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The Shared economy or the Sharing Economy is a framework of a highly flexible economic model in which assets and services are provided, acquired, or shared between private individuals – basically a peer-to-peer (P2P) model. The Sharing Economy often involves a community-based online platform that connects buyers and sellers.
Understanding a Shared Economy
People have shared assets for thousands of years, but with the advent of technology and the use of big data, it is easier for asset owners and the ones seeking those assets to find each other. This concept is also referred to as the Sharing Economy, Collaborative Economy, Collaborative Consumption, or Peer Economy. Sharing economies allow individuals and groups to earn money from their underused or idle assets by renting them out – simply put.
The Sharing Economy is Evolving
The concept of a Shared Economy has rapidly gained wide acceptance in the world today. As a result, more and more people are moving away from the traditional system into a system that allows for sharing of resources, information, ideas, and services, thus enabling greater collaboration.
This emerging economic system allows individuals, peers, and small businesses to share office spaces, services, resources and skills at a cost much lower than the traditional system.
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Types of Shared Economy
As mentioned earlier, people have been borrowing and lending resources and assets for various reasons for ages. Sometimes the terms were friendly, and other times they had to part with their resources in exchange for what they needed at that time. Depending on the sharing terms, the Sharing Economy revolves around 3 basic concepts:
- Real sharing: where something is given for free without any expectations.
- Gift giving: where something is given for free but with some expectations.
- Pseudo sharing or commercial sharing: where something is given with the purpose of earning money through it.
In this digital age, pseudo or commercial sharing best encapsulates today’s Sharing Economy. This Sharing Economy concept has created opportunities for businesses to indulge in a wide variety of Sharing Economy Business Model that help them expand their boundaries and increase their revenues.
Sharing economy business model
A Sharing Economy involves a business model where assets or resources are rotated, reused, and shared between different individuals and businesses. The concept is growing rapidly as more and more consumers are looking for more cost-effective ways to find, fund, and purchase assets or resources. Although different forms of businesses using the concept of Sharing Economy have emerged to address the customer needs, every business has a unique model, and we’ll discuss a few that are nailing it.
8 different sharing economy business model and sharing economy examples are
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1. Co-Working Spaces
Cowork spacing companies like WeWork provide the service of shared workspaces across the world. Young entrepreneurs, freelancers, and startups companies that don’t have sufficient capital to have traditional offices of their own rent a desk or an office without having to worry about the overhead and cost of renting an entire building or office. Co-working spaces also offer other benefits such as conference rooms, internet, phone lines, free coffee, etc. You have to pay a weekly or monthly charge based on your space requirements and the amount of time you spend at the office.
Getting a loan when you have a low credit score is a bit difficult. Besides, dealing with banks and their rules, paperwork and regulations is an added headache. You can borrow money from your peers in order to save yourself from this trouble. Peer-to-peer lending platforms allow individuals to lend and borrow money without going through a traditional bank. Peer to peer lending is a concept that brings together borrowers looking for unsecured loans with the investors (lenders) who want to get high returns on their investments. So, P2P Lending is a system where a borrower who is in need of money can get a loan from an investor who can provide loans at a certain interest rate. P2P lending platforms help those individuals get loans faster who have a low CIBIL score. Additionally people with no documents can also avail loans from these lending platforms.
Peer-to-Peer platforms like Money Club, an AI-driven online chit fund platform, helps people to borrow money at a much lower interest rate than most banks and credit card companies. It works for both parties, the borrower gets money, and the lender earns some interest on their money.
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Step 1: Download The Money Club app and register yourself.
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Crowdfunding platforms like Kickstarter, a platform dedicated to building a community around creative projects, connect artists who need money to get their creative projects off the ground to those who are willing to offer. In addition, the Sharing Economy platform allows users to fund projects they find interesting.
However, unlike peer-to-peer lending, the recipients are not always expected to repay the funds. Some crowdfunding campaigns function like grants, where individual lenders give money with the understanding that they won’t get it back. However, the recipients sometimes offer rewards, such as merchandise, to encourage this type of funding. It might be simpler for businesses and projects to get money if they use crowdfunding. For creative types, using a crowdfunding platform is less time-consuming and offers better success as compared to applying for grants through government or nonprofit arts organizations.
Ride-Sharing and Car-Sharing
An example of a car-sharing online marketplace is Uber. This Sharing Economy platform allows individual drivers to operate as a taxi service. Up to 4 people can find a ride that’s on the same route. Through this ride-sharing app, the passengers share the ride and the cost too.
Car sharing isn’t new, rental car companies make shared cars available for people who need them for a day. Individuals who are willing to share the use of their cars make money by renting it out through a website or smartphone app. The car sharing service connects a person who has a car to the person looking for a car.
In this concept of Sharing Economy, people with certain skills and knowledge offer their services in exchange for a fee. Upwork is a popular Sharing Economy marketplace connecting those offering services with those seeking the services. Through this platform, clients can get their jobs done by freelancers across the world. This online marketplace also helps traditional freelancers, such as coders, graphic designers and writers, connect business owners looking to hire their services.
Parking Space Rental
In busy areas, parking can be in high demand. Park India, a popular platform, provides parking solutions to decrease driver frustration and inconvenience. It allows drivers to search for parking spaces nearby and help them navigate the selected parking space.
A Kolkata-based startup Park 24×7 has created a platform to find and create a parking space by connecting drivers, in search of parking, with people who have a space to spare. The space can be a car park, private driveway or even a garage. Drivers can even park at unused parking slots of hotels, hospitals, stores, schools, public parking spaces from the app to save time. It offers real-time availability of parking space and allows users to pre-book for specific hours or on a monthly basis.
Learning is no longer confined to the walls of the classrooms. Udemy is an Education Sharing Economy marketplace that connects teachers to students from all over the world. Through the help of the latest technology, teachers are empowered to deliver up-to-date content and impart knowledge and expertise to their students.
Apartment/House Renting and Couchsurfing
Airbnb is a classic example of a global company that makes the Sharing Economy possible. The online platform connects owners who want to make money by renting out an unused room or property to people who are in need of a rented apartment or a house to stay.
In earlier times, when you were in an unfamiliar place and needed a place to sleep, you had to check in at a hotel or motel. However, now you can find people willing to share their entire home and all the amenities that come with it – often at a lower cost than traditional lodging. Hosts set the nightly price and specify available dates, typically when they’re not using the property.
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Advantages and Disadvantages of Business Models in the Sharing Economy
The Sharing Economy has not only brought different innovative business models into existence, but it has also contributed to economic growth and increased job opportunities. However, although the benefits of the Sharing Economy are many, there are a few cons you may want to be aware of.
Advantages of Sharing Economy
- Greater flexibility
- Greater reach for a wider range of users
- Sense of belonging to a community
- Build loyalty based on trust
- Eliminate unnecessary investments
- Creativity and Innovation
- Job Creation
- Opportunity to earn extra income
- More efficient allocation of resources
- Monetizing underutilized assets
- Save money and resources
- Reduce environmental impact
Disadvantages of Sharing Economy
- May require forfeiture of some amount of privacy
- May become vulnerable market fluctuations
- Potential risk of fraud and scams
- Need to rely on close cooperation between people on each side of a transaction
How does peer-to-peer sharing platform help individuals?
Technology has been the biggest driver behind the Sharing Economy’s growth. As we become more connected digitally, the trend will continue to grow. As a result, the Sharing Economy ecosystem looks promising and will have incredible inclusivity in the future.