Sharing Economy And Marketer’s Response – Niteen Bali from IIM Calcutta
Shared economy is taking off at a quick pace, although it is at a nascent stage in India. When people, organisations are given an efficient platform to share resources (including knowledge) it is known as shared economy. The best example would be Uber Pool, E-Bay, Zostel. It is a radical shift from the conventional market. It enables many individuals to attain gainful employment through the rise of micro-entrepreneurship. In India alone, there are >300 start-ups classified as shared economy ventures.
Shared Economy results in increasing ventures and aims to capture economies of scale. It also helps in conserving resources and hence adds to the sustainability of the planet. Many developed countries have taken the lead in this regard. In developing countries, this is mostly done informally which involves a lot of hassles and trust issues. Services offered can be classified in Professional & Personal services, Transportation services, Rented office or leisure space. It has gained in importance due to political and societal changes – individuals are becoming more autonomous and hence are not bogged down by family pressure (prestige) to not share things. The flexibility of work culture and life patterns is another reason. Finally, more efficient use of assets and resources is becoming paramount in the present consumerism era. But, trust is still a huge impediment in this sector.
There are implications for both businesses and users
For Businesses: Reactions by incumbents, Regulatory capture
For Users: Data management, Privacy
For both: Transparency, Pricing
In order to succeed, ventures need to attain the indirect network effect so that their platforms has enough members for it to attain economies of scale and keep the cycle of sharing going. Platforms also need to respect consumer concerns about spam. Consumers are receptive to only those things they are familiar to. Hence, changing consumer habits would be an uphill task. Marketers must also remember that digital ads only relevant to specific target group would work. This is effective when the ad is camouflaged as an entertainment or news content. Trust is hailed as a cornerstone of transactions, technology being the other. But as a platform becomes more democratic – vesting many powers to consumers, it is susceptible to abuse. Negative reviews are exaggerated and there is always scope for exploiting loopholes in the system. Hence, it is important to tread carefully. Nonetheless, it is evident that sharing economy has a lot of potential and opens a huge door for innovation.
About the Author:
Niteen Bali is a second year student at IIM Calcutta and is part of InsideIIM’s student team. He loves to travel and immerse in deep conversations. A shore waiting for the tide, currently reading ‘The Little Prince’. Chandler Bing is his idol.