The sharing economy is in vogue. Start-ups are scrambling to be a part of it, big business is trying to understand it, and all the while politicians cast a watchful eye over its development.
Highlighting its popularity, the FT’s recent inaugural “Sharing Economy European Summit” gathered over 150 of the burgeoning industry’s great and good to ponder the same question: is the sharing economy an opportunity or a threat to existing businesses?
Given most delegates worked for sharing economy platforms, it became immediately evident which way the discussion was heading. Driven by technological change and cultural shifts, the sharing economy, we were told, was booming. Traditional business models needed to wake-up to change or be consigned to history.
I should declare upfront that I’m an unashamed sharing economy fan. And user. Every day a chap called James pays £4 to park in my driveway using a website called JustPark.com. I benefit by monetizing a commodity I don’t use (I walk to the nearby train station) while James pays roughly half what it costs to park at the train station itself. Win-win.
The premise of the sharing economy – essentially sharing underused resources via digital platforms – goes well beyond parking to cover living spaces, DIY tools, cleaning and everything in between. Rohan Silver, the Prime Minister’s former tech advisor and speaker at the conference, reckons demand has a lot to do with a change in customer attitude, from ownership to access. Consider a car. The latest figures show that the average car in the UK sits idle for 23 hours a day. Or a power drill, which is used for only 13 hours in its whole lifespan. Platforms like BlaBlaCar and TaskRabbit, replacing car and drill ownership respectively, are booming because people feel they no longer need to own these items, simply have access when they need them.
But my interest is as much professional as personal. For all the talk of the industry’s potential to grow, these fledgling companies have a host of communications issues to address.
Perhaps top of the list, and the focus of much of the FT event’s discussion, is regulation. Bad regulation, of course, could sound the death knell for the sharing economy before it has really got going. You only have to ask representatives of the crowd funding industry about the challenge of getting to grips with their new FCA framework over the past 12 months. Ed Vaizey MP, the Conservative Culture Minister, was on hand to reassure delegates that the Government had no intention of imposing a draconian new framework on AirBNB and others. This is reassuring, but the story of crowdfunding shows the warm political words don’t necessarily translate into positive action from a regulator.
Sensibly, the conference heralded the launch of the first trade body to represent the big sharing economy platforms. The aptly named “Sharing Economy UK” body has an important role to play. We are already seeing traditional industries crying foul over these new disrupters. Think black cabs blockading central London last year over Uber. This will only increase as traditional markets are further eroded by disruptive players.
Equally, monumental growth requires capital, and capital requires businesses to communicate value and substance. Typically, funding for the more established companies has come from alt-fi platforms but there are already examples of private equity joining the party. I was struck by predictions of large scale M&A activity down the line based on the reality that consolidation is inevitable when some of the small platforms fail.
But perhaps the biggest communications challenge is awareness amongst customers. Knowledge of the sharing economy is, frankly, tiny. Current users are still the early adopters and, as the CEO of WeArePopUp explained, success relies entirely on increasing a user base beyond that, and fast.
Admittedly this blog has overlooked the challenge that traditional business models face. How the hotel industry, car manufacturers and even the likes of B&Q will adapt to a changing consumer market will be fascinating.
With all this in mind, I was unsurprised to see that I was not the only PR in the room. It is a great idea, after all.