We are living in an era where almost everything, from cars, motorbikes, clothes, and accessories to homes, furniture, and even office spaces, can be shared for consumption. The cash-strapped millennial and Gen Z population in India is enthusiastically feeding the idea of sharing assets and skills, and optimising their use in a scalable and sustainable manner. This innovative concept of collaborative consumption, popularly termed as the shared economy, enables consumers to plug the gap between what they want and what they can afford.
New-age consumers are turning to shared services as a smart, convenient way to emphasise experiences rather than possessions. They want to enjoy plush extravagance of driving high-end cars, staying at beautiful properties, working from a high-tech enabled workplace while paying only an affordable sum for access. Their idea is to save up their money for making significant and aspirational life purchases instead of spending on depreciating assets.
Sharing is empowering
Can you recall the yesteryears when DVDs, cars, books, and clothes were rented out via brick-and-mortar shops? The concept of shared economy has been a part of the Indian philosophy of consumption for many years across various industries, but digitalisation has enabled it to flourish and scale. While the idea is often misinterpreted and limited to B2C brands like Ola, Uber, AirBnB and OYO Rooms, it is actually an extensive concept that includes a variety of sharing even in the B2B space. Online furniture rental brands and co-working spaces are making it seamless for companies and budding entrepreneurs to resist office furniture purchases and long leases of commercial office spaces.
Factors driving the growth and acceptance of shared economy
A recent report curated by PricewaterhouseCoopers (PWC) mentions that the value of the global shared or rental industry will reach $335 billion by 2025. India can offer a productive ground to contribute to the thriving shared economy on the back of its burgeoning social-economic landscape. Escalating digital and internet penetration, increasing smartphone ownership, rapid urbanisation, and growing acceptance of rentals are some of the key factors that are driving the growth and acceptance of the organised shared market, and will continue to provide further opportunities in bringing shared economy to the mainstream by the end of 2020.This progress will eventually transform lifestyles and the way people work, and manage business and resources in the country.
Benefits paired with shared economy
The advantages of the collaborative approach towards consumption are manifold. While this form of economy makes consumers the king with on-demand services, lower costs, conveniences, customised services/products, and improved quality of service, it also strengthens the service provider community at the same time. While market places or aggregators are able to increase their efficiencies, supply at better prices and lower the capital intensity, suppliers can increase their business due to expanded market reach, increase their digital literacy, and develop their skills.
Yet another major problem solved by collaborative consumption is the consumers’ access to certain goods or services, which were otherwise unaffordable.
The concept of shared economy also increases participation, which indirectly moderates the negative environmental impacts that can occur due to excess consumption of resources, thus promoting sustainability. For instance, the model of carpooling and car rental companies can reduce a considerable number of cars operating on roads. Fewer vehicles on road would mean less carbon and pollution being released into the air. Moreover, as several surveys recommend that around 95 percent of privately-owned vehicles in the country remain unused, the potential of renting them out and incorporating those in the landscape of shared economy is immense.
With opportunities come challenges
Considering the advantages and possibilities, millennials are eagerly embracing the idea of a shared economy. However, the rapid growth of this economy poses complex challenges for both consumers and businesses. While the consumers experience trust, safety, and security issues along with the problem of consistency in service qualities, businesses call for significant regulatory changes from both central and state government.
The sharing economy has brought immense uncertainty where it is hard to foresee and develop the right policy since some of the business models are abstract and may not even last until the next policy-making cycle.
Meanwhile, some models manage to expand their reach with VC cash and angel funds towards a larger consumer base and commercial market share without generating profits. It is these businesses that drive an urgent need to create a new regulatory approach.
The shared economy is here to stay
India has a rapidly expanding middle-class population that mindfully favours the shared economy. It is, therefore, time to seize opportunities in this space through thoughtful comebacks to any short, medium, and long-term regulatory challenges that can unveil new possibilities for the young population instead of dismissing the shared economy as a fad.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)