Consumers embrace the sharing economy

Consumers embrace the sharing economy

Trust, convenience and a sense of community are driving the sharing economy, in which renting and borrowing replace ownership, a PwC report says.

Five key sectors — travel, car sharing, finance, staffing, and music and video streaming — have the potential to increase global revenue in the sharing economy to US$335 billion by 2025 from roughly $15 billion today.

The new business model lets individuals or companies make money from spare capacity or underused assets, says the recent PwC Consumer Intelligence Series report entitled "The Sharing Economy".

Also known as collaborative consumption or the peer-to-peer economy, the sharing economy means consumers can easily find goods or services through digital platforms accessible on technological devices and social media to help make decisions and carry out transactions.

Vilaiporn Taweelappontong, a partner at PwC Consulting (Thailand) said digital technology was transforming the way people work, learn, communicate and even consume.

"We're seeing a growing trend in the sharing economy in many industries around the globe," she said. "It saves people time and money, making our daily lives easy. Matching customer demand and supply is now easier than ever."

Although there are still unresolved matters concerning liability, safety and regulatory issues in many areas, Ms Vilaiporn says the sharing economy is upending business models everywhere. Essentially, companies and consumers are challenged to rethink the use of their underutilised assets.

As for trust issues, among the notable success stories is Airbnb, one of the world's fastest-growing start-up companies, which helps travellers find spare rooms. The service averages 425,000 guests a night and has listings in 190 countries, the report said.

While Spotify pipes music to nearly 40 million users, ride-hailing service Uber continues to disrupt taxi and limousine markets. Despite public scrutiny and lawsuits, Uber operates in some 250 cities worldwide after just five years of service. Valued at around $40 billion, its market worth reportedly tops that of some US airlines.

In Thailand, the US-based Uber became available last year and has intensified competition among other app-based taxi service providers such as Easy Taxi, Grab Taxi and All Thai Taxi.

"Trust, however, is a big issue when it comes to the sharing economy," Ms Vilaiporn said.

"Customers must be able to put their trust in the services. It's what allows someone to rent a room in a house from someone they've never met before or take a ride with a stranger from one place to another. Trust will be developed based on verified identity, together with the information, feedback and comments shared online."

The survey of 1,000 US consumers found that 44% of respondents were familiar with the sharing economy. While 18% of US adults say they've participated in the sharing economy as consumers, 7% say they've taken part as providers.

Collectively, a growing wave of peer-to-peer (P2P) or access-driven businesses is changing the way consumers think about value — the impact of goods and services on their wallet, time and planet.

The findings show that 81% of those surveyed think it's more affordable to share goods than to own them individually, while 83% agree that it makes life more convenient and efficient and 43% confide that owning today feels like a burden.

Some 76% of respondents said the sharing economy was better for the environment.

Many businesses, including automotive, hospitality, retail, entertainment, media and communications have adopted the sharing economy for years.

While there's positive momentum and optimism, unresolved concerns remain. Some 72% said they were worried about the consistency of quality received from the sharing economy.

"The sharing economy is big and inevitable, and it's growing at a rapid pace," Ms Vilaiporn said. "To become a winner in the sharing economy, companies must recognise changes in consumer purchasing behaviours and adapt their marketing strategy accordingly.

"Not only do they need to examine their assets and overhead, they need to engage themselves in shaping regulatory and policy frameworks through developing and complying with the law to legitimise their offerings to consumers and avoid unnecessary lawsuits."

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