What is the concept and how does it work?
Humanity is not new to the concept of sharing; they have grown learning to share things with their parents, teachers, friends and relatives. In the 21st century, with the kind of advancements that we have made in the area of information and communication technology, internet has enabled the availability of new platforms including social media for us to share things with the people in our loop. The concept of sharing economy is simple and straightforward- any product or service that is not in constant use for the owner or that the owner believes can be shared with others can be rented out with those who are in need of that particular product or service. The lender can contact the borrower through the relationship established through social media or other online platforms. There are multiple reasons and motivating factors for people to share online. Sharing economy, which is the modern form of market economy is enabled through the internet and its success depends on the fact that people can share products or services in a simple, fast and effortless way and get paid for this sharing exercise . One of the primary reasons is the manufacturer’s age old traditions and narrow approaches to value creation, with focus on short term gains for the company and ignoring the unmet needs of the market . At least some companies have realized this and have started focusing on creating shared value . The other major reasons include arousal like specific emotion and general arousal, word of mouth and getting viral. The major social motivations to share include shared passion between the people who share, opportunity to socialize, helping mentality, projecting oneself as a zeitgeist, thought of breaking the news and the excitement that it brings along, self-expression and shared emotional experience. The other major motivating factors include information sharing, better processing of information, ability to educate and advice others on the benefits/drawbacks of specific products and services, etc. The humanistic emotions that are satisfied through sharing include self-actualization, esteem, love and belongingness, safety and physiology .
This concept has got its own strengths and weaknesses. As mentioned above in a sharing economy, people share things online either within their closed loop or to people outside the group as well, probably strangers who may or may not share the same passion and interests of the lender. Also, the strengths and weaknesses should be evaluated at both the micro level (personal) and the macro level (economy, company etc.).
Some of the major strengths of this concept include-
Enables efficient utilization of resources
Fulfills the societal ego of people
As sharing economy gets more organized, manufacturers will innovate and bring in disruptive changes to the value chain, which will be beneficial to the end user
Lower search and transaction costs to the customers
The sharing economy provides greater flexibility- availability of a particular product or service at any point of time and at the desired place and that too at a much lower cost. This brings in enormous value.
Quick sharing of information- Social media platforms and mobile applications like WhatsApp are enabling quick sharing of information, which has been proved beneficial to the society on multitude of occasions.
Sharing economy is not limited to individuals exchanging goods and services online. It is applicable to companies as well who can perform the similar exercise and be a part of the sharing/collaborative economy
Even though started with transport and accommodation, the concept of sharing is now spread across many areas, virtually all the areas where sharing is possible
Promotes micro-entrepreneurship, where anyone can become a supplier easily
Provides companies with innovative ideas through exchange of information
A few of the weaknesses of the sharing framework include-
Sharing through social media has the potential to reduce the wages. Any job can be posted online and can get the best results at the cheapest rate possible as people with the expertise for the job loops in from across the world
It can also affect the hospitality industry as hotel rooms may lie vacant or will have to be let out at cheap rates as accommodation will be shared by the online parties. Also, individuals in tourist areas can let out a portion of their house for rent through online sharing, which may impact the business of hotels.
Sharing taxi may not provide a standardized rate as the metered taxi. The rate will be quoted by the person offering the service.
Sharing concepts like carpooling comes with its own security risks, particularly when dealing with strangers. There are several cases against Uber across nations for hiring drivers with criminal background
Matter of trust is a crucial factor that may act for against sharing
Many argue that sharing elongates the life of technology and may prove detrimental to innovation as people start choosing sharing over new technology innovations
Lack of standardization and regulation of product/service quality
Provide a clear example of how this concept can be used in practice by a marketer (i.e., show me that you can apply and really understand how this concept works).
One of the biggest success stories under the concept of sharing framework is BlaBlaCar. It is a ridesharing company founded in 2006 and headquartered in Paris. The company has grown into a global MNC with operations in over 20 countries and over 20 million members . The company acts as the platform for drivers and travelers where drivers with empty seats can offer seats for those who want to travel on the same route. When an interested party contacts the driver, the rates are negotiated and the boarding point is mutually discussed and agreed. Both the driver and the traveler have the option to narrate and rate their travel experience in the website. Drivers with higher rating will get more enquiries and can be priced at a slight premium.
The company is now the leading rideshare platform, the services of which are enjoyed by people in 22 countries.
Works Cited
Bla Bla Car. About Us. 3 November 2015. Website. 28 April 2016.
Brett, Brian. nytmarketing. n.d. Website. 27 April 2016.
Deloitte AG. "The Sharing Economy: Share and Make Money. How Does Switzerland Compare?" May 2015. deloitte.com. Website. 27 April 2016.
Michael E. Porter, Mark R. Kramer. Creating Shared Value. February 2011. Website. 27 April 2016.
