The sharing economy has been a movement that has brought monumental changes in our everyday lives. From changing how we order a taxi to the way we travel, this new trend has become a hugely profitable industry – and many entrepreneurs and business professionals have been taking note.
Although many companies have managed to find huge success in the sharing economy (like Uber, Etsy, Airbnb, etc.) it’s not a guaranteed profit-maker for every type of business.
Finding the right pain points, customers, and delivery methods can be extremely difficult for any startup sharing economy app, so it’s important to have a good understanding of the industry before you jump in and start raising money.
In this article, we’ll talk you through what the sharing economy is, what are the benefits of sharing economy, and how you can find your place as a startup app.
What is a sharing economy definition?
The sharing economy is a flexible economic model where assets and services are provided, acquired, or shared between private individuals. It’s a framework that operates on a peer-to-peer (P2P) level where people can provide goods and services to each other.
Most businesses that exist in the sharing economy will involve community-focused platforms – like an app – that will connect different buyers and sellers.
Within the sharing economy, the following three concepts outline the different sharing terms that are commonly observed:
• Real Sharing: A seller gives a buyer something, without any expectations of getting something back in return.
• Gift-giving: A seller gives a buyer something for free, but there are certain expectations that come with the transaction.
• Pseudo-sharing or commercial sharing: This is where someone is giving something with the purpose of earning some money.
Is the sharing economy sustainable?
At the start of the sharing economy boom, plenty of sharing economy benefits were asserted that this new framework would provide a range of economic, social, and environmental benefits to society.
It offered sellers and suppliers an opportunity to make additional income, and provide buyers with more control and flexibility when it comes to price, choice, convenience, etc.
From an environmental standpoint, sharing platforms made use of underused assets, improved efficiency, and saved resources.
Although the industry offers a sustainable prospect for businesses looking to make money, the overall sustainability of the framework often gets called into question.
Some argue that the sharing economy has moved away from its initial ideals of community and sustainability. Instead, it now focuses on convenience and efficiency that seeks to maximise profits and contributes to excessive consumption and waste.
However, it’s clear that the sharing economy is still in its infancy and as more apps and businesses get on board, the industry will evolve to become a more sustainable option for businesses, customers, and sellers.
According to the study by Statista , the future of the sharing economy is looking bright, with the industry set to grow from $15 billion in 2014 to $335 billion by 2025. This makes it an extremely interesting prospect for many business owners and entrepreneurs.
Tips for any sharing economy app
If you’re looking to start your own app, there are plenty of sharing economy opportunities out there for you.
To be successful, here are some of our top tips.
1. Identify your customers'pain
Sharing economy apps work the best when they can identify a customer pain that isn’t addressed properly anywhere else.
In these areas where there is a high degree of customer pain, customers will be excited and responsive to apps that offer a solution.
In many markets, customers are happy with the way things are and don’t want new apps complicating things. If you’re trying to enter a market where there aren’t high levels of customer pain, you can never expect your app to take off.
2. Balance your digital and in-person experiences
Normally, when you’re building an app, the priority is to design something that is intuitive, user-friendly, and aesthetic. However, in the sharing economy where platforms are used to facilitate physical sharing, you need to learn how to balance your digital and in-person experiences.
Offline service experience is especially hard to master but can be impactful for your customers.
3. Choose your customers wisely
At first, you may be concerned with getting anyone and everyone to sign up for your new app, but this could cause you to fail before you even get started.
The initial adopters of your app will set the tone for your business, so these customers should be picked carefully and monitored.
While you’re still setting up, introduce strict vetting processes for your sellers. This way you have more control over the people who are delivering your service and can instill trust and loyalty in your end customers.
4. Educate yourself on rules and regulations
There are many different rules and regulations that any app operating in the sharing economy will have to abide by.
As you’re starting up your business, it’s important to get acquainted with these rules that could significantly impact how you operate.
5. Identify sources of finance
You may think that setting up an app is a cheap process, but you’d be very wrong. The cost of developing an effective and useful app will involve a lot of capital.
Just look at businesses like Airbnb and Uber who have both had to raise hundreds of millions of dollars to remain operating.
6. Prepare for a lot of trial and error
Even the largest businesses in the sharing economy are trying out new processes. People are still figuring out what works and what doesn’t – things won’t be any different for your business.
So, embrace new opportunities, work with the changes, and look forward to an exciting future in a booming area.
Sharing economy examples: app success stories
Uber has made ride sharing and car sharing a bit part of daily life. By creating an easy-to-use app and having a strong system that quality checks their drivers, they have been able to create a trusted platform that lets passengers get from A to B.
Finally, another early adopter that has cashed in on the benefits of sharing economy is Airbnb. This app lets anyone rent out their house or apartment to others. Homeowners can make some extra cash, and customers can find more affordable accommodation options when they are traveling.
EatWith is a community for authentic culinary experiences all around the world, a platform connecting a variety kind of hosts and people seeking unique dining experiences, from a local family dinner to a 3-star Michelin restaurant.
Kickstarter is a crowdfunding platform that connects people who need money to fund their creative projects, with people who are willing to donate their spare cash.
This app works off the real sharing and gift-giving models. Some people are happy giving their money away to someone who needs it, and in some cases, they may get something back in return, like a free CD or early access to new music.
The first step to running your sharing economy app
After seeing loads of successful instances, you may have the impulse to start your own sharing economy business. However, where to begin? Apart from getting some powerful computers and hiring a team of coding experts, you may need a space in the first place. If you do not want to have a high overhead cost at the very beginning, some reliable flexible office solutions could be a good choice.
The flexible office industry is one of successful industries in sharing economy and is expected to go further in the future. Culture change in the workplace is one of the strong reasons to support the promising future of the industry, to be specific, hybrid working will be the mainstream, which means the demand for shared space, shared office, serviced office, and co-working space will increase.
In the whole picture, with more successful businesses under the umbrella, the ecosystem of sharing economy is more likely to be reinforced, and supporting distinct kinds of businesses in sharing economy could be the first step, therefore renting a flexible workspace as your start can be a supportive move for the sharing economy ecosystem.