THE TITLE may have scared you corporate executives. Those whose livelihoods are dependent upon finding new ways to increase your brand’s market share, in the midst of probably, if not, the worst economic slowdown witnessed in years.
There are no quantifiable reports, yet, to suggest that the so-called “sharing economy”, also dubbed as “collaborative consumption”, can actually bring down decades-old economic systems like capitalism.
One cannot deny that the sharing economy has been the most disruptive business model ever seen since the prominence of industrialised civilisations, and the significant impact it has made on traditional “producer-to-consumer” business models.
During the past 100 years, we’ve seen shifts in economic powers from producer to consumer sovereignty, whereby the latter dictates what stays and what goes.
The sharing economy, is a trending practice whereby goods and services, owned by regular consumers themselves, can be rented out by other people and the company that provides the platform takes a stake of the transaction between buyers and sellers.
The one common denominator that these models share is that they do not hold any inventory or some form of hardware but fundamentally act as a facilitator between providers and clients. Airbnb does not own a single hotel room, whereas Uber does not own a single car. This has allowed owners to take idle capital and turn them into revenue streams.
According to CBRE Hotels’ Americas Research, travellers spent almost US$2.4 billion (Bt84 billion) on Airbnb lodging from the latter of 2014 to the same time last year, with the company claiming to post almost a billion dollars in revenue in 2015. This has posed a huge threat to the hotel industry, especially in America where 55 per cent of Airbnb’s revenue comes from.
With the trend so strong now, the sharing economy has extended beyond the realms of hardware into services and experiences. Take for example a local Thai website that allows locals to become one-day guides during their spare time in their respective provinces and take tourists out to various unseen destinations not commonly found on Lonely Planet guide books.
The model is highly sustainable, and communal in nature. With global consumers becoming more environmentally and socially conscious, they are opting for goods and services that expend less carbon emissions than their corporate counterparts.
With this trend being a threat to many industries, my question here is: How switched on are global brands with this shift in consumption mindset and their willingness to adapt to the new model?
The automotive industry has naturally been the first to adapt.
There is actually one excellent case that I am happy to impart with you today. This is the case of BMW, an iconic global brand with the willingness to adapt to be an integral part in the evolution of collaborative consumption.
It is as if they adopted the “If you can’t beat them, join them” mantra, before embarking into this new venture.
According to Bloomberg, BMW AG’s Mini plans to make its new cars available with devices that enable owners to rent out their vehicles, like Airbnb does with spare rooms and empty apartments. The system facilitates both payment systems and tracks the vehicle to make sure the renter doesn’t pay for a one-way ticket into wander-land.
This has come on top of the German automaker’s recent launch of the car-sharing service ReachNow, which debuted in Seattle, Washington early this month.
ReachNow’s services include short-term rentals, delivery services, chauffeur services, and longer-term rentals. BMW said that car-sharing services can also be made available to closed groups such as companies or residential complexes.
The vehicles will be unlocked via the customers’ smartphones upon registration.
How cool would it be for the common Joe to drive a Beemer for a day, impressing his bird as he picks her up from home? Soon you will see an integrated set of systems, ready to serve the urban mobility market, responsive to the clients’ needs at the tip of their fingertips.
Coming back to the main question: Is this the beginning of the end for capitalism? I don’t have the answer to that, but when you have been informed that services, social and sharing in nature, do not contribute to the gross domestic product (according to an article on by Credit Suisse) and GDP rates have stalled in recent times, you cannot help but wonder: Is this really the end?
As GDP becomes harder to measure, obscuring the true value of economies, I suspect we will rapidly experience a shift from “pure capitalism” to “conscious capitalism” with the virtue of sharing central to shaping the future of economics.
I leave you today with one thought: Adapt or die.
Pradon Sirakovit is Associate Director, Corporate Communications IPG Mediabrands Thailand.
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