A Shared Economy – The disruption poses new ways of life
On your next business trip, would you consider hopping ng on the empty leg of a private jet for a fraction of the cost of flying commercial, grabbing a black car, staying in someone’s home, or having a meal in somebody else’s kitchen with people you have never met? All of these may not be to your liking but these disruptive offerings are changing our way of life. According to the latest PwC Consumer Intelligence Series, 19 percent of the total US adult population has participated by engaging some way in a shared economy transaction. And the growth looks like a hockey stick; research also shows that 72 percent see themselves participating within the next two years.
Leading the Change
In my opinion the automotive and hospitality segments have seen the most disruption thus far. In the interests of full disclosure, I’m a fan myself. I enjoy finding the car that is beyond the standard rental. Sure, top of mind brands like Uber and Lyft are popular to grab a ride but sometimes one just has to get behind the wheel. Offerings like RelayRides let you rent from an individual – convertible luxury sports car in the sun or SUV in the snow, with endless options in between. Simple car sharing around certain towns for a day often requires nothing more than an app to walk up and drive away.
HomeAway, Inc (AWAY) with more than a million rental homes in 190 countries, and a $3 billion market cap is a great alternative to snag a multi-room, key location, or residence for an upcoming trip. Great for personal space, extended stays or even entertaining. To tip the scales of disruption, the much-talked-about seven year old Airbnb averages 450,000 guests per night for a total of 155 million in 2014. According to the Consumer Intelligence Series, this is 22 percent more than Hilton Worldwide’s 127 million guests during that same period.
Much More than Cars and Homes
Are both of these a direct comparison? No, not at all. However, it is telling how radically markets can be changed and more important, how we are valuing and consuming all the offerings this radical new economy promises to deliver.
There are other examples in cars and hospitality, and more in other markets markets. Choose a flavor and you will find some version of sharing:
Another example, directly related to our lives on the road, is connecting us to spare capacity of private jet service. One such offering, JetStarter, has an app to find and book – at heavy discounts – empty legs of private aircraft flights.
Are All Things Equal?
This is not your franchise model, so there has to be a mindset shift as well. The experience across various services may lack consistency, so you have to keep a very open mind. Sure, drivers, cars, service providers are vetted, but there is an inherent level of fluidity in this new market. There is no front desk clerk and your room service is from a new delivery service from various restaurants in the neighborhood.
Brands have and are quickly overcoming the hurdle of trust. We are inherently predisposed to second-guess something new and different. Actually, 69 percent of those responding to PwC’s Consumer Intelligence Series agree they will not trust companies in the shared economy until someone they trust recommends them. This is much like any other product or service. Often we base our decisions on input from various sources including friend’s opinions.
Not only are these offerings often unique, we are seeing both new and legacy brands get into the game, often names we already know and trust, thus eliminating that barrier. Banking giant Citi is a great example, jumping into the bike sharing with Citi Bike. It’s only a bicycle example but who is to say what is next?
Disruptive offerings in this new economy are driving innovations, values, and behaviors across all generations throughout all aspects of how we live our lives. So again I pose the question to you: On your next business trip, would you consider hopping on the empty leg of a private jet for a fraction of the cost of flying commercial, staying in someone’s home, or having a meal in somebody else’s kitchen with people you have never met? BT