Published on the 27/07/2017 | Written by Donovan Jackson
Predictions on where disruptive business models will strike next…
By now, the notion of the ‘sharing economy’ isn’t new. Powered by technology which makes ‘brokerage’ between those who have resources and those who need them, the value of the sharing economy is becoming clearer, with researcher Juniper forecasting that it will reach US$40.2 billion in 2022, in terms of platform provider revenues, up from $18.6 billion in 2017.
In a whitepaper (registration required), the market watcher has also identified three industries which it said are ‘ripe for disruption’. However, those three areas are also well-competed, resting on what have rapidly become commodity business models.
Juniper pointed out that the sharing of items as a business model isn’t unusual, with the obsolete video store serving as an example. ‘With the introduction of digital formats, alongside the rapid expansion of the online ecosystem, the sharing of not just physical goods, but also skills and human resources, has spiralled upwards’,” it added.
Sharing now extends to services, money, transport, space (as in premises, not the cosmos), goods, and music and video. The technology ecosystem, exemplified by the smartphone, has made possible sharing of these (and likely other) resources in a somewhat straightforward ‘broker’ model, allowing the platform provider to clip the ticket on any deals entered (one imagines) by consenting adults. Including, of course, Tinder.
Among those components of the sharing economy, the researcher said it is in shared space, shared transport and shared logistics from which the lion’s, er, share of the growth to 2022 will come.
None of these should come as a surprise. After all, AirBnb and Uber, the leaders in space and transport respectively, are somewhat mature. What they are also, is commodity business models, with the concept being the real secret sauce, rather than the technology being any sort of differentiator.
And so it is that Uber has multiple competitors, from the big fellas like Lyft, to BlaBlaCar in Europe, Ola in India, Grab in South East Asia, and Didi Chuxing in China. There are multitudes more: Australia, for example, has GoCatch, and New Zealand has Zoomy, proving that it is relatively easy to pull together an app which rests on freely available technology to create a working service. Similarly, Airbnb has established a viable concept which is relatively easy for others to copy. That drives growth and competition.
Juniper has found that since its early 2016 research report, shared transport companies are on average taking closer to 30 percent of driver earnings, with the largest market by far being North America, where Uber dominates its closest rival Lyft, earning 9 times more per annum.
Once a media darling, Uber today is copping it for everything from a misogynistic culture to ‘ripping off drivers’ (who, one is nevertheless tempted to observe, are not forced to drive for Uber or anyone else). It is also entering the well-populated halls of infamy of cash burners, with question marks surely arising over its valuation, once estimated at US$70 billion, now down to around $50 billion.
Juniper said drivers in the US can expect to get an average fare of US$14.39 per journey this year – but that’s before platform providers take their cut. You can, of course, top up your driver’s wallet with a tip, even in New Zealand where doing so is far from normal practice.
To space, then, and not on a rocket ship, but instead into some premises. Juniper noted that the concept of space in the sharing economy covers both consumer- and corporate-focused businesses. ‘Generally, the model centres on renting space itself, as a cheaper alternative for consumers and a revenue stream for those providing the rental of excess capacity’.
Airbnb is the engine for the consumer space; how mature is it? Perhaps surprisingly, it is almost a decade old, having launched in 2008. But the more interesting hot spot here is corporate space rather than that for which Airbnb is renowned. ‘To date, North America has had the most rapid adoption of shared corporate space, with a number of services seeing considerable investment and anticipated growth. These include PivotDesk (recently purchased by fellow shared space provider, Industrious) and WeWork, which has been valued at US$16 billion,” Juniper said.
Juniper said it expects the corporate space sector to deliver significant growth over the next 5 years. “More, large office properties [will] sell hundreds of desks at a time. We expect almost 60,000 locations to be used for shared office space by the end of 2017. Until now the process has been very much set on offering 5-20 spare desks in established offices.”
Across the period Juniper forecasts the average corporate space rental cost per month, per desk, to increase to just under US$487, in line with expected price increases.
Finally, a quick peek at shared logistics. Deliveries by the likes of FedEx and DHL, and indeed Australia or NZ Post, have always rested on the shared model; how else could you get a package to your door for a couple of bucks? But, confirmed Juniper, emerging applications of the model have other features. “Whilst previously local delivery in the sharing economy had very much focused on the delivery of more traditional mail packages, the growth sub-sector over the past year has in fact been restaurant and takeaway food delivery.”
UK-based start-up Deliveroo, it said, has over 20,000 cyclists (as of June 2017) and revenues of US$130 million in 2016.
Uber is muscling in on this market, with UberEATS, while the grand old dame of e-tailing, Amazon, is another major player. As is the case for the shared rides and shared space brokers, expect plenty of competition in the shared logistics space, from incumbents as well as new players. The former may recognise opportunities for improved capability, flexibility and performance by using apps, location based technology, and likely dollops of AI, while the latter – like Urban Sherpa (which no longer appears operational) – may spot potential to get in on the action.