Rise of the Sharing Economy
The world is becoming more connected as people’s access to technology and Internet increases. According to McKinsey Global Institute (MGI) report the amount of cross-border bandwidth that is used has grown 45 times larger since 2005 and is predicted to increase exponentially. The global flow of information and communication has given rise to peer-to-peer based distribution resulting in a collaborative or sharing economy. With Internet and smart phone usage expanding, the ability to interact and more importantly the ways in which we interact are changing drastically.
The transition of power to the endpoints of the network through digital globalization has enabled this model of peer-to-peer (P2P) commerce. With p2p networking bringing people and/or businesses together to directly deal with each other and exchange goods and services, the expensive and often slow ‘middle-man’ process is eliminated. Digitization and sharing of resources such as music and movie files initially gave rise to online platforms such as Napster and LimeWire where anyone could post files to be shared with others.
Since then, the sharing economy of p2p service-trading sites has expanded beyond exchanging files to facilitating of all kinds of goods and services exchange. There are numerous p2p online and mobile platforms fueling the sharing economy. Here are a few popular ones:
· Ebay and trademe — offer people to sell their unwanted assets in exchange for money
· AirBnB and Uber — recently growing trend of offering someone’s assets temporarily, such as cars and homes that are not being used often to others who are willing to pay for temporary use.
· TaskRabbit — connects people together to hiring trusted individuals for many domestic services such as cleaning, delivery, running errands etc
· CurrencyFair and Bitcoin — uses p2p technology for money transfers/currency exchanges without middleman authorities such as banks.
It has been interesting to see the revolution of the online sharing economy over the last decade that have made it easy for people on both ends of a transaction to contact and work with each other. The growing popularity is largely due the benefits of lower costs and convenience offered to people and businesses. It also offers owners to make money from their underused assets and offer services with flexible working conditions.
It is quite evident that the rise of the sharing economy is largely due to digital globalization. Advancement in Internet-enabled devices such as smartphones along with better location based services and networks have enabled people with instantaneous access to such innovative p2p services. The proliferation of social networks has also contributed in shaping the way people share information.
I have personally used quite a few p2p services in the various places I have traveled. However, I have noticed that different platforms are popular in different countries. This makes me wonder about the influence of economic conditions on these services where different countries have varied Internet facilities and connectivity.
In this blog series I would like to explore the reasons why different services are more popular in some countries and not others. The challenges that p2p businesses face in implementing their services in different countries where social and culture differences exist. I’m also keen to investigate the disruptive impact the sharing model has had on numerous industries with traditional business models. I want to explore the risks, legal and regulatory concerns of p2p services and the future of sharing economy.
