
There are two simple rules for guiding your business in the new sharing economy.
While we have all recognized the phenomenal success of companies like Airbnb, it’s clear that the next generation of sharing economy businesses are following a different approach. Businesses in the sharing economy provide platforms that sell or rent unused product or service capacity. They are some of the most successful startups, largely because they act as platforms between buyers and sellers, without the headache of inventory. We all know that the world’s largest taxi firm (Uber) owns no cars, the largest provider of accommodation owns no property (Airbnb), and the world’s largest retailer carries no stock (Alibaba).
Creating these platforms that connect buyers and sellers may have been enough to create success for these businesses in the past, but looking to the future, one can see that the business plans of the next generation of sharing economy businesses must involve a new approach. Given that investors are still eager to fund new sharing economy startups, if you are thinking about starting a business using sharing economy technology, it is important to understand the two main strategies for success in the next generation of such companies.
Saturation is particularly problematic for sharing economy platforms as supply is physically constrained, and yet the value of these networked sites increases the larger the supply, as customers have more to choose from and prices naturally decrease. There are a relatively limited number of potential drivers for Uber, empty apartments for Airbnb and unused clothes for Ebay, for instance.
Similarly, with an increasing number of platforms offering a similar product, consumers are looking to curated platforms that enable them to relate to a product, building a sense of community.
Businesses in this space are countering these problems and creating opportunities by focusing on two simple things:
- Focusing not only on buyers, but also on keeping suppliers happy. With an increasingly limited pool of suppliers, platforms should focus on creating loyal suppliers
- Curating. With increasingly discerning buyers, platforms must create a more personalized experience