You can regret the day someone bumps you out of the market with their incredible idea, however, you can’t stop them by just shaking a fist.
A shift in societal values and advances in technology birthed this new method of doing business, and it’s shaking up already set up practices. The teenage tech wizards with their laptops and bright ideas are coming, and no one can afford to sit back and smile sarcastically.
Interested in learning more about the sharing economy and the implications for ecommerce?
The world has revealed its uncontrollable appetite for the sharing-based economy, and here’s where this gets interesting for Builderfly store owners: the means of despatch is most regularly ecommerce.
If you’ve set up an online store, there is a way that the sharing economy will or could impact your business. Perhaps you have to shape up so you don’t get disturbed, maybe there is a missed chance — either way, it’s worth your attention.
Let’s learn more about the growth of the sharing economy with lessons from leaders in the fashion industry, tricks for capitalizing on opportunity and mitigating risk for consumer goods, and how to apply these learnings to your own store.
The sharing economy explained
The sharing economy is a socio-economic ecosystem developed around the sharing of human, and intellectual resources. It adds the shared creation, distribution, production, trade and consumption of goods and services by many people and brands.
— thepeoplewhoshare.com
Translation: the sharing economy is a new way of selling, and getting what we want — and from one another instead of businesses or shops. It connects resources and people, it facilitates exchange and thriftiness (think Airbnb), it enables individuals to monetize underutilized assets, it avoids wastage, and that’s only the beginning.
Three leading ways the sharing economy now appears:
- Connecting spare capacity with demand — like airbnb.com, zipcar.com, borrowmydoggy.com
- Collaborative consumption — more of like walking tours
- Transactions that provide temporary access rather than ownership— for example, renttherunway.com
Almost 44% of US adults are familiar with the sharing economy and 19% of the US adult population has engaged in a sharing economy transaction.
—PWC Paper on the Sharing Economy
We’ve consistently been able to lend and borrow, however, the past decade has seen a massive rush. What changed, and why do we see this uptake currently?
A shift in values, advancements in technology, and social media possibilities
A 2011 survey by BAV Consulting demonstrated that 66% of buyers (and 77% of millennials) favored a pared-down lifestyle with fewer possessions.
Millennials place more on sharing and less emphasis on owning, bartering, and trading to access coveted goods. The future of consumption would seem to be accessed over ownership.
The ability to monetize underutilized resources, or to forgo purchasing those assets altogether, has significantly overturned consumer purchase behavior, especially when it comes to expensive things.
— PWC Paper on the Sharing Economy
Sounds green, doesn’t it?
Another shift has been in the planet’s unwillingness to wait. A hunger for instant gratification is the sign of our generation, and technology has had its impact in encouraging this. APIs and Apps have made it possible for businesses to meet consumer needs rapidly, creating an opportunity for services like Deliveroo and Uber, saving minutes and circumventing the need to carry cash.
Lastly, there’s the rise of social media.
A 6th of the world’s population is on Facebook. Stop and think for a minute that there is no other entity that so unilaterally ties us, and it’s kept running for profit. While that’s a bit scary, we do have social media to thank for building trust in ecommerce and online services through social feedbacks.
With Airbnb, we think people thought it was insane at first to allow strangers into your house. However, this ecosystem of having recommendations and people truly caring about their reviews and online reputation has demonstrated that most of the time people are cautious and practically generous with their stuff.
— Daryl Weber, Global Director of Creative Strategy at The Coca-Cola Company
Step aside B2C, buyers are doing it for themselves. We are beginning to trust each other and think sideways, which is pretty magnificent.
Why consumers like the sharing economy: less waste, revenue, and better quality
There are so many reasons people love the sharing economy, and we’ve pulled out a couple of that standout.
It reduces waste and excess
Anywhere there is a ton of waste going on, like the car or the kitchen space not being utilized, it feels like that’s a chance for sharing to come in and help diminish the waste.
— PWC Paper on the Sharing Economy
It encourages high quality over cheap
If you missed The Story of Stuff when it came out years ago we suggest watching it for a quick lesson in how enormous businesses drive consumption with redundancy. The world has faith in high quality because of its durability and resale value.
In the sharing economy, quality means a lot. Hardware will be as much about enduring function as it is about structure.
In some ways this makes a strain with the possibility of rental, however, there is room for both. For instance, in apparel: Buy a couple of high-quality items, make a lean wardrobe, and supplement this with borrowing (or lending).
More variety, lower commitment, less guilt
In a general situation of two birds with a single stone, implementing the sharing economy costs users many products and services, with lessens guilt for the shopaholics and less commitment.
Where it all started: the sharing economy for apparent
This trend started back in 2004 when Bag Borrow or Steal, one of the leading organizations in the online apparel rental industry, opened its closet to rent jewelry or purses for unique occasions.
The company got fame after being featured in Sex and the City and is recognized as one of the forerunners. Rent the Runway, established in 2009 made its mark next.
As the fashion rental market matures, sellers are opting for a niche to separate them. Take Belly Bump Boutique, who solve the particular issue of quickly evolving body-shape and dress-sizes during pregnancy.
How to implement the rule of the sharing economy to your business
Don’t simply sell stuff — offer rentals where you can
If you’re selling something, would you be able to rent it? Maybe it will urge trial. Possibly it will lead to a sale.
Rather than just selling goods, would you be able to rent them too? It may prompt additional income.
Obviously, this won’t work for everything. There are items we need access to constantly — like refrigerators — or items we feel it is abnormal to share — like toothbrushes. Sometimes just ownership makes sense.
But for items we just use once in a while, ownership isn’t cost-effective. Are you sitting on something rentable or shareable?
Gain some love by being more sustainable
The world is increasingly environmentally mindful, and if you show you’re on board, as a brand, you’ll win yourself some affection.
This probably won’t be measurable, however, it is a smart idea! People feel loyal to organizations who care, loyalty is a genuine asset.
Is there some way you could be increasingly green in your business model? Can you urge or empower recycling or sharing between customers?
Both Patagonia and Levis both offer trade-ins on old gear. It doesn’t need to pull a premium brand down.
How to start your own sharing economy-type business
If you’re ready to begin your own rental or sharing business, here’s a little procedure you could go through.
- Examine your underutilized assets
- Take a look at unmet demand or a source of friction in your neighborhood, or worldwide
- Investigate what it would take to meet those requirements
When you’re prepared to get started remember you have to host it all on building a wonderful, frictionless platform (like Builderfly). Finally, be careful about the legal side of collaboration. Ensure you have consulted with somebody who understands this well before launching.
Jump into the new economy
We’ve seen various sharing economy type stores showing up as of late. Whatever your store looks like today, the sharing economy presents too huge an opportunity to ignore.
Regardless of whether you have a current business or an idea brewing, as the IoT surges on we suggest continuously analyzing the value your store offers and seeking ways to make your product more engaging to today’s collaborative market.
Tell us what your personal experience of the sharing economy has been, or if you’re thinking about jumping in now — we’d love to hear from you.
