16 Aug The Sharing Economy and What It Means For Small Business
The sharing economy is changing the way we use everything. We get all the benefits without the overheads. Why own a car and pay to maintain, clean and store it when you’re not using it when you only need it for 2 days a week? Platforms like Uber and Airbnb act as a middleman to facilitate the relationship between owners and user. Digitisation also means that programs like Netflix, Spotify and Xbox Game Pass (Netflix for computer games) allow users to download and stream any media they want with a low-cost monthly subscription without owning it.
The sharing economy can be a rich area for small businesses to take advantage of. Almost any area can find a way to use the sharing model, take a butcher as an example. Most people don’t own a spit roast but when they have a big family event, they rent one from the butcher. If this arrangement could be digitised, the relationship would be greatly streamlined. But small businesses need to be careful with how they use a sharing platform.
Take the Chinese umbrella sharing startup ‘E Umbrella’ as an example. The idea was to have stacks of shareable umbrellas available around the city mostly at train and bus stations. Users are charged a ¥19 ($3.50 AUD) deposit and half a Yuan per 30 min. Sadly they over looked the return process for the umbrellas as have now lost track of almost 300,000 of them. Some have pointed to the issues that umbrellas face in the sharing economy is that umbrellas aren’t very expensive to purchase, so unlike Uber or Airbnb, the savings don’t add up.
But what does this mean for small business in the future?
This trend could affect small business from both directions. From a supplier perspective, it could mean lower running costs for you as suppliers save money by taking advantage of the sharing economy and pass the savings onto you. Say the company that supplies your raw materials starts using a shared shipping platform as opposed to having to pay their truck drivers salary and maintenance of the truck. This could mean a better product (e.g. more frequent delivery times and faster delivery) and lower cost for you. (See our article on The Co-Cooking Kitchen for another example) The sharing economy could also create new opportunities for you as a service/product supplier. Now you can outsource and save money on the production of your product (e.g equipment, delivery) and again, pass the savings onto your customers.