European ‘sharing economy’ tipped for rapid growth
Companies like Airbnb and Uber have made headlines – positive and negative – around the world as they disrupt the traditional holiday accommodation and taxi models. They’re two of the best-known pioneers of what’s become known as the sharing economy.
Mark Cliffe, chief economist at ING Group
Such peer-to-peer pooling was unimaginable just a few years ago. Now, though, nearly one in 10 people in the US are getting involved, and Europe is playing catch-up – fast.
“New mobile and internet technologies that make it quicker and easier to share have accelerated the growth of the sharing economy,” says Mark Cliffe, chief economist at ING Group. “There’s a clear shift in perceptions of ‘ownership’, and it has far-reaching implications for corporates as well as consumers.”
Or as The Economist wrote earlier this year: “The sharing economy is the latest example of the internet’s value to consumers. This emerging model is now big and disruptive enough for regulators and companies to have woken up to it. That is a sign of its immense potential.”
Competing with corporates
Some 5% of consumers in the Netherlands and in Europe broadly have already tried peer-to-peer sharing, but considerable growth is expected over the next year, according to a recent ING survey of almost 15,000 people in 15 countries. Nearly a third of people in Europe think they will take part in the sharing economy, also known as collaborative consumption, in the coming 12 months.
As the sharing economy comes of age, it will become an increasingly serious competitor to the corporate world. Greater transparency and supply will put pressure on margins of companies that supply ‘shareable’ products or services. On the other hand, it could boost sales of ‘unshareable’ items, as well as creating opportunities for companies to provide services related to the sharing economy.
PwC recently estimated that the five main sharing sectors – peer-to-peer finance, online staffing, peer-to-peer accommodation, car sharing and music/video streaming – have the potential to grow their global revenues from around $15 billion now to $335 billion by 2025.
Incumbents need to develop effective strategies to respond. Few sectors have been as quick off the mark as the automotive industry: most manufacturers now run their own car-sharing schemes, such as Car2Go from Daimler, or DriveNow, a joint venture between BMW and Sixt. Others have made strategic investments in new entrants, such as Avis in Zipcar or BMW in parkatmyhouse.
“Organisations need to start the process of identifying the potential for disruption in their sector today,” said PwC. The next step is for the company to develop a mitigating strategy. That might be acquiring a new entrant, partnering or investing in them; differentiating products to continue to justify the existing pricing structure; or developing their own sharing economy concepts.
Some big organisations are sharing their assets, both tangible and intangible, with other companies. Pharma giant Merck, for example, shares some of biotechnology company Medimmune’s manufacturing capacity. GE partnered with invention platform Quirky, giving Quirky’s inventor community open access to GE’s patents and technology.
Cars, not clothes
Among consumers, cars are the most frequently shared item, but holiday accommodation is expected to take the lead in the next year, the ING survey showed. There is less willingness to share things like clothes and household appliances. And there’s a clear age dimension: those participating in the shared economy are most commonly well-educated consumers aged under 35.
Saving money was the most frequently stated reason for sharing. The view that it’s good for the environment was also influential, as was the idea it’s an easy way to make extra money. By contrast, the reason most European respondents gave for not sharing was aversion to other people using their possessions: 64% in the Netherlands said “I don’t like other people using my property”. Worries about insurance deterred 44% of Dutch respondents, while 32% said they did not trust the quality of shared items.