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Today in Fellow Funders we want to pay special attention to a concept that according to the Time Magazine “it is 1 out of the 10 amazing ideas that will change the world, since it creates new forms of entrepreneurship and a new concept of property”. We are talking about the Sharing Economy. Be welcome to the collective consumption world! Be welcome to the world where there important thing is to enjoy the good and not its property!
It is possible that when we say sharing economy the first thing our subconscious think is free services. Nothing far from the truth. This is like any other business model whose aim is to maximize its profits. And it does so by being completely adapted to the new ways of consumption, where enjoying the service prevails over its property.
The term sharing economy is already part of our vocabulary and we mainly associate it with technology companies that are either known by their large economic valuations as well as their multiple lawsuits. But, what do we understand by Sharing Economy? According to the well-known Wikipedia, “Sharing Economy” is a way of distributing goods and services that differs from the traditional model of corporations. In the sharing economy, individuals are said to rent or ‘share’ things like their cars, homes and personal time to other individuals in a peer-to-peer fashion”.
Figures make help us realise how important the Sharing Economy is
- 72% of American Adults have used in their life at least 1 sharing economy platform.
- It is estimated that 1,4% of the Spanish GDP is linked to the Sharing Economy. It is estimated that it will represent 3%in 2025
- 1/3 Internet users in Spain often use Sharing Economy platforms. It is estimated that 80% of these users are under the age of 25.
- 8/10 Spanish consumers plant to use a sharing economy service in the medium term.
- Approximately 60% of sharing economy platform users indicate that price is their main motivation.
However, within the overall concept of Sharing Economy we must separate two different aspects:
- Offline Sharing Economy (without digital platforms). Here we can talk about Time-based currency, Consumer Groups, Urban Orchards and Co-working.
- Online Sharing Economy. Here technology is essential because consumers and suppliers, whether professionals or individuals, interact through a technological platform.
When we generally talk about Sharing Economy, we usually mean Online Sharing Economy. This is a business model where suppliers and consumers interact through a technological platform. We can distinguish between different business models and types of companies:
These are companies that do not provide services, that is to say, the goods or services that users enjoy are not their property. Digital platforms are online marketplaces. They are intermediates between individuals and individuals or professionals in exchange for, generally, payment. An example of this are: Blablacar for carpooling, Airbnb for homestay and Wallapop to buy used goods.
These are business models where individuals and for-profit professionals interact. An example of this are the shared rides apps such as Uber or Cabify; micro tasks such as Homeserve and food delivery apps such as Glovo or Deliveroo.
These are business models where a company, for commercial purposes, makes available to a different user its own goods for temporary use. An example of this are car rental companies such as Emov or Car2go.
So to speak, when we mean Sharing Economy we mean allowing a community or a network of individuals, interconnected in digital platform, to use and enjoy a good that it has been barely used. Therefore, the need to buy it decreases. Although it may no seems like that, we are living an important cultural and economic change. We are changing from individualized consumption to collaborative consumption where enjoying the service prevails over its property.
The emergence of these companies has become the worst nightmare of many highly regulated sectors. And has also led to a radical change in working relations because it is no longer the employer-employee concept but the freelance-end consumer.
Fellow Funders thinks that these business models have arrived to stay and therefore organizations and companies will have to be prepared and adapted. Otherwise, they will have to close permanently. However, it should be taken special care that while developing the Sharing Economy we are complying with the rules of the game in the markets and respecting the labour rights of employees. Otherwise we would be blamed with the phenomenon that some author has defined as “When Radical Capitalism disguises itself as collaborative economy“.
Fellow Funders thinks that…
…these business models have arrived to stay and therefore organizations and companies will have to be prepared and adapted. Otherwise, they will have to close permanently. However, it should be taken special care that while developing the Sharing Economy we are complying with the rules of the game in the markets and respecting the labour rights of employees. Otherwise we would be blamed with the phenomenon that some author has defined as “When Radical Capitalism disguises itself as collaborative economy“.
Fellow Funders don’t want to lose any business opportunities that the Sharing Economy can offers to us as investors. In the next few weeks, we will present you a project related to the Sharing Economy. We encourage you to analyse them carefully and, above all, don’t stop believing. We can’t ignore the new business models that are emerging. It’s a world full of opportunities!
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