The future of the sharing economy – Everything As A Service

The BCG Henderson Institute, Boston Consulting Group’s strategy think tank released a 3-part series exploring the intricacies and the future of the Shared Economy, in late 2017. The series is an essential read for anyone and everyone in business, since the shared economy affects wide swathes of industries and business models. The data in the series is derived from extensive market research conducted in Germany, India, and the US.

Read the 3 parts online, on BCG’s website:
1. Hopping Aboard the Sharing Economy
2. Learning to Love (or Live with) the Sharing Economy
3. What’s Next for the Sharing Economy?

Or, download the PDFs of the 3 articles: Part 1 | Part 2 | Part 3

If you think about it, shared economy was always present long before Uber and Airbnb made it cool. But it was present in a clumsy, unorganized manner, run by manual intervention. When algorithms took charge of making connections between people of demand and people of supply, things started becoming seamless (or human-less mediation, in other words).

The first part of the series looks at the opportunity, in the many sectors that have started adopting the shared model. This goes beyond travel (Uber, Ola) or accommodation (Airbnb). The report talks about sharing in areas like farming equipment (Mahindra’s Trringo), a camera-rental platform in the US (Sharegrid), a US leisure-boat rental firm (BoatBound), a wardrobe-rental service (Rent The Runway), among others. This part ends with making a point that it’s not just start-ups that lead the sharing economy, but also established companies.

The second part of the series goes deeper into the business fundamentals of the sharing economy. And introduces us to B2B models within the sharing economy, like the German truck manufacturer MAN has a platform to help smaller German logistics providers and carriers supplement the cargo of trucks with less than a full load. The most interesting point here is the vulnerabilities of the existing value chain, explained best here: “sharing can introduce an intermediate step, as when an Uber driver buys a car in order to transport passengers. If the intermediary—the ride-sharing platform—negotiates or makes the purchase on behalf of the driver, what was formerly a B2C transaction in essence morphs into a B2B transaction. The car maker loses some control of the customer relationship and, potentially, of its pricing power”.

This part also explores what companies that are more vulnerable to the sharing economy may want to offer creative alternatives as a way to buy time – one of them even includes, quite pragmatically, playing the regulatory card!

The final part of the series looks at how the sharing economy is shaping the future of consumer behaviour and product design in the ‘everything as a service’ space.

This 3-part series is a great reference material to consider the many opportunities, pitfalls and considerations of the sharing economy.