The rise of sharing economy and why it will work in India
The dawn of Internet has helped us connect with people and content which otherwise would have been inaccessible. Web 1.0 helped us gather vast amount of knowledge from varied sources while sitting in an unknown corner of the world.
As technology improved, we entered the era of Web 2.0, where we powered ourselves with email communication and social media. The core of Web 2.0 was that it encouraged users to engage, collaborate and share information with each other. As technology improves further, we can notice an obvious trend where humans are more willing to share.
In fact, sharing among human beings has existed since the earliest civilisation. Humans are hard-wired to share and be social animals. The barter system might have been the earliest form of sharing. From sharing content and media online, Internet has now enabled people to share physical things like homes, vehicles, appliances, furniture, etc with each other. Consider how entrepreneurs now can crowd-fund their dream projects with the help of a collaborative economy.
Look at the following examples:
- Earlier, customers preferred buying from big brands but are now considering pre-owned and refurbished options.
- Earlier, people owned brand-new cars but are now gradually looking at alternative options of sharing or renting a car only when required.
- The holiday industry has been revolutionized by the influx of home-stays and platforms like Airbnb that enable this behaviour.
- The sources to borrow money apart from just a financial institution are on the rise.
These examples have now become mainstream and are a part of our daily lives. A sharing or collaborative economy is a movement which is rapidly growing and will play a pivotal role in shaping our economy.
We have reached the tipping point
Jeremiah Owyang, Founder of Crowd Companies, points out the three drivers that are making sharing a transformational movement. These three drivers have created a conducive environment for sharing economy to blossom at its best.
People are becoming more considerate about the environment and sustainable development and this has led to a greater interest in sharing rather than owning. Millennials are gradually becoming less and less materialistic. There is no taboo associated when a person opts for these new-age options.
Inflation of prices and recession of economy is also letting people look at alternative options like buying pre-owned goods and/or rented goods. The rate of inflation is at its peak and there is a constant slump in the market, these trends are set to propel the sharing economy further.
Improved technologies like smartphones, Internet penetration, lean logistics, simple payment systems etc., have also eased peer-to-peer sharing. Most of the hindrance that was present in enabling sharing economy has been successfully tackled with the help of technology. Now is the time when the sharing economy movement can soar high with community effort.
Benefits of sharing economy
- Saves money
Saving money is always on our mind. The motive behind saving can be planning a dream vacation, education of your child, retirement fund, or for your new startup. Irrespective of what the motive is, sharing economy will help save you those bucks.
- Is good for the environment
Global warming, e-waste, deforestation, pollution, depletion of ozone layer, green house effect and whatnot! We all have heard of these effects and how we human beings are constantly harming our environment. Sharing economy might not be the ultimate answer to all the environmental issues but it sure helps curb them to an extent.
- Provides flexibility in your lifestyle
You do not have to own it to experience it. The more stuff you own, harder it is to adapt to change. Your life would be filled with behemoth white elephants unless you take it onto yourself to declutter it.
- Access to try a product before buying
Not sure if a particular model of an appliance is the right one for your home? It would be so much better if you could try it at your place for long enough to take the right decision and not make an impulse purchase.
- Sense of belonging to a community
Sharing economy is a rising movement. Throughout the world, communities and companies are adopting and enabling this movement. Join this movement and be a part of this rapidly growing community.
Why will it work in India?
The trends that we see internationally also stand true for India. Moreover, in India, a few other conditions along with the aforementioned drivers make sharing economy a more viable option.
When compared to India’s western counterparts, the purchasing power is substantially less. Look at the following example: the average salary of an engineer in India is Rs 35,000 and he has to shell out more than a month’s salary to buy a PlayStation, which costs about Rs 42,000. On the other hand, the average salary of an engineer in US is $4,000 and all he has to spend on buying a PlayStation is $400 which is 10 percent of his salary.
Hence, it makes more sense for Indians to opt for rental or pre-owned products.
Millennials will shape sharing economy
Many publications and researchers have pointed out how millennials will shape the sharing economy. Millennials display a change in attitude and have displayed a delay in buying behaviour. Considering the fact that more than 65percent of India’s population is under the age of 35, it is safe to say that India is a welcoming place for the sharing economy boom. Metro cities of India are already witnessing a spurt in the ride-sharing services and this is only set to expand.
India has a very high population density of 368 per sq.km,while in the US it is 33 per sq.km. This means that we have 10 times the population density of the US! On the flip side, this means that there are more goods and services available much nearer than in any other country. This helps in enabling hyperlocal services which eases the availability and logistics issues.
Increasing urban population
The trend of sharing is more popular and acceptable among the urban population. It is predicted that by 2025 India will have about 42percent of its population in urban cities, which in turn would lead to a large number of people adopting to a collaborative economy.
It is here to stay
According to ASSOCHAM’s predictions in 2014, the used-goods market would cross the 1,50,000-crore mark in the year 2015 and is seeing a YoY increase of 12percent.
Sharing economy is a movement and not just a trend. You will notice people all around you making the smarter choice by adapting and contributing to the sharing economy. We’ve witnessed businesses for centuries making buying really easy. We are at the beginning of making sharing easy.
About the Author