The major side effect of disruptive technology such as smartphones and tablets is that it has made us more connected. The knock on effect of this development has been that we are more engaged than ever before – not only when it comes to our friends and family but people across the country, even halfway across the world.
It’s immediate, it’s powerful and it has now given rise to what people are calling the ‘sharing economy’.
What is sharing economy?
We are actually uniquely geared as a species to share. It brings great benefits, after all. You have something I need and I have something you need; we can swap or at least get it at a reduced price. We don’t necessarily have to pay because we can share. We can share creative ideas, production methods, delivery of goods, distribution networks, or goods and services that are in high demand. There are two keys to this being successful on a large scale.
First of all, you need the technology that enables people to connect (in this case online and smart devices) and you need a platform where people can go and share and connect without prohibitive transactional costs. Put these together and you have an economic model that anyone can engage with.
How it will work in India?
Whether you call it the sharing economy or collaborative consumption, this is the biggest change in the way we buy and sell and delivers a range of economic and social benefits that have a far reach. While it is yet to fully catch on in India, the future for the sharing economy does look promising. Consumers are happier to try different things and the technology is certainly there – smartphone usage has exploded in India over the last few years, across all demographics.
The sharing economy first became relevant in respect of transport sharing (with apps such as Uber) but it is also gathering pace in areas such as hospitality (for instance, finding somewhere to stay) and food and beverages. In essence, though, it has benefits for Indian consumers, marketplaces and suppliers that are much more far reaching.
India has some key factors in place that mean the sharing economy is likely to take off in a big way over the next few years. First of all, mobile usage is set to come second only to the USA and, secondly, and perhaps more importantly, the country has a large number of young people who are highly agreeable to change. This demographic, which makes up almost 50 per cent of the population, are hungry for new ways of doing things and are more likely to engage online than their older counterparts.
This in turn is helping to create marketplaces and drive suppliers to engage with the sharing economy. Let’s take a quick look at the three most popular sectors:
• Transportation: Finding someone online who can drive you to a destination. It’s been made popular by apps such as Uber who have put customers and suppliers in contact with each other, disrupting the normal transport provision of taxis, buses and trains.
• Hospitality: You don’t have to book into a hotel but can rent a room or house off a private individual just by going onto the right app.
• Food and Beverage: Again, platforms put customers and suppliers in contact with each other at a much lower price.
These on demand technologies are not only changing the way we think but is areproducing a number of other benefits. It is easier to find good deals, one of the major governing factors in take up. Costs are brought down so that we get products and services cheaper.
It’s also boosted an entrepreneurial state of mind, especially in our younger population.
The wider impact of the sharing economy in India
While the sharing economy is growing in areas like transportation and hospitality it has much wider ramifications, particularly in an economy such as India’s.
1. Better resource utilisation can be achieved because suppliers are in tune with what customers want. The consumer essentially dictates demand and they want more and better. It has not only disrupted areas such as travel and hospitality, it is also causing major changes in areas like education with Massively Open Online Courses (MOOC) where users can access the teaching they need when they need it.
2. The sharing economy is already having an impact on employment. Indians can now become self-employed simply by joining a particular platform and offering their services. They don’t have to go through an interview process or compete with other applicants and they can dictate how much they earn based on how their particular industry performs. There is not only access to crowd funding but also the chance to begin entrepreneurial projects for a very low start up cost – something that previously was a big deterrent particularly in India.
3. The knock on effect of the impact on employment is increased social mobility. This paradigm shift means anyone can engage with a particular platform at a low cost and with little risk and have a chance of success, raising their income and status. They are not dependent on others for improving their quality of life and the support provided and success seen with others in a similar demographic is a driving factor for growing confidence.
4. The sharing economy in India doesn’t just provide opportunities to go self-employed and improve your bank balance. It also gives many people the chance to learn new skills and bring them to the market place when they would not normally have had the opportunity to do so.
One of the prime benefits of the sharing economy for both sides is convenience. Suppliers get more customers and customers get a much better deal. The inclusion of two way ratings on sharing platforms means that there is also more transparency and improved technology means that customers can see exactly what they are getting, creating an ecosystem where accountability is at the forefront.
There are suggestions that the sharing economy is also helping us to act more sustainability by reducing our impact on the environment as well as improving digital literacy across the board as more and more people in India become engaged with mobile technology.
The future of the sharing economy
Of course, in India as in most other countries, there are still some major hurdles to overcome. First of all, the sharing economy is growing rapidly which poses problems for maintaining consumer trust and supplier quality of service. There’s also the issue of local regulatory considerations, security issues and tax compliance considerations. For instance, the problem of insurance for taxi sharing platforms could well lead to legislative complications as the need to protect consumers becomes of paramount concern.
Despite these hurdles, the benefits of the sharing economy to India are set to be huge and potentially life changing for a lot of people. That’s not just for consumers and suppliers but also for the Indian government who may have to preside over one of the biggest shifts in the national economy.
India currently has 243 million internet users and a penetration of just under 20 per cent. This, like in other countries, is growing rapidly. And it’s set to transform lives across all areas of Indian society. The sharing economy is here to stay and the opportunities are there for all. It’s simply one of the most democratic revolutions ever seen in world history.