Understanding the sharing economy
When the sharing economy knocks, how will you answer?
The sharing economy comprises new business models empowered by multiple disruptive technologies (i.e., cloud-based collaborative apps riding on high-bandwidth, always-on mobile networks and the web) that exploit previously inaccessible information to instantaneously match consumer needs to idle capacity — thus creating disruptive economic efficiencies.
Our Top of mind report explores how sharing economy business models work, the benefits they bring, why they’re important and the issues and challenges faced by sharing economy companies as well as by the industries they disrupt.
Benefits and opportunities
We identify five proven, tangible benefits and opportunities that emerge from sharing economy business models.
1. Customer delight
The power of delighted customers cannot be overstated. “The customer's voice will always carry a lot of weight and customer delight is why the sharing economy is here to stay,” says Pat Hyek, EY’s Global Technology Industry Leader.
2. Individual entrepreneurship
Sharing economy models empower individual entrepreneurs in various ways. “The sharing economy makes entrepreneurs of us all,” says Paul Brody, Ernst & Young LLP’s Americas Strategy Leader, Technology Sector.
3. New “abstracted” value creation
Technology providers are often surprised by the unintended uses their products serve once they are released. Sharing-economy models may drive a similar phenomenon throughout other industries too.
4. Developing economy boost
In developing economies, sharing economy models may enable first-time access to certain assets for a large portion of the population.
5. Societal benefits
Sharing economy models are believed to be better for the environment because they make greater use of existing resources. Also, increased utilization and efficiency raises productivity, which in turn can raise standards of living.
The sharing economy also introduces new challenges. Three of the most disruptive include:
1. Government challenges: tax, regulatory and legal
If significant commerce migrates from incumbent market participants to sharing economy businesses, governments may see revenue flows disrupted before they’re able to enact new rules.
2. Incumbent company and workforce challenges
Sharing economy models often disadvantage incumbents in multiple ways, from luring customers away to not having to own the assets they monetize.
3. New business risks
Sharing economy models face their own challenges and uncertainties, from the continuous rapid evolution of their own business models to newly enacted tax, regulatory and legal codes.