The sharing economy is on the rise. But how do you create a business that will thrive in this brave new world?
Understand. 'The sharing economy is a socio-economic ecosystem built around the sharing of human and physical resources,' says founder of compareandshare.com Benita Matofska. 'There is an estimated $3.5 trillion of idle resources in the world - from sports equipment to accommodation - and in the sharing economy entrepreneurs are using technology to build businesses that connect idle resource with demand.'
It's not just efficiency. It's about people's desire to connect to other people and be part of a community, says Matofska. 'People usually become involved the first time because they want to save money or make money. But having a social conscience is definitely a necessary part of being a sharing economy business. It's about companies having a heart and caring about the planet.' For example, Streetbank encourages people to share household items with neighbours.
Convenience is critical. Companies like Uber deliver services on-demand. J Walker Smith, executive chairman of The Futures Company, says: 'There is an aspect of convenience that unburdens people. If you don't have to own something or go through a traditional channel, then you can do things or access things with fewer obligations. Our tagline for the current consumer mindset in developed countries is "Live large. Carry little".'
Think glocal. Sharing economy businesses can be global or local in nature, but they work best when combining the strengths of each. 'Through being global you can become the go-to place for your product or service, but you can get strongest engagement when there is a local feel or experience around the product,' says Robert Vaughan, manager, Strategy & Economics at PwC. Airbnb operates in 34,000 cities - but what users value is staying with local people in their own homes.
Be even-handed. Without providers, you can't deliver anything to consumers, so they must be given equal consideration. 'Having inventory is critical,' says Matofska, 'but the whole idea of consumption has changed so that someone can interchangeably be a consumer and a supplier at the same time.' Users of sites like EatWith or VizEat can host a meal one week, and go to someone else's the next.
Anticipate regulation. Be prepared to demonstrate that you are responsible. 'I don't think we understand fully the risks of the sharing economy, so there is going to be a lot of 'defensive' regulation until sharing economy companies can allay these concerns, either through their own systems or through accumulated experience of safe, reliable, affordable operations,' says Smith.
Establish trust. A new trustmark, Share Trade, will provide consumers with assurance: that the provider has insurance; is who they say they are; adheres to a code of conduct; and facilitates users to share feedback.
Create your brand. 'Successful sharing economy brands put in a lot of effort to how they stand out,' says Vaughan. 'They are more engaging, have a more personalised look and feel, and the CEO is more open than in a traditional organisation.' Call your business something funky like Snapgoods or TaskRabbit.
'Our mission is to match demand with under-utilised assets, help people to share - and make money for ourselves.'
'We're really cheap because we've found a neat way to sidestep regulation.'