The Sharing Economy
Sharing economies have taken the world by storm, revolutionising the way transactions are made, as well as the way services are provided. A sharing economy is now recognised as any digital platform that matches optimised supply to better demand, while generating profit or revenue. Common examples of sharing economies are Carousell, Uber, Grab, and Airbnb.
How the Sharing Economy Benefits Society
On the whole, sharing economies have benefited society greatly. Tan feels that adopting the sharing economy model allows for a leap into a better future, being able to drastically change the way people consume products and services. The sharing economy model provides ease for consumers to find products and services they need, and also allows for much more efficient business by optimising supply and demand.
For example, traditional taxi drivers have persistently brought up the problem of having a lack of customers, while the customers have also voiced their complaints that there are never any taxis around when they urgently need one. This, Tan explains, is a result of poorly matched supply and demand. Sharing economies such as Uber and Grab, however, have found a way around this problem, so they do not face this problem, but instead have achieved massive success.
The ability for sharing economies to match supply and demand accurately is one advantage they hold over traditional businesses, and Tan predicts that it is only a matter of time before the sharing economy model takes over traditional business systems.
The Rising Importance of Data Analytics
As previously mentioned, the ability to accurately match supply and demand can be a huge factor to a business’s success. This process relies heavily on the ability to analyse data, a concept that is not particularly new or revolutionary. However, what was once seen as a niche concept has evolved to being a basic competence that one has to have today, regardless of their role, be it marketing, sales, business development or anything.
As Tan puts it, “whoever has the most data wins”. Sharing economies typically stock up on data, consuming gigantic amounts of it in order to better serve clients, matching what they want to someone willing to deliver it. This creates an environment where clients are able consume products more easily and effectively as compared to traditional businesses.
Beating Traditional Businesses
The key advantage sharing economies have over traditional business models is their ability to match supply and demand in the most optimal fashion, which stems from their analysis of a grand store of data. Tan explains that this leads to greater convenience for consumers, and hence entices them away from traditional businesses. Now, sharing economies are still new, but they are already a huge rising force in markets. It may only be a matter of time before they completely take over traditional business models.
One obstacle to this seemingly imminent future is the skepticism of various governments towards the sharing economy model. Governments typically have regulatory policies, which poses as an obstacles to sharing economies. For example these policies may restrict their ability to interact with certain markets. Government’s skepticism towards sharing economies comes from their fear of scams, their desire to preserve traditional businesses, and the possibility of sharing economies being exploited for profit at the expense of others’.
New sharing economies should aim to work together with the government from the start, so as to reduce this skepticism, and build trust with the governments instead. For example, the product or service can solve a problem that the government themself wishes to solve. This partnership may prove to be beneficial for both parties, with the government’s issue being addressed and the sharing economy gaining support instead of opposition from the government.
Watch the full Arcadier Inspire Summit by Jim Tan here