How will the sharing economy affect retailers?

The 2-sided marketplace model and the On-Demand Economy are here to stay. The “Uberisation” trend is spreading to more verticals, as consumers become more demanding of “instant gratification” and technology enables delivery of services in a streamlined and cost-efficient way. It is far more cost-effective to share resources than invest in ownership. This applies to physical assets as well as labour.

Florence Guild will discuss access over ownership and the new 2 sided marketplace business model with some of Australia’s leaders in the on-demand economy. Meet UrbanYou, Spacer, and Car Next Door and learn how they are taking the 2 sided marketplace to the next level.

UrbanYou offers prescreened household service providers to busy professionals.

Spacer brings together people with space with people who need storage; i.e. Tinder for storage.

Car Next Door brings car owners together with car renters.

Conversation notes

  • The sharing economy is now becoming mainstream. Many people are used to using Uber and Air BNB. Pretty much everyone, now, is doing it. That wave of change in consumer behaviour has allowed businesses like ours (Car Next Door) to flourish.
  • Mindset is one of the big things to overcome because of the fact that, in our society, at least for the last 100 – 200 years, individual ownership has been the norm, and everybody has always owned everything that they’ve needed to use.
  • It is possible to free people from the ‘one car, one person’ mentality. Cars sit idle 96% of the time.
  • The rise of reviews is both a benefit and a detriment to online businesses. Everyone loves to have a say. The danger is that businesses or contractors can live and die by their reviews.
  • The world is changing very quickly and some of the (innovation and regulation) laws were written without the internet in mind and without sharing economy platforms in mind. New sharing economy businesses are keen to work with governments to address changes in things like the Trade Practices Act and consumer laws. The industry does need some regulation around it because everybody would be better off if the guidelines were clear.
  • The focus is to keep things really simple, have options available, and to give the consumer the best possible experience.

 

“With consumer behaviour, especially with the millennials, it is instant gratification that they want … and they are willing to embrace this way of being. Not long ago we were all too scared to use a credit card to buy a product online yet now we will go and stay in someone’s home overseas whom we have never met before. So, the on-demand phenomenon is not so much, ‘When is it coming?’ It’s here, and it’s expected now.”

 

10 years ago, many people thought the rise of the online economy spelt doom for all retailers. While this has happened to an extent in some industries (such as the book retailing industry), many of the traditional retail players are still around and thriving. In many cases, this is because they have embraced the online economy and found a way to merge the best of both worlds.

(See our previous article Blending physical and digital worlds is the key to seamless service.)

Are retailers under threat?

Now, as the sharing or ‘gig’ economy is becoming more and more mainstream, there are fears that retailers might be under threat again, especially those selling high-ticket items like cars and electronic goods. As more people opt to rent or share bigger assets rather than buy them, does this mean that sales will drop?

Not necessarily. It may just mean that the nature of the sales will change. Take cars, for example. Car sharing organisation GoGet owns a large fleet of vehicles that they park in various secure locations for people to hire as needed. GoGet are still required to buy the cars, however the difference is that each vehicle will be fully-utilised by many people instead of being underutilised by only one or two people.

GoGet are not taking many sales from the car companies, they are hiring vehicles to people that were probably not going to buy one for themselves anyway. Even peer-to-peer car lending services like Car Next Door need car owners to start with. If the owner can then hire their car out when they don’t need it, it may help them recoup some of the purchase cost and then provide an extra source of income.

Another way smart retailers are leveraging the benefits of the gig economy is through partnerships or mergers with successful sharing economy businesses. This allows them to offer more convenience and a better overall experience to their customers.

What should retailers consider to expand their business?

As Tony Vu tells us in his Business Insider Australia article How Airtasker grew to 1.7 million users through partnerships with eBay, IKEA, The Good Guys, Australia Post and CommBank, there is huge potential for retail giants to expand their offerings to include home delivery, installation, and assembly services through the use of gig economy workers. The demand for these services has been growing organically anyway. You only have to check the Airtasker site on any given day to see a long list of people needing help with furniture delivery and, more specifically, the assembly of IKEA furniture. It made sense for Airtasker and IKEA to formalise this alliance.

In 2017, IKEA also purchased the giant US/UK gig platform TaskRabbit. In one stroke, they gained access to 60,000+ workers willing to help IKEA’s customers within hours of their purchase. Incidentally, IKEA’s stores along the east coast of Australia also boast GoGet vans on site, ready and waiting for customers to hire to get their new furniture home.

Access over ownership

Mike Rosenbalm, CEO and founder of Spacer, Elke Keely and Noga Edelstein, Co-founders of UrbanYou, and Marty Newkirk, Product Manager at Car Next Door, shared their views on the shared economy industry when they participated in a panel discussion called Access over ownership: UrbanYou, Spacer & Car Next Door as part of Florence Guild’s speaker series, The Antidisciplinary Future’. This series narrative explores how we can look outside traditional disciplines to find better ways to live and work now and in the future.

Between them, these panel members have a wealth of knowledge about how the shared economy is taking shape in Australia, what consumers are looking for, what the industry trends are, and what challenges lie ahead.

Connect

Noga’s Linkedin: Noga Edelstein

Elke’s Linkedin: Elke Keeley

UrbanYou’s Website: urbanyou.com.au

Mike’s LinkedIn: Michael Rosenbaum

Spacer’s Website: spacer.com.au

Marty’s LinkedIn: Marty Newkirk

Car Next Door’s Website: carnextdoor.com.au

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This episode forms part of our 2018 series narrative, ‘The Art of Focus’ which is based on the premise that, in an information-dense society, our attention resources have become depleted. The series’ speakers will help us identify and explore the areas in our lives where we may need to regain focus, increase our self-awareness and improve how we interact with those around us.

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