Sharing Economy and Collaborative Consumption Quiz

The Sharing Economy, Collaborative Consumption, and Efficient Markets through Tech

• The sharing economy and collaborative consumption are facilitated by technology.
• Technology improves reach and efficiency compared to traditional markets.
• "Citizen suppliers" and product owners participate as rental providers.
• Examples include Airbnb for rooms, Turo for cars, Boatsetters for boats, Uber/Lyft for rides, Rover for pet-sitting, Feastly for meal prep, and Care.com/Angie's List/Handy for home services.
• Some firms buy inventory and rent it out (e.g., Rent the Runway, Zipcar, Chegg).
• These products are "collaboratively consumed."
• An individual uses an item temporarily, then returns it to others.

Learning Objectives (Section 11.1)

• Identify firms in the sharing economy and collaborative consumption.
• Evaluate the market size, impact, investment, and valuation of these sectors.

Introduction

• Technology connects diverse providers and consumers effectively.
• It creates a wider reach than traditional markets.
• Individuals contribute as suppliers ("citizen suppliers").
• Existing product owners become rental providers.

Introduction (continued)

• Some companies buy inventory for rental.
• Products like dresses, cars, and textbooks are examples of collaboratively consumed items.
• Individuals possess an item temporarily, then return it for use by others.
• Consumers can collaborate on financing projects(e.g., Kickstarter, GoFundMe, LendingClub).

Examples of Firms in the Sharing Economy

• Goods: Pre-owned items (eBay, Craigslist), Loaner products (Zilok), Customized products (Etsy, CustomMade).
• Services: Professional services (Upwork, crowdSPRING), Personal services (Angie's List, Handy, TaskRabbit), Delivery services (DoorDash, Grubhub, Instacart), and others.

Examples of Firms in the Sharing Economy (continued)

• Transportation: Rideshare services(Uber, Lyft, Didi), Loaner vehicles (Turo, Zipcar).
• Places to Stay: Office space (LiquidSpace, ShareDesk), Vacation rentals (Airbnb, HomeAway, Couchsurfing).
• Money and Finance: Peer-to-peer lending (LendingClub, Kiva, Prosper), Crowdfunding (Kickstarter, GoFundMe, Indiegogo).

Learning Objectives (Section 11.2)

• Identify factors contributing to the rise of the sharing economy.
• Comprehend competitive factors influencing marketplaces supporting collaborative consumption.

Factors Fueling the Rise of Collaborative Consumption

• Economic recessions often trigger growth in the sharing economy.
• Stagnant wages lead to a search for affordable alternatives.
• Individuals are increasingly willing to offer services for hire.
• Environmental benefits of reuse and reduced consumption contribute to the appeal

Winning in Electronic Markets

• Early platforms gain scale, brand recognition, and financial resources.
• Technology allows peer-to-peer supply without inventory ownership.
• Platforms like Airbnb and Uber benefit from this model.
• Certain services prioritize quality by controlling inventory (e.g., Rent the Runway).
• Marketplaces improve the supply chain by connecting suppliers and customers.

Social Media and Trust

• Word of mouth through social media strengthens the sharing economy.
• Social proof is a powerful driver for new customer acquisition.
• Trust and safety concerns (e.g., audits, ratings) are important for success.

Challenges of Safety and Regulation

• Firm safety concerns do not equate to a lack of safety issues.
• Insurance and liability issues arise due to sharing economy participants.
• Insurance is often considered a significant safety concern.
• Local tax exemptions and regulatory fees impact this sector.
• Competition raises concerns in some locations.

Challenges of Safety (continued)

• Uncertainty about classifying workers as independent contractors or employees.
• Workplace protections may not exist for independent contractors(minimum wage, overtime compensation, unemployment/workers' compensation).
• Legal action and agency involvement are possible outcomes of these concerns.

WePay's Success

• WePay provides simple payment solutions.
• The firm targets buyer/seller platform operator challenges.
• Its fraud-fighting technology, transaction history, and machine learning improve fraud models.
• WePay's payment solutions are easily integrated, similar to embedding a YouTube video.

Learning Objectives (Section 11.3)

• Identify large firms investing in, partnering with, and building collaborative consumption efforts.
• Learn the advantages of these firms for traditional industry players.

Future Outlook: Established Players Enter the Sharing Economy

• Major corporations are investing in the sharing economy(e.g., Alphabet & Toyota invested in Uber).
• Major players are partnering to utilize benefits.

Learning Objectives (Section 11.4)

• Analyze Airbnb's success in a multi-billion dollar sharing economy.
• Understand the appeal of Airbnb to suppliers and consumers.
• Identify the challenges for Airbnb as it grows.
• Discuss the firm's ability to foster trust in a sensitive area (private home rentals).

Airbnb's Success

• Over two hundred million guests have used the platform.
• The platform has extensive worldwide reach, operating in over eighty thousand locations across nearly two hundred countries.
• Unique accommodations are a part of the appeal. (e.g., castles, treehouses)

Airbnb's Trust Building Strategies

• Essential trust and verified guest/host identity verification (two-step).
• Offer secure payment methods and 24/7 support.
• Thorough transaction and communication monitoring.

Challenges for Airbnb

• In some areas, businesses do not comply with zoning regulations or health/safety laws.
• Homesharing and traditional hotel firms represent substantial competition.
• Booking.com and similar sites add Airbnb as a competitive option.

Learning Objectives (Section 11.5)

• Understand Uber's appeal to drivers and consumers.
• Evaluate how Uber uses technology to improve services and cost.
• Analyze the impact of executive decisions and corporate culture on the firm.
• Consider how technology shapes Uber's competitive advantage.

Uber's Appeal and Services

• Uber offers convenient ride-hailing through a smartphone app.
• Pricing is set via the app, and the platform handles payments.
• Drivers benefit from flexibility and potential higher pay rates.

Uber's Business Model

• Lean cost structure, as vehicles are owned by drivers, not the company.
• Customer feedback continually evaluates and improves driver quality.
• Surge pricing adjusts based on supply and demand.

Uber's Challenges and Growth Concerns

• Uber faces competition through strong rivals like Lyft.
• Uber has had significant financial losses in certain periods.
• The firm has made considerable investments in areas that have not proven substantial.
• Past hiring practices have negatively affected the firm's future potential job prospects.

Technology and Safety for Uber

• Uber uses technology to increase safety via real-time driver/passenger tracking, and verification.
• Data is used for safety and dynamic pricing.

Uber's Data-Driven Operations

• Uber's staff comprises PhD holders in scientific fields.
• The "God View" system tracks and analyzes data to understand demand and adjust pricing.
• Data-driven analytics allow price adjustments based on real-time factors.

Uber's Platform Expansion through APIs

• Uber builds its platform by offering application programming interfaces.
• The platform expands into other applications.
• Existing services (like airlines, hotels) integrate further into the service.

Opportunities for Uber

• Expanding into different varieties of logistics.
• Bike delivery, self-driving cars, and other technologies.

Concerns for Uber

• The extensive growth of the firm is threatened by regulatory concerns.
• Firm quality and service and sustaining international expansion are also issues.

Additional Note

• Joby has listed on the New York Stock Exchange three years prior.

Test your knowledge on major concerns and technologies in the sharing economy. This quiz covers topics from classification of workers to firms like WePay and platforms like Airbnb. Challenge yourself with various concepts related to collaborative consumption and its impact on traditional industries.