Development of Sharing Economy and Big Data #MSING051#
With success stories of sharing economy pioneer companies like Airbnb, Zipcar and lyft, sharing economy has become a growing popular topic in recent years. Some people think the success of sharing economy are attribute to the innovative idea, peer-to-peer based sharing of access to goods and services. However, the idea of sharing has been around for a while. For example, as is well-known homestay existed for decades and it is one form of peer-to-peer based sharing of property. Most hobby based clubs are started as a platform for people with similar interest to share goods, facility and ideas. In less developed countries, farmers in the same village always share the expenses to keep a fleet of agriculture equipment. Even car-sharing business can be traced back to 1948 when a Switzerland housing cooperate opened a small car share arrangement.
So, what caused the sharing economy growth in recent years? In my opinion, the key to sharing economy is that all party participate in the trade are rewarded for the sharing of resources, when compare to each party own their resources. Neglect people’s desire to the sense of ownership, the benefit of owning a resource is the convenience of having access to it whenever needed, with a cost to acquire such resource. With the homestay case, although owning a property might be more convenience, the cost of ownership made owning low-utilization property impractical. With limited tenant to share the cost, homestay is often offered after the fact of owning a property as a mean of additional income, rather than having homestay in mind when acquiring the property. Hobby club members choose to pay the membership fee to access the club as they want. However, the existing of club house requires a certain amount of people with shared interest geographically close to its location in order to share the cost. When farmers in the same village share agriculture equipment, with carefully planned usage schedule they can still get access to the equipment when needed while only invest a portion of the equipment cost. A good coordination of equipment usage is critical and is made possible given the small group of people.
From those cases discussed above, it is clear the growth of sharing economy is limited by the challenges in effective cost sharing and matchmaking of resources to people in need. How were those challenges resolved and lead to the recent sharing economy bloom? This is where big data come in to the picture. With the use of big data, Airbnb is able to track local hotel rates, sharing photo and reviews. Lyft is able to provide optimized route for driver to reduce vacant ride and for rider to reduce wait time. Use of big data helped to overcome information asymmetric and reduce uncertainty in transactions, thus created efficient matchmaking and effective cost sharing.