What is a Sharing Economy?
A sharing economy can be described as an economic model in which goods and resources are shared by individuals and groups in a collaborative way such that physical assets become services. The sharing economy’s growth has been facilitated through advances in big data and online platforms.
The sharing economy is one of the most rapidly growing market phenomena in history. Since 2010, investors have contributed over $23 billion in venture capital funding to start-ups that are using a share-based business model. As many of the share-based firms are private, it is difficult to know the exact size of the sharing economy.
- A sharing economy can be described as an economic model in which goods and resources are shared by individuals and groups in a collaborative way such that physical assets become services.
- The sharing economy enables people and organizations to earn profits from underutilized resources.
- Technology has assisted the sharing economy’s growth to its present level, and the momentum will accelerate with more digital connections.
Significance of a Sharing Economy
Over thousands of years, groups of people have shared the use of assets. Still, the invention of the internet, through the usage of Big Data, has made it more convenient for asset owners and the entity looking to use such assets to reach one another. The mechanism may also be referred to as shareconomy, collective economy, shared consumption, or peer economy.
Sharing economies enable people and organizations to make money from underused resources. In a shared economy, unused assets such as parked vehicles and spare bedrooms can be leased out while not in service. Physical assets are thus exchanged as services.
The sharing economy has developed over the last few years. It now represents an all-inclusive concept that refers to a host of on-line commercial exchanges that can also include business-to-business (B2B) encounters.
Impact of Sharing Economy
Historically, the sharing economy has been disrupting traditional sectors of business. The lack of inventory and overhead helps sharing-based businesses to operate leaner. These businesses can transfer value to supply chain partners and customers through increased efficiencies.
Uber’s rise in the transport sector is one of the best ways to illustrate the disruptive impact of the sharing economy on the transportation sector. Uber and other ride-sharing services offer a cost-effective, comfortable, and safe alternative to conventional transit options, such as public transportation or taxis.
By making use of an efficient mobile app and network of verified drivers, Uber fulfills consumer transport requirements while providing a much better experience than the conventional means of transport.
2. Consumer Goods
The three most important factors in the decision to purchase consumer goods are convenience, affordability, and efficiency. Therefore, it is not surprising that sharing-based brands also dominate the consumer goods sector.
eBay is among the innovators in the peer-to-peer consumer market. Their innovative system enables users to purchase and sell used or new products via their interface and ship goods directly to their homes. Consumers can look at various products at customized price ranges, with various guarantees, and under different conditions. This provides consumers with a more convenient, affordable, and efficient way of purchasing goods.
3. Personal and Professional Services
The effects of a shared economy are best demonstrated in the field of technical and personal services. Professional and personal services are characterized by work requiring skills, special knowledge, experience, and certification or training, such as accountants, copywriters, or plumbers. In the case of a shared economy, this is often referred to as freelance, and other popular words similar to short-term work.
While the sharing economy has yet to truly take root in the healthcare sector, many analysts suspect it is the next target. The drawbacks of conventional healthcare programs, costs, and capital are considerations that have been mitigated in other sectors by share-based approaches. From group consultations to telemedicine, the sharing economy is expected to transform the healthcare sector.
Technology has assisted the sharing economy move to where it is presently, and the momentum will accelerate when people and organizations get more linked digitally. Although it can be seen how dominant collective demand can be in some industries such as shipping, consumer goods, and services, many other conventional sectors will soon face shifts due to the sharing economy.
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