The sharing or collaborative economy is the latest business model for marketers and business owners to sink their teeth into.
Companies such as AirBnb and Uber have transcended their position in the market by recognizing the incomparable advantages of e-commerce as their main platform for doing business. Top-down communication and business models will soon be something of the past, with a revolutionized economic system that will have companies fostering collaboration and utilizing technology to build trust amongst consumers.
Start-ups, which capitalize on this sharing economy, have the chance to drive consumer behavior and encourage people in their market to be more open about trying new and unconventional products and services.
Brands in the category
Online shopping has become the inspiration for the sharing economy. Amazon and eBay both started out as peer-to-peer marketplaces and evolved to become platforms dominated by business professionals with sales abilities. These companies regard the crowd as part of their company and business decisions rather than “someone” they sell to. Sites like Amazon and eBay helped to create a generation that felt comfortable with online buying. This translated into customers trusting a larger number of platforms. The sharing economy has transcended the basis of operations even further, with consumers taking the opportunity to share their personal assets on the basis of “what’s mine is yours, especially if I’m not utilizing it’s full potential”.
Airbnb, one of the largest hospitality-inspired companies, found a solution to the problem of owning an asset – a house – without utilizing its full potential, at least not the whole year round. Despite the major claims and controversy around renting out a room or entire apartment on a short-term basis, violating a surprising number of laws and regulations, the company enjoys major success as globetrotters enjoy an authentic and traditional experience while saving on their accommodation costs.
While Airbnb has transcended the hospitality industry, brands like Uber turn personal cars into community transportation resources while doubling their revenue every six months. Businesses are being forced to team up with tech companies or experts to optimize their online buying platforms in an effort to form part of the sharing economy.
E-commerce: going in the same direction
Proceeding along the same direction is the e-commerce industry, as we no longer experience B2B or B2C, but rather H2H (human-to-human) markets. In the Middle East, the e-commerce market is expected to grow rapidly, with 90 million active Internet users. The challenge is that only 15 percent of businesses in the Middle East have an online presence, making them miss out on the opportunity to gain a much larger chunk of market share. The expected e-commerce sales are estimated to reach up to $15 billion by the end of this year.
Effect on the marketing industry
The sharing economy movement enables marketing agencies to find solutions that are more cost-effective and enhance creativity. Innovative digital spectrums are on the rise and companies are crowd-sourcing to generate new creative ideas. Companies don’t need to employ specialties and experts for supervision – costs will decrease and brands can achieve desirable ROI as a result of executing campaigns directly from the platform.
Other significant positive changes that the economy is currently undergoing are: first, scalability is being developed as the sharing economy enables collaborative marketing campaigns to run at the same time in multiple countries. New technology makes it feasible for marketing companies to share expert knowledge from where they are situated, thus making a localized campaign to a specific target more effective. Second, marketing campaigns get controlled: the model reduces unnecessary links between agencies and clients, enables businesses to track progress and conform the parameters and costs of campaigns, as a result of technology advancements.
Future peer-to-peer demand
The on-demand economy is still in its early stages of development. However, within the next five years, substantial growth is expected in the region and start-ups who enter the industry at this stage will benefit greatly from the expansion.
The type of company that aspires to be part of this business form and economy has a different interpretation of its market and customers. These companies are focused on creating value-added experiences that save the customer some money along the way. Investment in consumer satisfaction marketing in an effort to drive word-of-mouth advertising is vital. Uber, for example, spends close to nothing on any form of marketing. Instead, its approach is focused on keeping the customer satisfied and impressed. The brand is built on the notion that once someone has experienced it for the first time, they won’t use anything else and are also likely to tell people about it.
Companies that choose to adopt strategies to form part of the sharing economy, along with technology that adds value, can consider themselves less vulnerable to losing market share and business. Reality tells us that the new normal is a mobile-enabled, on-demand, customized product and services and companies need to implement this in their approach.