Sharing Economy: what businesses need to consider to stay competitive
Market disruption is becoming a regular occurrence across all industries. New start-ups are creating shockwaves around the world and well-known, established companies are being forced to reconsider their strategy in order to compete with those that have used digital platforms to get ahead. The fact that the ‘sharing-economy’ is now responsible for over 5 million jobs in the UK alone highlights what is already a ‘rags to riches’ success story. However, the question must be asked, can it be sustained?
The sharing economy is influencing all industries, but especially the transportation and hospitality sectors, which have seen digital start-ups – such as Uber and Airbnb – experience rapid growth due to their consumer-friendly business offerings and their clever economic models. These digital innovators not only address the demand for consumer convenience but also offer flexibility and anytime access to competitively priced services.
Public transport is a strong example of an industry that is in the process of being disrupted. The impact of Uber and car-sharing businesses has helped to reduce the cost of transportation significantly; no longer does the consumer have to pay for parking fines, road tax, car insurance or sky-high taxi fares. Instead, consumers can choose and control their mode of transport from their own smartphone, tracking the waiting time and cost of their journey and even sharing the cost of a journey with a friend, if they wish – all of this adding to the cost and convenience benefits offered by the sharing economy.
It is a similar picture in the hospitality industry. Airbnb has opened up affordable travel to those not wanting – or able - to stay in fully-serviced hotels, but instead are happy to rent homes – or even individual rooms – from homeowners that make their properties available online for short-term lets.
Both scenarios involve consumers borrowing or renting assets owned by someone else – in these cases, a car or accommodation – and both are supported by innovative technology. In order to remain competitive, traditional businesses will therefore, need to acknowledge, plan and implement a similar roadmap of digital development, with the full understanding and support from the senior management team.
Hospitality is a good example of an industry rising to this challenge by using technology to enhance its traditional services. Hotels are increasingly using email and instant messaging services to communicate with guests before they arrive – for example, to check any specific requests or needs that guests have – as well as during their stay, in the event of any queries guests may have about the local area and so on. The truth is that established businesses are often in a much better position to provide this kind of personal and on-hand customer service, compared to those in the sharing economy.
With most businesses only just embarking on their digital journeys, it is important for them to consider both the short and long-term benefits that changes like these can bring. This way, organisations will be able to adapt their strategies in line with their customers’ needs right now, and also plan for the long-term impact these changes will have.